Waste Management 2011 Annual Report Download - page 160

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
damage caused by conditions that existed before we acquired a site. These liabilities include potentially
responsible party (“PRP”) investigations, settlements, and certain legal and consultant fees, as well as costs
directly associated with site investigation and clean up, such as materials, external contractor costs and
incremental internal costs directly related to the remedy. We provide for expenses associated with environmental
remediation obligations 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 a
number of estimates and assumptions.
Where it is probable that a liability has been incurred, we estimate costs required to remediate sites 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 respect to other named and unnamed PRPs. Estimates of the costs for the likely remedy are
then either developed using our internal resources or by third-party environmental engineers or other service
providers. Internally developed estimates are based on:
‰Management’s judgment and experience in remediating our own and unrelated parties’ sites;
‰Information available from regulatory agencies as to costs of remediation;
‰The number, financial resources and relative degree of responsibility of other PRPs who may be liable for
remediation of a specific site; and
‰The typical allocation of costs among PRPs, unless the actual allocation has been determined.
Estimating our degree of responsibility for remediation is inherently difficult. We recognize and accrue for
an estimated remediation liability when we determine that such liability is both probable and reasonably
estimable. Determining the method and ultimate cost of remediation requires that a number of assumptions be
made. There can sometimes be a range of reasonable estimates of the costs associated with the investigation of
the extent of environmental impact and identification of likely site-remediation alternatives. In these cases, we
use the amount within a range that constitutes our best estimate. If no amount within the range appears to be a
better estimate than any other, we use the amount that is the low end of such range. If we used the high ends of
such ranges, our aggregate potential liability would be approximately $150 million higher than the $273 million
recorded in the Consolidated Financial Statements as of December 31, 2011. Our ultimate responsibility may
differ materially from current estimates. It is possible that technological, regulatory or enforcement
developments, the results of environmental studies, the inability to identify other PRPs, the inability of other
PRPs to contribute to the settlements of such liabilities, or other factors could require us to record additional
liabilities. Our ongoing review of our remediation liabilities, in light of relevant internal and external facts and
circumstances, could result in revisions to our accruals that could cause upward or downward adjustments to
income from operations. These adjustments could be material in any given period.
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