Waste Management 2011 Annual Report Download - page 169

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The changes to landfill and environmental remediation liabilities for the years ended December 31, 2010
and 2011 are reflected in the table below (in millions):
Landfill
Environmental
Remediation
December 31, 2009 .............................................. $1,267 $256
Obligations incurred and capitalized .............................. 47 —
Obligations settled ............................................ (86) (36)
Interest accretion .............................................. 82 5
Revisions in cost estimates and interest rate assumptions(a)(b) .......... (49) 61
Acquisitions, divestitures and other adjustments ..................... 5 (2)
December 31, 2010 .............................................. $1,266 $284
Obligations incurred and capitalized .............................. 49 —
Obligations settled ............................................ (80) (37)
Interest accretion .............................................. 84 6
Revisions in cost estimates and interest rate assumptions(a)(b) .......... (30) 23
Acquisitions, divestitures and other adjustments ..................... 3 (3)
December 31, 2011 .............................................. $1,292 $273
(a) The amounts reported for our landfill liabilities include reductions of approximately $50 million and $30
million for 2010 and 2011, respectively, related to our year-end annual review of final landfill capping,
closure and post-closure obligations.
(b) The amount reported in 2010 for our environmental remediation liabilities includes increased cost estimates
associated with environmental remediation obligations, primarily based on a review and evaluation of
existing remediation projects. As these remediation projects progressed, more defined plans were
developed, resulting in a net increase in the required obligation to reflect the more likely remedies.
Additionally, during 2010, the risk-free discount rate used to measure our liabilities decreased from 3.75%
at December 31, 2009 to 3.5% at December 31, 2010, resulting in an increase of $5 million to our
environmental remediation liabilities and a corresponding increase to “Operating” expenses.
The amount reported in 2011 for our environmental remediation liabilities primarily relates to the impact of
a decrease in the risk-free discount rate used to measure our liabilities from 3.5% at December 31, 2010 to
2.0% at December 31, 2011, resulting in an increase of $25 million to our environmental remediation
liabilities and a corresponding increase to “Operating” expenses. This charge was partially offset by a $9
million favorable revision to an environmental remediation liability at a closed site based on the estimated
cost of the remediation alternative selected by the EPA.
Our recorded liabilities as of December 31, 2011 include the impacts of inflating certain of these costs based
on our expectations for the timing of cash settlement and of discounting certain of these costs to present value.
Anticipated payments of currently identified environmental remediation liabilities as measured in current dollars
are $38 million in 2012; $26 million in 2013; $27 million in 2014; $24 million in 2015; $12 million in 2016; and
$138 million thereafter.
At several of our landfills, we provide financial assurance by depositing cash into restricted trust funds or
escrow accounts for purposes of settling final capping, closure, post-closure and environmental remediation
obligations. Generally, these trust funds are established to comply with statutory requirements and operating
agreements and we are the sole beneficiary of the restricted balances. However, certain of the funds have been
established for the benefit of both the Company and the host community in which we operate.
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