Waste Management 2011 Annual Report Download - page 192

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
On January 13, 2012, the Pennsylvania Department of Environmental Protection (“Department”)
informed Phoenix Resources, Inc. (“Phoenix”) landfill that it intended to seek civil penalties for alleged
violations of Pennsylvania solid waste regulations during the third quarter of 2011 resulting from the
acceptance of certain loads of industrial waste prior to the Department’s written approval. Phoenix is an
indirect wholly-owned subsidiary of WM.
Additionally, the United States Attorney’s Office for the District of Hawaii has commenced an investigation
into allegations of violations of the federal Clean Water Act involving discharge of stormwater at the Waimanalo
Gulch Sanitary Landfill, located on Oahu, Hawaii in connection with three major storm events in December 2010
and January 2011. No formal enforcement action has been brought against the Company, although we could
potentially be subject to sanctions, including requirements to pay monetary penalties, in connection with a future
proceeding that may arise from the investigation. We are cooperating with the U.S. Attorney’s Office.
Multiemployer Defined Benefit Pension Plans — About 20% of our workforce is covered by collective
bargaining agreements with various union locals across the United States and Canada. As a result of some of
these agreements, certain of our subsidiaries are participating employers in a number of trustee-managed
multiemployer, defined benefit pension plans for the affected employees. Refer to Note 10 for additional
information about our participation in multiemployer, defined benefit pension plans considered individually
significant. In connection with our ongoing renegotiation of various collective bargaining agreements, we may
discuss and negotiate for the complete or partial withdrawal from one or more of these pension plans. A complete
or partial withdrawal from a multiemployer pension plan may also occur if employees covered by a collective
bargaining agreement vote to decertify a union from continuing to represent them.
One of the most significant multiemployer pension plans in which we have participated is the Central States,
Southeast and Southwest Areas Pension Plan (“Central States Pension Plan”), which has reported that it adopted
a rehabilitation plan as a result of its actuarial certification for the plan year beginning January 1, 2008. The
Central States Pension Plan is in “critical status,” as defined by the Pension Protection Act of 2006. We
recognized charges to “Operating” expenses of $26 million in 2010 and $9 million in 2009 associated with the
withdrawal of certain bargaining units from underfunded multiemployer pension plans. Our partial withdrawal
from the Central States Pension Plan accounted for all of our 2010 charges. In October 2011, our last remaining
group of employees that were active participants in the Central States Pension Plan voted to decertify the union
that represented them, ceasing any contribution obligation and withdrawing them from the Central States Pension
Plan.
We are still negotiating and litigating final resolutions of our withdrawal liability for previous withdrawals and
our recent final withdrawal mentioned above, which could be materially higher than the charges we have
recognized. We do not believe that our withdrawals from the multiemployer plans, individually or in the aggregate,
will have a material adverse effect on our financial condition or liquidity. However, depending on the number of
employees withdrawn in any future period and the financial condition of the multiemployer plans at the time of
withdrawal, such withdrawals could materially affect our results of operations in the period of the withdrawal.
Tax Matters — We are currently in the examination phase of IRS audits for the tax years 2010, 2011 and 2012
and expect these audits to be completed within the next three, 12 and 24 months, respectively. We participate in the
IRS’s Compliance Assurance Program, which means we work with the IRS throughout the year in order to resolve
any material issues prior to the filing of our year-end tax return. We are also currently undergoing audits by various
state and local jurisdictions that date back to 2000. We have finalized audits in Canada through the 2005 tax year
and are not currently under audit for any subsequent tax years in Canada. On July 28, 2011, we acquired Oakleaf,
which is subject to IRS examinations for years dating back to 2008 and state income tax examinations for years
dating back to 2002. Pursuant to the terms of our acquisition of Oakleaf, we are entitled to indemnification for
Oakleaf’s pre-acquisition tax liabilities. We maintain a liability for uncertain tax positions, the balance of which
management believes is adequate. Results of audit assessments by taxing authorities are not currently expected to
have a material adverse impact on our results of operations or cash flows.
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