Waste Management 2007 Annual Report Download - page 45

(g) WMI provides financial guarantees on behalf of its subsidiaries to municipalities, customers and regulatory
authorities. They are provided primarily to support our performance of landfill closure and post-closure
activities.
The assets held in our funded trust and escrow accounts may be drawn and used to meet the obligations for
which the trusts and escrows were established. Other than these permitted draws on funds, virtually no claims have
been made against our financial assurance instruments in the past, and considering our current financial position,
management does not expect there to be claims against these instruments that will have a material adverse effect on
our consolidated financial statements. In an ongoing effort to mitigate the risks of future cost increases and
reductions in available capacity, we are continually evaluating various options to access cost-effective sources of
financial assurance.
Insurance
We carry a broad range of insurance coverages, including general liability, automobile liability, real and
personal property, workers’ compensation, directors’ and officers’ liability, pollution legal liability and other
coverages we believe are customary to the industry. Our exposure to loss for insurance claims is generally limited to
the per incident deductible under the related insurance policy. Our general liability, workers’ compensation and auto
insurance programs have per incident deductibles of $2.5 million, $1.5 million and $1 million, respectively.
Effective January 1, 2008, we increased the per incident deductible for our workers’ compensation insurance
program to $5 million. We do not expect the impact of any known casualty, property, environmental or other
contingency to have a material impact on our financial condition, results of operations or cash flows. Our estimated
insurance liabilities as of December 31, 2007 are summarized in Note 10 to the Consolidated Financial Statements.
Regulation
Our business is subject to extensive and evolving federal, state or provincial and local environmental, health,
safety and transportation laws and regulations. These laws and regulations are administered by the EPA and various
other federal, state and local environmental, zoning, transportation, land use, health and safety agencies in the
United States and various agencies in Canada. Many of these agencies regularly examine our operations to monitor
compliance with these laws and regulations and have the power to enforce compliance, obtain injunctions or impose
civil or criminal penalties in case of violations.
Because the major component of our business is the collection and disposal of solid waste in an environ-
mentally sound manner, a significant amount of our capital expenditures is related, either directly or indirectly, to
environmental protection measures, including compliance with federal, state or provincial and local provisions that
regulate the discharge of materials into the environment. There are costs associated with siting, design, operations,
monitoring, site maintenance, corrective actions, financial assurance, and facility closure and post-closure obli-
gations. In connection with our acquisition, development or expansion of a disposal facility or transfer station, we
must often spend considerable time, effort and money to obtain or maintain necessary required permits and
approvals. There cannot be any assurances that we will be able to obtain or maintain necessary governmental
approvals. Once obtained, operating permits are subject to modification, suspension or revocation by the issuing
agency. Compliance with these and any future regulatory requirements could require us to make significant capital
and operating expenditures. However, most of these expenditures are made in the normal course of business and do
not place us at any competitive disadvantage.
The primary United States federal statutes affecting our business are summarized below:
• The Resource Conservation and Recovery Act of 1976, as amended, regulates handling, transporting and
disposing of hazardous and non-hazardous waste and delegates authority to states to develop programs to
ensure the safe disposal of solid waste. In 1991, the EPA issued its final regulations under Subtitle D of
RCRA, which set forth minimum federal performance and design criteria for solid waste landfills. These
regulations must be implemented by the states, although states can impose requirements that are more
stringent than the Subtitle D standards. We incur costs in complying with these standards in the ordinary
course of our operations.
• The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, which
is also known as Superfund, provides for federal authority to respond directly to releases or threatened
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