Waste Management 2011 Annual Report Download - page 189

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
post-closing. For acquisitions completed subsequent to January 1, 2009, we have recognized liabilities for
these contingent obligations based on an estimate of the fair value of these contingencies at the time of
acquisition. For acquisitions completed before January 1, 2009, the costs associated with any additional
consideration requirements are accounted for as incurred. Contingent obligations related to
indemnifications arising from our divestitures and contingent consideration provided for by our
acquisitions are not expected to be material to our financial position, results of operations or cash flows.
‰WM and WM Holdings guarantee the service, lease, financial and general operating obligations of certain
of their subsidiaries. If such a subsidiary fails to meet its contractual obligations as they come due, the
guarantor has an unconditional obligation to perform on its behalf. No additional liability has been
recorded for service, financial or general operating guarantees because the subsidiaries’ obligations are
properly accounted for as costs of operations as services are provided or general operating obligations as
incurred. No additional liability has been recorded for the lease guarantees because the subsidiaries’
obligations are properly accounted for as operating or capital leases, as appropriate.
We currently do not believe it is reasonably likely that we would be called upon to perform under these
guarantees and do not believe that any of the obligations would have a material effect on our financial position,
results of operations or cash flows.
Environmental Matters — A significant portion of our operating costs and capital expenditures could be
characterized as costs of environmental protection as 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. In addition to remediation activity required by state or local authorities, such liabilities include
potentially responsible party, or PRP, investigations. The costs associated with these liabilities can include
settlements, certain legal and consultant fees, as well as incremental internal and external costs directly
associated with site investigation and clean-up.
As of December 31, 2011, we had been notified that we are a PRP in connection with 80 locations listed on the
EPA’s Superfund National Priorities List, or NPL. Of the 80 sites at which claims have been made against us, 17 are
sites we own. Each of the NPL sites we own was initially developed by others as a landfill disposal facility. At each
of these facilities, we are working in conjunction with the government to characterize or remediate identified site
problems, and we have either agreed with other legally liable parties on an arrangement for sharing the costs of
remediation or are working toward a cost-sharing agreement. We generally expect to receive any amounts due from
other participating parties at or near the time that we make the remedial expenditures. The other 63 NPL sites,
which we do not own, are at various procedural stages under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, known as CERCLA or Superfund.
The majority of these proceedings involving NPL sites that we do not own are based on allegations that
certain of our subsidiaries (or their predecessors) transported hazardous substances to the sites, often prior to our
acquisition of these subsidiaries. CERCLA generally provides for liability for those parties owning, operating,
transporting to or disposing at the sites. Proceedings arising under Superfund typically involve numerous waste
generators and other waste transportation and disposal companies and seek to allocate or recover costs associated
with site investigation and remediation, which costs could be substantial and could have a material adverse effect
on our consolidated financial statements. At some of the sites at which we have been identified as a PRP, our
liability is well defined as a consequence of a governmental decision and an agreement among liable parties as to
the share each will pay for implementing that remedy. At other sites, where no remedy has been selected or the
liable parties have been unable to agree on an appropriate allocation, our future costs are uncertain.
Litigation — In April 2002, certain former participants in the ERISA plans of WM Holdings filed a lawsuit
in the U.S. District Court for the District of Columbia in a case entitled William S. Harris, et al. v. James E.
Koenig, et al. The lawsuit attempts to increase the recovery of a class of ERISA plan participants on behalf of the
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