Waste Connections (WCN) Risk Analysis

If we are unable to obtain performance or surety bonds, letters of credit or insurance, we may not be able to enter into additional collection contracts or retain necessary landfill operating permits. Collection contracts, municipal contracts, transfer station operations and landfill closure and post-closure obligations may require performance or surety bonds, letters of credit or other financial assurance to secure contractual performance or comply with federal, state, provincial or local environmental laws or regulations. We typically satisfy these requirements by posting bonds or letters of credit. As of December 31, 2025, we had $2.157 billion of such surety bonds in place and $220.6 million of letters of credit issued and outstanding. Closure bonds are difficult and costly to obtain. If we are unable to obtain performance or surety bonds or additional letters of credit in sufficient amounts or at acceptable rates, we could be precluded from entering into additional collection contracts or obtaining or retaining landfill operating permits. Any future difficulty in obtaining insurance also could impair our ability to secure future contracts that are conditional on the contractor having adequate insurance coverage. Accordingly, our failure to obtain performance or surety bonds, letters of credit or other financial assurances or to maintain adequate insurance coverage could limit our operations or violate federal, state, provincial, or local requirements, which could have a materially adverse effect on our business, financial condition and results of operations.

?Stakeholder input, business considerations, and potential regulation have reinforced the ?importance of developing and implementing sustainability and ?environmental, social, and governance, or ESG, initiatives. In 2020, we ?adopted long-term, aspirational sustainability targets, which we have since expanded and updated; we also committed $500 million for investments and ?projects to support these efforts. Our ability to achieve these targets will depend significantly on, among other ?things, the success of these investments and projects and our ability to meet our financial and ?operating objectives,which can be impacted by the numerous risks and uncertainties associated with ?our business and the industry in which we operate. There is a risk that some or all of the expected ?benefits of these investments and projects may fail to materialize, may cost more to achieve or may ?not occur within the anticipated time periods, including as a result of limitations on technology, permitting requirements, labor constraints or supply chain disruptions. In addition, there is a risk that the actions taken by us to ?achieve these targets may have a negative impact on our existing business and increase capital ?expenditures or decrease investments in other aspects of the business, which could adversely affect our operating results or future growth. Our failure to achieve these targets, ?or a perception among key stakeholders that such targets are insufficient or unattainable, could ?damage our reputation, competitive position and share price.? While there continues to be interest from many stakeholders in ESG policies, practices and disclosure around climate-related risk ?identification and mitigation by businesses, initiatives to promote the development and implementation of robust ESG policies and the disclosure of climate related risk are in a state of flux among U.S. federal, state, and Canadian regulators. In the United States, many federal climate change and ESG requirements have stalled, and prospective federal requirements will be determined by litigation or new congressional or regulatory action. Regardless of federal action, certain states have initiated independent state specific programs. In addition, certain investors and lenders are incorporating ESG factors ?into their investment or lending process, alongside traditional financial considerations, to varying extents. Developing and ?implementing policies and practices, and developing additional disclosure in relation to climate change ?and other environmental and social risk issues, can involve significant costs and require a significant ?time commitment from our Board of Directors, management and employees. In addition, a failure ?to implement such policies, practices and disclosure could adversely affect our reputation, competitive ?position and share price and our ability to raise capital, even if our operating results or prospects have ?not changed.? Furthermore, public statements regarding ESG matters are increasingly subject to scrutiny by regulators, investors and the public. Any actual or perceived "greenwashing"-defined generally as the misrepresentation or exaggeration of ESG or sustainability practices or commitments not adequately supported by measurable actions or outcomes-could result in reputational harm and legal liability, including regulatory enforcement actions, investor lawsuits and consumer claims under securities and consumer protection laws. Finally, should states implement differing requirements, the complexity of compliance could increase our costs and adversely affect our business prospects.

Existing environmental laws and regulations have become more stringently enforced in recent years. In addition, our industry is subject to regular enactment of new or amended federal, state, provincial and local environmental and health and safety statutes, regulations and ballot initiatives, as well as judicial decisions interpreting these requirements, which have generally become more stringent over time. Citizen suits brought pursuant to environmental laws as well as purported class and mass actions based on nuisance and negligence claims related to alleged landfill odors have proliferated, along with the use of social media to drive such efforts. In addition, various state, provincial and local governments and the Canadian federal government have enacted, have the authority to enact or are considering enacting laws and regulations that restrict the movement or disposal within their jurisdictions of certain types of waste generated outside their jurisdictions. We expect these trends to continue, which could lead to material increases in our costs for future environmental, health and safety compliance. These requirements also impose substantial capital and operating costs and operational limitations on us and may adversely affect our business. In addition, federal, state, provincial and local governments may change the rights they grant to, the restrictions they impose on or the laws and regulations they enforce against, solid waste and E&P waste services companies. These changes could adversely affect our operations in various ways, including without limitation, by restricting the way in which we manage storm water runoff, comply with health and safety laws, treat and dispose of E&P or other waste or our ability to operate and expand our business. Governmental authorities and various interest groups in the United States and Canada have implemented laws and regulations designed to limit GHG emissions in response to growing concerns regarding climate change. For example, the State of California, the Canadian federal government and several Canadian provinces have enacted climate change laws, and other states and provinces in which we operate are considering similar actions. The EPA made an endangerment finding in 2009 allowing certain GHGs to be regulated under the CAA. While the Trump administration is seeking to roll back this finding, the EPA's prior regulatory actions created regulations that will impact our operations by imposing emission reporting, permitting, control technology installation and monitoring requirements, although the materiality of the impacts will not be known until all applicable regulations are promulgated and finalized, including following any regulatory appeals. The Canadian federal government enacted the Greenhouse Gas Pollution Pricing Act in June 2018, which established a national carbon-pricing regime starting in 2019 for provinces and territories in Canada where there is no provincial regime in place or where the provincial regime does not meet the federal benchmark. The Canadian Government recently enacted new regulations that will restrict methane emissions from certain MSW landfills. Several Canadian provinces have promulgated legislation and regulations to limit GHG emissions through requirements of specific controls, carbon levies, cap and trade programs or other measures. The EPA identified methane emissions from landfills and from oil and gas facilities as a focus for enforcement and compliance resources in its National Enforcement and Compliance Initiatives for 2024 through 2027. Comprehensive GHG legislation or regulation, including carbon pricing, affects not only our business, but also that of our customers. The State of California enacted Senate Bill 219 in 2024, requiring companies with revenues exceeding $1 billion and operating within California to report Scope 1 and Scope 2 emissions beginning in 2026 (for emissions occurring in fiscal year 2025) and Scope 3 emissions beginning in 2027 (for emissions occurring in fiscal year 2026). Companies disclosing emissions in California must obtain formal assurance from approved data verification firms to ensure regulatory compliance. Increased regulation of GHG emissions from oil and natural gas E&P operations may also increase the costs to our customers of developing and producing hydrocarbons, and as a result, may have an indirect and adverse effect on the amount of oilfield waste delivered to our facilities by our customers. For example, in November 2023 and March 2024, the EPA finalized rules providing additional and more stringent regulation and control of methane emissions from oil and natural gas E&P operations and implementing a methane waste emissions charge applicable to certain E&P operations. Statutes and regulations governing methane also increase the costs of our operations, and future climate change statutes and regulations may have an impact as well. Further, governmental authorities have considered or have begun to implement increased regulation of PFAS and potentially other emerging contaminants, which could adversely affect our operations as well as our customers' operations. The regulation of these substances could increase or accelerate our financial obligations associated with leachate treatment as well as closure obligations, post-closure maintenance and other environmental remediation related to our solid waste facilities. Further, more stringent permitting obligations, including those relating to air and wastewater, as well as enhanced treatment of landfill leachate and landfill gas could adversely affect our operations in various ways, including without limitation, increased operational expenses as well as treatment and disposal costs, greater capital expenditures to meet control requirements, costs of compliance with permitting and health and safety requirements, and litigation risk.