CLOSURE AND POST-CLOSURE OBLIGATIONS

12 Months Ended

Dec. 31, 2021

CLOSURE AND POST-CLOSURE OBLIGATIONS

CLOSURE AND POST-CLOSURE OBLIGATIONS

NOTE 15. CLOSURE AND POST-CLOSURE OBLIGATIONS

Our accrued closure and post-closure liability represent the expected future costs, including corrective actions, associated with closure and post-closure of our operating and non-operating disposal facilities. We record the fair value of our closure and post-closure obligations as a liability in the period in which the regulatory obligation to retire a specific asset is triggered. For our individual landfill cells, the required closure and post-closure obligations under the terms of our permits and our intended operation of the landfill cell are triggered and recorded when the cell is placed into service and waste is initially disposed in the landfill cell. The fair value is based on the total estimated costs to close the landfill cell and perform post-closure activities once the landfill cell has reached capacity and is no longer accepting waste. We perform periodic reviews of both non-operating and operating facilities and revise accruals for estimated closure and post-closure, remediation or other costs as necessary. Recorded liabilities are based on our best estimates of current costs and are updated periodically to include the effects of existing technology, presently enacted laws and regulations, inflation and other economic factors.

We do not presently bear significant financial responsibility for closure and/or post-closure care of the disposal facilities located on state-owned land at our Beatty, Nevada site, provincial-owned land in Blainville, Québec; or state-leased federal land on the Department of Energy Hanford Reservation near Richland, Washington. The states of Nevada and Washington and the province of Québec collect fees from us based on the waste received on a quarterly or annual basis. Such fees are deposited in dedicated, government-controlled funds to cover the future costs of closure and post-closure care and maintenance. Such fees are periodically reviewed for adequacy by the governmental authorities. We maintain a surety bond for closure costs associated with the Stablex facility. Our lease agreement with the province of Québec requires that the surety bond be maintained for 25 years after the lease expires. We also maintain surety bonds for closure costs

associated with our energy waste landfills in Texas. Under the terms of our waste disposal permits for these landfills, financial security must be provided to the Railroad Commission of Texas in an amount necessary to close the facility. At December 31, 2021 we had $13.3 million in commercial surety bonds dedicated for closure obligations at our operating and non-operating disposal facilities.

In accounting for closure and post-closure obligations, which represent our asset retirement obligations, we recognize a liability as part of the fair value of future asset retirement obligations and an associated asset as part of the carrying amount of the underlying asset. This obligation is valued based on our best estimates of current costs and current estimated closure and post-closure costs taking into account current technology, material and service costs, laws and regulations. These cost estimates are increased by an estimated inflation rate, estimated to be 2.6% at December 31, 2021. Inflated current costs are then discounted using our credit-adjusted risk-free interest rate, which approximates our incremental borrowing rate, in effect at the time the obligation is established or when there are upward revisions to our estimated closure and post-closure costs. Our weighted-average credit-adjusted risk-free interest rate at December 31, 2021 approximated 5.3%.

Changes to reported closure and post-closure obligations for the years ended December 31, 2021 and 2020, were as follows:

$s in thousands	2021		2020
Closure and post-closure obligations, beginning of year	$	95,869	$	86,383
NRC Merger purchase price allocation adjustment		—		1,782
Accretion expense		5,363		4,000
Payments		(3,054)		(1,750)
Adjustments		732		5,422
Foreign currency translation		10		32
Closure and post-closure obligations, end of year		98,920		95,869
Less current portion		(5,771)		(6,471)
Long-term portion	$	93,149	$	89,398

Adjustment to the obligations represents changes in the expected timing or amount of cash expenditures based upon actual and estimated cash expenditures. The adjustments in 2021 were primarily attributable to a $584,000 increase in closure and post-closure obligations at our Belleville, Michigan operating facility due to an increase in estimated closure costs. The adjustments in 2020 were primarily attributable to a $5.4 million increase in closure and post-closure obligations at our Robstown, Texas operating facility due to placing a new landfill cell into service in the fourth quarter of 2020.

Changes in the reported closure and post-closure asset, recorded as a component of Property and equipment, net, in the consolidated balance sheets, for the years ended December 31, 2021 and 2020 were as follows:

$s in thousands	2021		2020
Net closure and post-closure asset, beginning of year	$	26,532	$	22,884
NRC Merger purchase price allocation adjustment		—		(389)
Additions or adjustments to closure and post-closure asset		732		5,422
Amortization of closure and post-closure asset		(1,614)		(1,407)
Foreign currency translation		12		22
Net closure and post-closure asset, end of year	$	25,662	$	26,532