Description
Multipoint features are invalid with the Feature Envelope To Polygon SINGLEPART option. Using SINGLEPART on a multipoint feature class means that each part (or point) in the multipart would be given its own envelope. Since the envelope of a point has no area, using this option would not return any meaningful information and is restricted.
Solution
When using multipoint features, use the Feature Envelope To Polygon MULTIPART option to generate your envelopes.