Waste Management 2007 Annual Report Download - page 62

specific landfill. In these circumstances, continued inclusion must be approved through a landfill-specific review
process that includes approval of the Chief Financial Officer and a review by the Audit Committee of the Board of
Directors on a quarterly basis. Of the 54 landfill sites with expansions at December 31, 2007, 18 landfills required
the Chief Financial Officer to approve the inclusion of the unpermitted airspace. Eight of these landfills required
approval by the Chief Financial Officer because of a lack of community or political support that could impede the
expansion process. The remaining ten landfills required approval primarily due to the permit application processes
not meeting the one- or five-year requirements, generally as a result of state-specific permitting procedures.
Once the remaining permitted and expansion airspace is determined, an airspace utilization factor, or AUF, is
established to calculate the remaining permitted and expansion capacity in tons. The AUF is established using the
measured density obtained from previous annual surveys and then adjusted to account for settlement. The amount of
settlement that is forecasted will take into account several site-specific factors including current and projected mix
of waste type, initial and projected waste density, estimated number of years of life remaining, depth of underlying
waste, and anticipated access to moisture through precipitation or recirculation of landfill leachate. In addition, the
initial selection of the AUF is subject to a subsequent multi-level review by our engineering group and the AUF used
is reviewed on a periodic basis and revised as necessary. Our historical experience generally indicates that the
impact of settlement at a landfill is greater later in the life of the landfill when the waste placed at the landfill
approaches its highest point under the permit requirements.
When we include the expansion airspace in our calculations of available airspace, we also include the projected
costs for development, as well as the projected asset retirement cost related to final capping, and closure and post-
closure of the expansion in the amortization basis of the landfill.
After determining the costs and remaining permitted and expansion capacity at each of our landfills, we
determine the per ton rates that will be expensed through landfill amortization. We look at factors such as the waste
stream, geography and rate of compaction, among others, to determine the number of tons necessary to fill the
remaining permitted and expansion airspace relating to these costs and activities. We then divide costs by the
corresponding number of tons, giving us the rate per ton to expense for each activity as waste is received and
deposited at the landfill. We calculate per ton amortization rates for each landfill for assets associated with each
final capping event, for assets related to closure and post-closure activities and for all other costs capitalized or to be
capitalized in the future. These rates per ton are updated annually, or more often, as significant facts change.
It is possible that actual results, including the amount of costs incurred, the timing of final capping, closure and
post-closure activities, our airspace utilization or the success of our expansion efforts, could ultimately turn out to be
significantly different from our estimates and assumptions. To the extent that such estimates, or related assump-
tions, prove to be significantly different than actual results, lower profitability may be experienced due to higher
amortization rates, higher final capping, closure or post-closure rates, or higher expenses; or higher profitability
may result if the opposite occurs. Most significantly, if our belief that we will receive an expansion permit changes
adversely and it is determined that the expansion capacity should no longer be considered in calculating the
recoverability of the landfill asset, we may be required to recognize an asset impairment. If it is determined that the
likelihood of receiving an expansion permit has become remote, the capitalized costs related to the expansion effort
are expensed immediately.
Environmental Remediation Liabilities — We are subject to an array of laws and regulations relating to the
protection of the environment. Under current laws and regulations, we may have liabilities for environmental
damage caused by our operations, or for damage caused by conditions that existed before we acquired a site. These
liabilities include potentially responsible party, or PRP, investigations, settlements, certain legal and consultant fees,
as well as costs directly associated with site investigation and clean up, such as materials and incremental internal
costs directly related to the remedy. We provide for expenses associated with environmental remediation obli-
gations when such amounts are probable and can be reasonably estimated. We routinely review and evaluate sites
that require remediation and determine our estimated cost for the likely remedy based on several estimates and
assumptions.
We estimate costs required to remediate sites where it is probable that a liability has been incurred based on
site-specific facts and circumstances. We routinely review and evaluate sites that require remediation, considering
whether we were an owner, operator, transporter, or generator at the site, the amount and type of waste hauled to the
site and the number of years we were associated with the site. Next, we review the same type of information with
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