Waste Management 2007 Annual Report Download - page 50

land use. The permits and approvals are often difficult, time consuming and costly to obtain and could contain
conditions that limit our operations.
Governmental authorities may enact climate change regulations that could increase our costs to operate.
Environmental advocacy groups and regulatory agencies in the United States have been focusing considerable
attention on the emissions of greenhouse gases and their potential role in climate change. The adoption of laws and
regulations to implement controls of greenhouse gases, including the imposition of fees or taxes, could adversely
affect our collection and disposal operations. Additionally, certain of the states in which we operate are contem-
plating air pollution control regulations that are more stringent than existing and proposed federal regulations.
Changing environmental regulations could require us to take any number of actions, including the purchase of
emission allowances or installation of additional pollution control technology, and could make some operations less
profitable, which could adversely affect our results of operations.
Significant shortages in fuel supply or increases in fuel prices will increase our operating expenses.
The price and supply of fuel are unpredictable, and can fluctuate significantly based on international, political
and economic circumstances, as well as other factors outside our control, such as actions by the Organization of the
Petroleum Exporting Countries, or OPEC, and other oil and gas producers, regional production patterns, weather
conditions and environmental concerns. In the past two years, the year-over-year changes in the average quarterly
fuel prices have ranged from an increase of 28% to a decrease of 5%. We need fuel to run our collection and transfer
trucks and equipment used in our landfill operations. Supply shortages could substantially increase our operating
expenses. Additionally, as fuel prices increase, our direct operating expenses increase and many of our vendors raise
their prices as a means to offset their own rising costs. We have in place a fuel surcharge program, designed to offset
increased fuel expenses; however, we may not be able to pass through all of our increased costs and some
customers’ contracts prohibit any pass through of the increased costs. We may initiate other programs or means to
guard against the rising costs of fuel, although there can be no assurances that we will be able to do so or that such
programs will be successful. Regardless of any offsetting surcharge programs, the increased operating costs will
decrease our operating margins.
We have substantial financial assurance and insurance requirements, and increases in the costs of
obtaining adequate financial assurance, or the inadequacy of our insurance coverages, could negatively
impact our liquidity and increase our liabilities.
The amount of insurance we are required to maintain for environmental liability is governed by statutory
requirements. We believe that the cost for such insurance is high relative to the coverage it would provide, and
therefore, our coverages are generally maintained at the minimum statutorily required levels. We face the risk of
incurring liabilities for environmental damage if our insurance coverage is ultimately inadequate to cover those
damages. We also carry a broad range of insurance coverages that are customary for a company our size. We use
these programs to mitigate risk of loss, thereby allowing us to manage our self-insurance exposure associated with
claims. To the extent our insurers were unable to meet their obligations, or our own obligations for claims were more
than we estimated, there could be a material adverse effect to our financial results.
In addition, to fulfill our financial assurance obligations with respect to environmental closure and post-closure
liabilities, we generally obtain letters of credit or surety bonds, rely on insurance, including captive insurance, or
fund trust and escrow accounts. We currently have in place all financial assurance instruments necessary for our
operations. We do not anticipate any unmanageable difficulty in obtaining financial assurance instruments in the
future. However, in the event we are unable to obtain sufficient surety bonding, letters of credit or third-party
insurance coverage at reasonable cost, or one or more states cease to view captive insurance as adequate coverage,
we would need to rely on other forms of financial assurance. These types of financial assurance could be more
expensive to obtain, which could negatively impact our liquidity and capital resources and our ability to meet our
obligations as they become due.
The possibility of development and expansion projects or pending acquisitions not being completed or
certain other events could result in a material charge against our earnings.
In accordance with generally accepted accounting principles, we capitalize certain expenditures and advances
relating to disposal site development, expansion projects, acquisitions, software development costs and other
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