Waste Management 2008 Annual Report Download - page 42
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Please find page 42 of the 2008 Waste Management annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.operating contracts. Balances maintained in these trust funds and escrow accounts will fluctuate based on
(i) changes in statutory requirements; (ii) future deposits made to comply with contractual arrangements;
(iii) the ongoing use of funds for qualifying activities; (iv) acquisitions or divestitures of landfills; and
(v) changes in the fair value of the financial instruments held in the trust fund or escrow accounts.
(f) 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. As of December 31, 2008, our per-incident deductible
for our general liability program was $2.5 million and our per-incident deductible for our workers’ compensation
insurance program was $5 million. As of December 31, 2008, our auto liability insurance program included a per-
incident base deductible of $1 million, subject to additional aggregate deductibles in the $1 million to $5 million
layer and the $5 million to $10 million layer of $2.4 million and $2.5 million, respectively. Effective January 1,
2009, we increased the per-incident base deductible of our auto liability insurance program to $5 million, subject to
an additional aggregate deductible in the $5 million to $10 million range of $4.8 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, 2008
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 U.S. 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 placement 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 required permits and approvals. There
cannot be any assurances that we will be able to obtain or maintain required governmental approvals. Once
obtained, operating permits are subject to renewal, 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.
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