Waste Management 2015 Annual Report Download - page 100

and factor in inflation and discount rates. The possibility of changing legal and regulatory requirements and the
forward-looking nature of these types of costs make any estimation or assumption less certain. Changes in
estimates for closure and post-closure events immediately impact the required liability and the corresponding
asset. When the change in estimate relates to a fully consumed asset, the adjustment to the asset must be
amortized immediately through expense. When the change in estimate relates to a landfill asset that has not been
fully consumed, the adjustment to the asset is recognized in income prospectively as a component of landfill
airspace amortization.
Remaining Permitted Airspace — Our engineers, in consultation with third-party engineering consultants
and surveyors, are responsible for determining remaining permitted airspace at our landfills. The remaining
permitted airspace is determined by an annual survey, which is used to compare the existing landfill topography
to the expected final landfill topography.
Expansion Airspace — We also include currently unpermitted expansion airspace in our estimate of
remaining permitted and expansion airspace in certain circumstances. First, to include airspace associated with an
expansion effort, we must generally expect the initial expansion permit application to be submitted within one
year, and the final expansion permit to be received within five years. Second, we must believe that obtaining the
expansion permit is likely, considering the following criteria:
• Personnel are actively working on the expansion of an existing landfill, including efforts to obtain land
use and local, state or provincial approvals;
• We have a legal right to use or obtain land to be included in the expansion plan;
• There are no significant known technical, legal, community, business, or political restrictions or similar
issues that could negatively affect the success of such expansion; and
• Financial analysis has been completed based on conceptual design, and the results demonstrate that the
expansion meets Company criteria for investment.
For unpermitted airspace to be initially included in our estimate of remaining permitted and expansion
airspace, the expansion effort must meet all of the criteria listed above. These criteria are evaluated by our field-
based engineers, accountants, managers and others to identify potential obstacles to obtaining the permits. Once
the unpermitted airspace is included, our policy provides that airspace may continue to be included in remaining
permitted and expansion airspace even if certain of these criteria are no longer met as long as we continue to
believe we will ultimately obtain the permit, based on the facts and circumstances of a specific landfill. In these
circumstances, continued inclusion must be approved through a landfill-specific review process that includes
approval by our Chief Financial Officer and a review by the Audit Committee of our Board of Directors on a
quarterly basis. Of the 21 landfill sites with expansions included at December 31, 2015, three landfills required
the Chief Financial Officer to approve the inclusion of the unpermitted airspace. One landfill required approval
by our Chief Financial Officer because of community or political opposition that could impede the expansion
process. The remaining two landfills required approval because the permit application process did not meet the
one- or five-year requirements.
When we include the expansion airspace in our calculations of remaining permitted and expansion airspace,
we also include the projected costs for development, as well as the projected asset retirement costs related to final
capping, closure and post-closure of the expansion in the amortization basis of the landfill.
Once the remaining permitted and expansion airspace is determined in cubic yards, an airspace utilization
factor (“AUF”) is established to calculate the remaining permitted and expansion capacity in tons. The AUF is
established using the measured density obtained from previous annual surveys and is then adjusted to account for
future settlement. The amount of settlement that is forecasted will take into account several site-specific factors
including current and projected mix of waste type, initial and projected waste density, estimated number of years
of life remaining, depth of underlying waste, anticipated access to moisture through precipitation or recirculation
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