SECURITIES AND EXCHANGE COMMISSION

                         WASHINGTON, DC
                            FORM 10-K

             Annual Report Under Section 13 or 15(d)
           of the Securities and Exchange Act of 1934

           For the Fiscal Year Ended December 31, 1998
                   Commission File No. 0-17536

              SEVENSON ENVIRONMENTAL SERVICES, INC.
             ______________________________________
     (Exact name of registrant as specified in its charter)

     New York                                     16-1091535
_______________________________              ______________________
(State or other jurisdiction of              (IRS Employer
incorporation or organization)               Identification No.) 
                       2749 Lockport Road
                           PO Box 396
                    Niagara Falls, NY   14302
                   ___________________________
            (Address of principal executive offices)
                           (Zip Code)

                         (716) 284-0431
                        ________________
      (Registrant's telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act: None

   Securities Registered Pursuant to Section 12(g) of the Act:

                          Common Stock
                         ______________
                        (Title of Class)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
                   Yes __X____    No ________







                     Cover Page 1 of 2 Pages
                Exhibit Index appears on Page 21

                              - 1 -
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [  ]

As of March 16, 1999, 2,110,779 shares of Common Stock were
outstanding, and the aggregate market value (based on the closing
bid price quoted on the National Market tier of the NASDAQ Stock
Market on March 16, 1999) of the Common Stock held by non-
affiliates was approximately $19 million.  As of the same date,
7,434,850 shares of Class B Common Stock were outstanding.


  ____________________________________________________________

               DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement for its 1999 Annual
Meeting of Stockholders and 1998 Annual Report to Stockholders are
incorporated by reference into Part III hereof.

































                     Cover Page 2 of 2 Pages
                Exhibit Index appears on Page 21

                              - 2 -

<PAGE>
                             PART I

ITEM 1.   BUSINESS

General

Sevenson Environmental Services, Inc. (the "Company") was
incorporated in the State of New York in 1977 and changed its state
of incorporation to Delaware in 1989.  Effective May 19, 1998, the
Company was reincorported in New York as a result of a merger with
its predecessor of the same name.  The Company provides a
comprehensive range of field services for the remediation of sites
and facilities contaminated by hazardous materials ("site
remediation").  These services include on-site treatment,
containment, and excavation and removal of contaminated materials. 
The Company also decontaminates, demolishes and closes contaminated
industrial facilities and provides industrial cleaning services. 
Sevenson has performed site remediation field services since 1979,
when it was selected as the principal contractor for the
remediation of the Love Canal site in Niagara Falls, New York.  The
Company also participates as an investor in ventures which acquire,
clean up and sell contaminated sites ("brownfields").

The Company's strategy has been to capitalize on its extensive
hazardous waste site remediation experience.  The Company believes
that it is one of only a few national companies with such a high
degree of expertise in site remediation services.  

The Company does not own or operate offsite hazardous waste
transportation, storage or disposal facilities.  When required, the
Company contracts with others for these services.

Since its inception, the Company has been successful in marketing
its services to both private and public sector customers.  The
following table summarizes revenue contribution from these
customers during the last three years:

Contract Revenues                      Years Ended December 31,
(Dollars in Millions)          
                        1998            1997             1996
Public Sector       $37.3 (44%)     $29.9 (37%)        $26.0 (30%)
Private Sector      $47.4 (56%)     $52.0 (63%)        $59.7 (70%)

Total               $84.7           $81.9              $85.7

The Company's customers include major industrial corporations and
government agencies.  Since entering the business in 1979, the
Company has performed over 750 contracts including contracts at 71
Superfund sites. 

In performing its services, Sevenson emphasizes safety, quality and
cost effectiveness.  The Company performs most work with its own
employees and equipment, which allows it to maintain a high degree
of control over its operations.

The Company operates nationwide, but most of its operations are in
the eastern United States.  It currently operates through offices
in Niagara Falls, New York, Delmont (Pittsburgh), Pennsylvania,
                              - 3 -
<PAGE>
Chadds Ford (Philadelphia), Pennsylvania, Chicago (Munster,
Indiana) and Fayetteville (Atlanta), Georgia.  The operations of
Waste Stream Technology Inc., the Company's bioremediation and
laboratory subsidiary, are conducted at office, laboratory and shop
facilities in Buffalo, New York. 

The Remediation Process

The remediation process consists of three phases;  site assessment,
remedial design, and, finally, field cleanup operations.  The site
assessment phase is largely investigative, involving a detailed
evaluation of the hazardous waste problem and the consideration of
alternative solutions.  The remedial design phase involves the
preparation of a detailed remediation plan for the chosen solution. 
The third phase is the field implementation of the site remediation
plan, which can include on-site treatment, containment, and
excavation and removal of contaminated materials.  

The Company's business is performing this third phase, the actual
cleanup or "remediation" of a site.  In so doing, the Company draws
on project management expertise derived from over 20 years of
hazardous waste site remediation experience.  The Company believes
that this expertise enables it to accurately assess the costs and
risks of site remediation projects and that its experience and
reputation for safe and timely completion of such projects give it
a competitive advantage, especially for larger and more difficult
projects.

While some firms in the environmental business offer services in
more than one phase of the remediation process, the Company has
chosen to focus on field cleanup operations.  Sevenson believes
that substantial business opportunities exist for the site
remediation services which the Company provides and that broad-
based public support for the cleanup of hazardous waste sites
ensures that such opportunities will continue to flow.

Market Dynamics

Hazardous waste contamination of the environment first came to
national attention in 1978 with publicity regarding the Love Canal
site in Niagara Falls, New York.  In the years that followed,
public concern was heightened by the discovery of thousands of
additional contaminated sites throughout the country and by the
growing perception of the public health risk posed by these sites. 
In response to public concern, several regulatory statutes were
enacted including the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("Superfund"), the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), and
the Resource Conservation and Recovery Act of 1976, as amended in
1984 ("RCRA"), among others.

The Superfund program, other regulatory programs and pressure from
Congress and the general public for the cleanup of hazardous waste
sites sustain demand for site remediation services provided by the
Company.



                              - 4 -
<PAGE>
According to the EPA, as of September, 1998 there were 1,370
existing and proposed sites on the EPA's National Priorities List
("NPL"), of which 1228 are either at some phase of cleanup or are
complete.  In addition to the NPL sites, there are thousands of
other lesser contaminated sites which will require cleanup.  As
more hazardous waste sites move out of the study and design phases
of the remediation process, the demand for site remediation
services will increase.

Private sector expenditures for site remediation result in part
from federal, state and local government efforts to force
potentially responsible parties ("PRPs") to address and fund the
remediation of contaminated sites.  PRPs often take responsibility
for the remediation process in an effort to control and minimize
their liability.  If the PRPs are not identifiable or decline to
accept responsibility for a site, federal, state or local
government agencies may fund the project directly and take legal
action against the identifiable PRPs for recovery of expenses and
damages.  Also, recently published regulations for the RCRA
Corrective Action Program, which addresses the clean-up of active
manufacturing facilities, should result in more private sector
cleanup projects. 


Company Services

The Company's site remediation field services include on-site
treatment, containment, and excavation and removal of contaminated
materials and the decontamination and demolition of closed
industrial plants.  The Company provides one or a combination of
these services, as required for the specific project.

On-Site Treatment.  On-site treatment involves treating hazardous
materials at the site to reduce or eliminate the hazardous
properties of the materials.  On-site treatment includes a variety
of techniques which either eliminate the substance permanently,
reduce its toxicity or volume, or stabilize its constituents for
disposal on-site or off-site at a permitted disposal facility. 
Treatment methods used by the Company include stabilization and
fixation, filtration, dewatering, air stripping and carbon
adsorption, precipitation, bioremediation and thermal treatment.

Stabilization and fixation are used for organic material (such as
petroleum products, solvents, and certain chemicals) and inorganic
material (such as heavy metals).  Generally, these involve mixing
a reagent (such as kiln dust, fly ash, cement, lime or clay) with
the contaminated material in order to form a solid, semi-
impermeable mixture which can be more easily handled for
transportation and eventual disposal in an on-site or off-site
facility.  Fixating agents can be mixed with inorganic material to
chemically bond or physically encapsulate the material to reduce
the potential for migration to other areas.

Filtration involves passing contaminated liquids through a
filtering media, such as sand, diatomaceous earth or fabric, to
separate solid contaminants from the base liquid.

                              - 5 -

<PAGE>

Dewatering involves pumping semi-liquid waste into a press which
separates solids and liquids under pressure.

Air stripping and carbon adsorption involve passing contaminated
liquids through a chamber of counterflowing forced air which strips
away volatile contaminants.  This air is then passed through an
activated carbon filter which absorbs the contaminants.

Precipitation utilizes an agent which chemically reacts with
soluble contaminants in a liquid, separating the contaminants from
the base liquid.  These contaminants can then be removed for
treatment or disposal.

Bioremediation utilizes naturally-occurring microorganisms to
degrade certain organic contaminants to reduce the level of
contamination to within approved limits. Bioremediation can be a
particularly effective solution for petroleum, petroleum
derivatives, and wood and pulp wastes.

Thermal Treatment involves the application of heat to remove and
destroy contaminants present in  a matrix, typically soil.

Containment.  Containment systems are constructed to prevent the
migration of hazardous materials from a site to the surrounding
groundwater, surface water, soil or air.  While containment can be
a permanent remedial solution, it is also used as an interim step
that is followed by excavation and removal or onsite treatment. 
The types of containment systems that the Company installs include
containment cells, surface caps and slurry walls.

Containment cells are constructed to hold contaminated materials
and prevent them from escaping into the surrounding environment. 
Construction typically requires the excavation and placement of
soil, the building and installation of leachate collection systems,
and the installation of clay and synthetic liners.

Surface caps are built over contaminated zones to prevent rainwater
and surface water from entering the zone, becoming contaminated,
and ultimately migrating to surrounding soil and groundwater. 
Surface caps can be installed on older landfills or surface
impoundments as a permanent remedial solution or as a temporary
measure prior to other forms of remediation.  They are also
installed on newly filled containment cells to provide long-term
closure.  These caps are typically made of clay and synthetic
liners, which are covered with soil and plantings.

Slurry walls are relatively impermeable vertical barriers built
below ground around a source of contamination to prevent the
lateral movement of contaminated groundwater from the contaminated
zone to the surrounding area.  The walls extend from the ground
surface down to an impermeable underground layer such as natural
clay.  Slurry walls are semi-permanent barriers which provide a
relatively impermeable wall.  The construction of slurry walls
involves special techniques for constructing deep, narrow trenches
and the careful mixing and placement of slurry (a special mixture
of water, clay and other materials).

                              - 6 -

<PAGE>

Excavation and Removal.  Excavation and removal involves the
excavation of contaminated materials for containment, on-site
treatment, or off-site disposal.  When off-site disposal is
required the Company subcontracts with licensed third parties for
the transportation of the material for off-site disposal.  As part
of its quality control program, the Company regularly samples and
analyzes excavated materials to verify that the contaminants are
consistent with those identified in the remediation plan.  To avoid
undue liability exposure associated with the transportation and
disposal of hazardous materials, the Company, as a matter of
policy, will not assume title to, or the status of "generator" for
such materials.  Typically, the customer retains the status of
generator and owner of the materials until disposal at which time
the disposal facility operator assumes ownership.

Facilities Decontamination, Demolition and Closure

In addition to site remediation, the Company provides
decontamination, demolition and closure services for deactivated
industrial facilities.  Company personnel use various techniques to
decontaminate facilities for reuse or prior to demolition and
closure.  Demolition and closure services include dismantling large
structures, draining liquid wastes from pipes and tanks, removing
above and below-ground tanks, cleaning and disposing of
contaminated equipment, and controlled demolition.  While the
Company may remove relatively small amounts of asbestos incident to
its facilities decontamination services, it does not generally
perform asbestos removal.

Industrial Cleaning Services

The Company uses hydroblasting and vacuuming to dislodge and remove
deposits, wastes and debris from boilers, process equipment, pipes,
tubes, drains, vessels, sumps and other facilities in operating
industrial plants. Hydroblasting is the application of high
pressure (up to 10,000 psi) streams of water to the area or surface
to be cleaned.  Vacuuming is accomplished using truck mounted
wet/dry vacuum units capable of moving up to 5,000 cubic feet of
air per minute.

Brownfields

The Company participates in ventures which acquire, clean up and
sell contaminated sites ("brownfields").  The Company's
participation generally will involve acting, through a subsidiary,
as  an investor in the venture, as well as the remediation
contractor.

Operations

Project Management.  At the proposal stage, each major project is
assigned to one of the Company's Operations Divisions.  Project
proposals are prepared under the supervision of the Operations
Division Manager by estimators who have broad experience in project
management and field operations, and who are therefore
knowledgeable in assessing the cost and time frame required to
complete a project.  Estimators work with field and technical
                              - 7 -

<PAGE>

personnel on an ongoing basis to keep current on changes in the
Company's operating capabilities.  When a contract is obtained, the
project is assigned a project manager who maintains overall project
responsibility, a project engineer who tracks progress and is
responsible for quality control, a superintendent who is
responsible for all field operations, and a safety officer who is
responsible for implementing the site safety plan.  Field
production and related costs are monitored daily by the project
engineer and project manager.   On a weekly basis such costs are
reviewed by the Operations Division Manager and compared against
the original project budgets.  

Quality Control.  To ensure and document that remediation plan
requirements are met, the Company develops a quality control
program for each project.  Such a program involves a schedule of
observation, sampling and testing throughout each phase of the
project to determine whether project specification requirements are
being achieved.

Health and Safety.  For each project, the Company's health and
safety staff develops a comprehensive health and safety program
designed to address the specific exposures anticipated to be
encountered during the project.  The programs generally address
daily employee hygiene, use of required safety devices, monitoring
of hazards, and employee training.  Every program requires the
monitoring of employee health through physicals at the beginning
and end of the project for all  employees.  The Company's
commitment to health and safety is reflected by citations and
awards which the Company has received from both public and private
sector customers and by the Company's Workers Compensation
experience rating which has consistently indicated a loss rate well
below average.

Equipment.  The Company seeks to maintain high utilization of its
equipment.  Prior to purchasing specialized equipment, the Company
first determines how the cost of such equipment can be fully
amortized over one or two projects.  The Company seeks to avoid
purchasing equipment which will not provide an immediate,
substantial return on investment and also a continuing, regular
return thereafter.

Marketing

Sevenson markets its services nationwide with concentration in the
eastern United States.

The Company's marketing activities are primarily conducted by
senior technical and management professionals.  They are
responsible for contacting appropriate representatives of
corporations known to have specific problems and maintaining
communication with consulting engineering firms, analytical
laboratories and specialty contractors as a source of potential new
business.  The Company also participates in industrial and
hazardous waste trade shows.  In the public sector, the Company
monitors government contract procurements and responds to requests
for proposals and for competitive bids.  


                              - 8 -
<PAGE>
Approximately 71%, 78% and 87% of revenues for 1998,  1997 and
1996, respectively, were the result of work awarded on the basis of
competitive bids in both the public and private sectors.

Customers

The Company's two largest customers in 1998 accounted for 28% and
14% of 1998 revenues.  The Company's largest customer in 1997
accounted for 28% of 1997 revenues.  The Company's  two largest
customers in 1996 each accounted for 22% of 1996 revenues.  No
other customer accounted for more than 10% of total revenues in any
of the three years in the period ended December 31, 1998.  Because
of the nature of the Company's business, which involves large,
discrete contracts often completed within one year, customers that
account for a significant portion of revenue in one year may
represent an immaterial portion of revenue in subsequent years. 
The Company believes that the loss of the United States government
as a customer would have a material adverse effect on its business.

Backlog

On February 28, 1999, the Company had an estimated backlog of work
under contracts believed to be firm of approximately $89.2 million,
as compared with an estimated backlog of approximately $69.3
million and $62.0 million on February 28, 1998 and February 28,
1997, respectively.

The value of backlog is subject to change as the scope of work on
projects changes.  Customers generally retain the right to change
the scope of work and to receive an appropriate increase or
decrease in the contract price.  Government agencies always, and
private sector customers usually, retain the right to terminate
contracts with the Company at any time, with or without cause.  As
a result, substantially all of the Company's backlog of $89.2
million at February 28, 1999 is subject to such right of
termination.

The Company believes that backlog is not necessarily indicative of
revenues to be earned by the Company in the current year or
subsequent periods.

Insurance and Bonding

The Company currently maintains general liability insurance
policies with aggregate limits of $22 million.  These policies
contain standard exclusions, including exclusions of claims arising
out of actual, alleged or threatened discharge, dispersal or
release of pollutants.  Some projects require the Company to
purchase a policy of pollution liability insurance for the project. 
The Company has been able to purchase such policies on all projects
which have required them.

In general, government entities, and to a lesser extent, private
sector customers, require the Company to obtain surety bonds as
security for the Company's completion of a contract.



                              - 9 -
<PAGE>

The Company has been able to secure all the insurance and surety
bonding required by all contracts which it has received.  However,
there is no assurance that insurance will continue to be available,
that the possible types of liabilities that may be incurred by the
Company will be covered by its insurance or that the liabilities
incurred by the Company, although covered,  will not exceed the
limits of such policies.  Also, there is no assurance that the
Company will continue to be able to obtain surety bonds or that the
surety bonds the Company is able to obtain will be adequate for its
business needs.

Competition

The Company competes with both small and large companies in each
aspect of its business, although no company is dominant.  

Some of the Company's competitors possess certain capabilities
which the Company does not, including professional engineering
services and off-site transportation, storage and disposal
capabilities.  When required, the Company contracts for these
services, but the broader capabilities of some of the Company's
competitors may give them an advantage in obtaining certain
projects. 

The Company believes the principal competitive factors in the site
remediation industry are price, reputation, experience, technical
proficiency and financial strength.  The Company believes it
effectively competes on the basis of these factors.


Regulation

General.  The Company's customers, including federal and state
governments and owners and operators of contaminated sites and
facilities and other parties responsible for facility and site
cleanup, are subject to extensive and evolving environmental laws
and regulations administered by the EPA and various other federal,
state and local environmental, safety and health agencies and
authorities.  These laws contribute to the demand for the Company's
services.  Although the Company's customers remain responsible by
law for their environmental problems, the Company must itself
comply with the requirements of those laws applicable to its
services.  The Company believes it is in substantial compliance
with all federal, state and local laws and regulations governing
its business.

RCRA.  RCRA is the principal federal statute governing hazardous
waste generation, treatment, storage and disposal.  RCRA, or EPA-
approved state programs at least as stringent, govern any waste
handling activities involving substances classified as "hazardous". 
Regulations under RCRA for hazardous waste generators, transporters
and owners and operators of hazardous waste treatment, storage or
disposal facilities impose detailed operating, inspection,
training, emergency preparedness and response standards and
requirements for closure, continuing financial responsibility,
manifesting, record keeping and reporting.


                             - 10 -
<PAGE>
Superfund.  Superfund generally addresses the cleanup of sites at
which hazardous substances are located and have been released or
are threatened to be released into the environment.  Superfund
imposes joint and several liability for costs of cleanup and
damages to natural resources upon:  (a) certain owners or operators
of hazardous substance sites; (b) any person who arranged for the
disposal, transport or treatment by any other party of hazardous
substances owned or possessed by such person; and (c) certain
transporters of hazardous substances.  In addition, under the
authority of Superfund and its implementing regulations, detailed
requirements apply to the manner and degree of remediation of
facilities and sites where hazardous substances have been or are
threatened to be released into the environment.

Among other things, Superfund authorizes the federal government
either to remediate sites at which hazardous substances were
disposed of and have been or are threatened to be released into the
environment or to order, or offer an opportunity to, persons
potentially liable for the hazardous substances to do so.  In
addition, Superfund requires the EPA to establish a National
Priorities List ("NPL") of sites at which hazardous substances have
been or are threatened to be released and which require
investigation or cleanup.

SARA specifically provides that contractors deemed "response action
contractors" with respect to any release or threatened release of
a hazardous substance in connection with a site on the NPL are not,
subject to certain exceptions, liable under Superfund or any other
federal law to any person for injuries, costs, damages, expenses or
other liabilities which result from such release or threatened
release.  The Company may be a response action contractor in
respect to a portion of the work it performs.  This protection only
applies to releases or threatened releases on NPL sites.  This
protection does not apply in the case of a release that is caused
by the negligence or intentional misconduct of the response action
contractor.  Further this protection does not affect the liability
of any person under any warranty under federal, state or common
law, the liability of any person under state statutory or common
law or the liability of any employer who is a response action
contractor to any employee under any provision of law.  Certain
states, including New York, have similar protections for response
action contractors.

SARA also allows the government, under certain circumstances, to
agree to indemnify and hold harmless a response action contractor
against liability for negligence in carrying out a response action
at an NPL site, unless such liability was caused by the
contractor's gross negligence or intentional misconduct.  Any such
indemnity will have deductibles and a limit to the amount of
available indemnification.

Although the Company makes a continuing effort to avoid Superfund
liabilities, the failure of the Company to conform its services to
the requirements of Superfund could subject the Company to
liabilities which could have a material adverse effect on the
Company's business.


                             - 11 -
<PAGE>
Other.  The Company's services could be subject to other federal
environmental protection laws, including, without limitation, The
Clean Water Act, The Clean Air Act and the Toxic Substances Control
Act.  Many states have adopted laws for the protection of the
environment which may affect the Company, including laws governing
the generation, handling, transportation and disposition of
hazardous substances, and laws governing investigation and cleanup
of, and liability for, contaminated sites.  Some of the state
provisions are broader and more stringent than federal law and
regulations.  In addition, the Company is subject to the federal
Occupational Safety and Health Act which imposes requirements for
employee safety and health.  The failure of the Company to conform
its services to the requirements of other applicable federal, state
or common laws could subject the Company to liabilities which could
have a material adverse effect on the Company's business.  In
addition, the Company cannot predict the extent to which it may be
affected by any law that may be enacted or enforced in the future,
or by new interpretations of existing laws.

Employees

As of March 16, 1999, the Company had 222 full-time employees of
whom 11 were officers, 74 were project management, engineering and
estimating personnel, 30 were scientists and technical personnel,
5 were in business development and marketing, 30 were
administrative personnel and 72 were field and shop personnel.  In
addition, the Company employs from 150 to 200 field workers on an
as-needed basis.  The Company's ability to retain and expand its
staff of qualified engineers, estimators, technicians and field
personnel will be an important factor in the Company's future
success.  To date the Company has not experienced difficulty in
attracting and retaining qualified personnel and does not expect
difficulty in the foreseeable future.

Work at the Company's various project sites is performed by regular
Company personnel and by locally hired field workers. The Company
has no national union affiliations.  The Company does have union
agreements which apply to projects in the Niagara Falls, New York
area and to specific projects elsewhere.

The Company considers its relations with its employees to be good.


ITEM 2.   PROPERTIES

The Company and its subsidiaries currently operate out of six
separate facilities.  The Company believes that its current
facilities are adequate for its present operations.  

The following table summarizes the location and character of all
significant property owned or leased by the Company as of
February 28, 1999:






                             - 12 -
<PAGE>
                                             Square            Lease
       Property              Location        Footage         Expiration

Headquarters, shop and 
  yard facilities        Niagara Falls, NY   55,000             Owned
Office                   Delmont, PA          3,000             Owned
Office                   Chadds Ford, PA      4,600        July 31, 1999
Office                   Fayetteville, GA     2,000        August 31, 1999
Office                   Munster, IN          2,050        November 30,1999
Waste Stream 
  Technology Inc.        Buffalo, NY         52,000             Owned


ITEM 3.   LEGAL PROCEEDINGS

No material legal proceedings to which the Company is a party are
pending except a suit for patent infringement in which a jury
returned a verdict of $975,000 against the Company during the
second quarter of 1997.  The Company believes it has meritorious
bases for appealing the verdict and is doing so.  The patent in
suit expired in 1994 and thus will have no effect on current or
future operations or results.  The Company knows of no legal
proceedings pending or judgments entered against any director or
officer of the Company in his or her capacity as such.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.





























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<PAGE>

EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of the Company and their respective ages and
positions with the Company are as follows:


        Name            Age                Title 

Michael A. Elia          47         President, Chief Executive
                                    Officer, Director

Laurence A. Elia         48         Vice President and Director

Richard A. Elia          45         Executive Vice President and
                                    Director

William J. McDermott     49         Vice President-Finance,
                                    Secretary and Director

Dena M. Armstrong        41         Treasurer, Assistant Vice
                                    President-Finance and Director

Michael A. Elia has served as Chief Executive Officer of the
Company since 1984.  From 1982 to 1984 he served as Vice President
in charge of all civil, heavy and highway construction operations
of the Company and from 1979 to 1982 he was a project manager with
the Company.  He received his B.S. degree in Civil Engineering from
Villanova University.

Laurence A. Elia has served as a Vice President of the Company
since 1975 and in various executive capacities prior to that time. 
He is President of the Company's wholly-owned Canadian subsidiary. 
 He received his A.B. and B.S. degrees in Engineering from
Dartmouth College.

Richard A. Elia has served as a Vice President of the Company since
1982 and in various executive capacities prior to that time.  From
1979 to 1982 he served as project manager for many major projects. 
He received his B.S. degree in Business Administration from
Villanova University.

William J. McDermott has served as Vice President-Finance of the
Company since 1986.  From 1975 to 1986 he served as legal counsel
and in various executive capacities with the Company.  He received
his J.D. and B.S. (Civil Engineering) degrees from the State
University of New York at Buffalo.  He is a member of the New York
Bar.

Dena M. Armstrong joined the Company in 1975.  She served in
various project and headquarters administrative positions form 1975
to 1982.  Since 1982 she has served as Assistant Vice President-
Finance.  She received her B.S. degree from Niagara University.

Michael, Laurence and Richard Elia are brothers; Dena M. Armstrong
is their cousin.



                             - 14 -
<PAGE>
                             PART II


ITEM 5.   MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS

(a)  Market Information.  Trading in the Company's Common Stock is
reported on the NASDAQ National Market tier of the NASDAQ Stock
Market under the symbol "SEVN".  There is no market for the
Company's Class B Common Stock.

The following table sets forth the high and low price of the
Company's Common Stock as reported by the NASDAQ National Market
System for the periods indicated (all prices are adjusted to
reflect the eight-for-five stock split in the form of a 60% stock
dividend which occurred in October, 1997):


       YEAR          QUARTER             HIGH         LOW

       1998          4th Quarter           9         7 3/8
                     3rd Quarter           9         7 11/16
                     2nd Quarter          10 1/8     8 3/8
                     1st Quarter          12 1/2     8 1/2

       1997          4th Quarter          14 1/2     10
                     3rd Quarter          15         12
                     2nd Quarter          13          9 1/2
                     1st Quarter          11 3/8      9 1/2

       1996          4th Quarter          11 3/8      9 1/2
                     3rd Quarter          11 3/8      9 1/2
                     2nd Quarter          12 7/8      9 7/8
                     1st Quarter          12          9 1/2

(b)  Approximate Number of Holders of Each Class of Common Stock. 
As of March 16, 1999, 2,110,779 shares of the Company's Common
Stock were outstanding and the number of holders of record of that
class on that date was 54.  Because a substantial number of the
Company's Common shares are held in street name, the Company
believes that the number of beneficial owners of its Common Stock
exceeds 700.  As of the same date, there were 7,434,850 shares of
the Company's Class B Common Stock outstanding which were held by
five stockholders or in trust for their minor children.

(c)  Dividends.  Since the third quarter of 1994 the Company has
paid a regular quarterly dividend.  For the fourth quarter of 1998,
the dividend rate paid was 3.5 cents per share of Common Stock and 3.18
cents per share of Class B Common Stock.

ITEM 6.   SELECTED FINANCIAL DATA

The information included under the caption "Five Year Selected
Financial Data" on page 5 of the Sevenson Environmental Services,
Inc. 1998 Annual Report to Stockholders is incorporated herein by
reference.


                             - 15 -
<PAGE>
ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          DATA AND RESULTS OF OPERATIONS

"Management's Discussion and Analysis" on pages 6 through 8 of the
Sevenson Environmental Services, Inc. 1998 Annual Report to
Stockholders is incorporated herein by reference.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Balance Sheets of the Company and its subsidiaries
at December 31, 1998 and 1997, and the related Consolidated
Statements of Earnings, Stockholders' Equity and Cash Flows for
each of the three years in the period ended December 31, 1998,
together with the report thereon of Deloitte & Touche LLP dated
February 5, 1999, are contained on pages 9 through 23 of the
Sevenson Environmental Services, Inc. 1998 Annual Report to
Stockholders and are incorporated herein by reference. 
Supplementary quarterly financial information contained on page 22
under "Quarterly Results" is incorporated herein by reference.

With the exception of the aforementioned information and the
information incorporated by reference in Items 6 and 7, the Annual
Report to Stockholders is not to be deemed filed as part of this
Form 10-K Annual Report.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.


                            PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information regarding Directors is contained under the caption
"Election of Directors" in the Company's definitive Proxy Statement
involving the election of directors at its 1999 Annual Meeting of
Stockholders which the Company will file with the Securities and
Exchange Commission pursuant to Schedule 14A under the Securities
Exchange Act of 1934, as amended, not later than 120 days after
December 31, 1998 and is incorporated herein by reference. 
Information related to Executive Officers of the Company appears on
page 14 of this Annual Report on Form 10-K.  The information
included under "Compliance with Section 16(a) of the Securities
Exchange Act of 1934" in the Company's definitive Proxy Statement
related to its 1999 Annual Meeting of Stockholders is incorporated
herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

This information is contained under the captions "Executive
Compensation", "Compensation Committee Interlocks and Insider
Participation" and "Five-Year Stockholder Return comparison" in the
Company's definitive Proxy Statement related to its 1999 Annual
Meeting of Stockholders and is incorporated herein by reference.


                             - 16 -
<PAGE>
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

This information is contained under the caption "Security Ownership
of Management and Principal Stockholders" in the Company's
definitive Proxy Statement related to its 1999 Annual Meeting of
Stockholders and is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

This information is contained under the caption "Certain
Transactions" in the Company's definitive Proxy Statement related
to its 1999 Annual Meeting of Stockholders and is incorporated
herein by reference.


                             PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
          ON FORM 8-K

(a)  The following documents are filed as part of this report:

     1.   The financial statements and report of independent public
          accountants set forth on pages 9 through 23 of the
          Sevenson Environmental Services, Inc. 1998 Annual Report
          to Stockholders are incorporated by reference into this
          Annual Report on 10-K.

     2.   Financial statement schedules.

          The following financial statement schedule should be read
          in conjunction with the financial statements incorporated
          by reference in Item 8 of this Form 10-K Annual Report:

                                                          Page
Independent Auditor's Report on Schedules.............     19

Valuation and Qualifying Accounts.....................     20

          Schedules other than those listed above are omitted
          because of the absence of the conditions under which they
          are required or because the information called for is
          included in financial statements or notes thereto.

     3.   Exhibits - See the Exhibit Index on pages 21 and 22 of
          this Annual Report on Form 10-K.

          The Company will provide a copy of any exhibit upon
          receipt of a written request for the particular exhibit
          or exhibits desired and upon receipt of payment of an
          amount equal to a charge of twenty-five cents for each
          exhibit page, with a minimum charge of two dollars per
          request.  All requests should be addressed to the Vice
          President and Secretary of the Company at the address of
          the Company's principal offices.


                             - 17 -
<PAGE>
(b)  Report on Form 8-K.  No reports on Form 8-K were filed by the
     Company during the last quarter of its fiscal year ended
     December 31, 1998.

(c)  Exhibits Filed.  See Item 14(a)(3) above.

(d)  Financial Statement Schedules.  See Item 14(a)(2). 


                           SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this annual report to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 16th day of March, 1999.


                              SEVENSON ENVIRONMENTAL SERVICES, INC.

                              /s/William J. McDermott        
                              _____________________________________
                              William J. McDermott
                              Vice President and 
                              Chief Financial Officer


Pursuant to the requirements of the Securities Exchange Act of
1934, this annual report has been signed on the 16th  day of March,
1999 by the following persons in the capacities indicated:


/s/Michael A. Elia                  /s/Arthur A. Elia         
_______________________________     _____________________________
Michael A. Elia, Director and       Arthur A. Elia, Director
President (Chief Executive Officer)


/s/Richard A. Elia                  /s/Laurence A. Elia   
_______________________________     _____________________________
Richard A. Elia, Director and       Laurence A. Elia, Director 
Executive Vice President            and Vice President


/s/William J. McDermott             /s/Dena M. Armstrong 
_______________________________     _____________________________
William J. McDermott, Director,     Dena M. Armstrong, Director,
Vice President and Secretary        Treasurer and Assistant
(Chief Financial Officer)           Vice President 


/s/Joseph J. Castiglia              /s/Robert S. Kelso   
_______________________________     _____________________________
Joseph J. Castiglia, Director       Robert S. Kelso, Director





                             - 18 -
<PAGE>

Deloitte &
    Touche
___________         _______________________________________________
                    Deloitte & Touche LLP  Telephone: (716)843-7200
                    Suite 250              Facsimile: (716)856-7760
                    Key Bank Tower
                    50 Fountain Plaza
                    Buffalo, New York 14202


INDEPENDENT AUDITORS' REPORT ON SCHEDULES

We have audited the consolidated financial statements of Sevenson
Environmental Services, Inc. and Subsidiaries ("the Company") as of
December 31, 1998 and 1997, and for each of the three years in the
period ended December 31, 1998, and have issued our report thereon
dated February 5, 1999; such consolidated financial statements and
report are included in your 1998 Annual Report to Stockholders and
are incorporated herein by reference.  Our audits also included the
financial statement schedule of Sevenson Environmental Services,
Inc. and subsidiaries, listed in Item 14.  This consolidated
financial statement schedule is the responsibility of the Company's
management.  Our responsibility is to express an opinion based on
our audits.  In our opinion, such consolidated financial statement
schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly in all
material respects the information set forth therein.


February 5, 1999

Buffalo, New York


























                             - 19 -
<PAGE>
SEVENSON ENVIRONMENTAL SERVICES, INC.                            SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS
_____________________________________________________________________________

COLUMN A        COLUMN B               COLUMN C       COLUMN D     COLUMN E

Description                           Additions
                               _______________________
               Balance at   Charged to
               Beginning    Cost and   Charged to                Balance at
               of Year      Expenses  Other Accounts  Deductions End of Year

Allowance for
doubtful
accounts:
1996           $40,575        $0          $0              $0       $40,575
1997            40,575        $0          $0              $0       $40,575
1998            40,575        $0          $0              $0       $40,575





































                                  - 20 -


<PAGE>
                          EXHIBIT INDEX

Exhibit No.

3.1*      Certificate of Incorporation
3.2*      By-Laws.
9**       Voting Agreement dated April 3, 1989 among Michael A.
          Elia, Laurence A. Elia, Richard A. Elia, Alan Elia, Jr.,
          and William J. McDermott.
10.2*     Agreement dated October 30,1981 between the Company and
          the Arthur A. Elia Trust, as amended and promissory note
          in the principal amounts of $1,000.000.
10.3*     Agreement dated October 30, 1981 between the Company and
          the Alan R. Elia Trust, as amended, and promissory note
          in the principal amount of $1,000,000.
10.5**    Stockholders Agreement dated April 3, 1989 among the
          Company, Michael A. Elia, Laurence A. Elia, Richard A.
          Elia, Alan Elia, Jr., and William J. McDermott.
10.6      Agreement dated as of January 1, 1997 between the Company
          and SCC Contracting, Inc.
10.7      Agreement dated as of January 1, 1997 between the Company
          and Sevenson Hotel Associates, Inc.
10.8**    Tax Indemnity Agreement dated April 1, 1989 among the
          Company, Sevenson Environmental Ltd., SCC Contracting,
          Inc., Michael A. Elia, Laurence A. Elia, Richard A. Elia,
          Alan Elia, Jr., and William J. McDermott.
10.9*     Indemnity Agreement dated April 17, 1989 among the
          Company, Sevenson Environmental Ltd., SCC Contracting,
          Inc., Albert Elia Building Company, Inc., Afore, Inc.,
          Michael A. Elia, Laurence A. Elia, Richard A. Elia, Alan
          Elia, Jr., and William J. McDermott.
10.10*    Split Dollar Insurance Agreement, dated March 1, 1984
          between the Company and Michael A. Elia.
10.11*    Split Dollar Insurance Agreement, dated March 1, 1984
          between the Company and Laurence A. Elia.
10.12*    Split Dollar Insurance Agreement, dated March 1, 1984,
          between the Company and Richard A. Elia.
10.13*    Split Dollar Insurance Agreement, dated March 1, 1984,
          between the Company and William J. McDermott.
10.14*    Sevenson Environmental Services, Inc. Pension Plan.
10.15*    Sevenson Environmental Services, Inc. Profit Sharing
          Plan.
10.16*    1989 Sevenson Environmental Services, Inc. Incentive
          Stock Plan.
10.17**   Option Agreement dated April 17, 1989 between the Company
          and Alan R. Elia, Sr.
13        Sevenson Environmental Services, Inc.'s 1998 Annual
          Report  to Stockholders (such report, except for those
          portions thereof which are expressly incorporated by
          reference in this Form 10-K Annual Report, is furnished
          for the information of the Commission and is not to be
          deemed "filed" as part of the Form 10-K).
21        Subsidiaries of the Registrant.
23        Consent of Independent Auditors
27        Financial Data Schedule

                             - 21 -


<PAGE>

*    Incorporated by reference to the same exhibit numbers in the
     Company's registration statement on Form S-1 (File No. 0-
     17536).

**   Incorporated by reference to the same exhibit numbers in the
     Company's Annual Report on Form 10-K for the fiscal year ended
     December 31, 1990 (File No.  0-17536).

















































                             - 22 -


<PAGE>

                           EXHIBIT 13


               1998 Annual Report to Stockholders




















































                             


<PAGE>

SEVENSON ENVIRONMENTAL SERVICES, INC.


Corporate Profile

Sevenson provides a comprehensive range of services for the
remediation of sites and facilities contaminated by hazardous
materials. Founded as a general construction business in 1917,
Sevenson entered the remediation business in 1979 when it became
the principal contractor for the remediation of the Love Canal
site, Niagara Falls, New York. Sevenson has performed over 750
projects including projects at over 70 Superfund sites.   

Headquartered in Niagara Falls, New York, the Company and its
subsidiaries also maintain offices in Pittsburgh and Philadelphia,
Pennsylvania; Atlanta, Georgia; Buffalo, New York; and Chicago,
Illinois. Present full-time employees number 221. Sevenson's common
stock trades on the National Market tier of The Nasdaq Stock Market
(registered) under the symbol SEVN.


Notice of Annual Meeting

The Annual Meeting of the Stockholders of Sevenson Environmental
Services, Inc., will be held on Tuesday, May 18, 1999 at 10:00 a.m.
EDT at the Comfort Inn, One Prospect Point, Niagara Falls, New York
14303.


Contents

                                                      Page

Annual Message to Stockholders                         4-5
Financial Review                                       6
Consolidated Statements of Earnings                    12
Consolidated Balance Sheets                            13-14
Consolidated Statements of Cash Flows                  15-16
Consolidated Statements of Stockholders' Equity        17-19
Notes to Consolidated Financial Statements             20-34
Independent Auditors' Report                           35
Management                                             36
Corporate Information                                  37


Forward-Looking Statement

Certain statements and information included herein constitute
"forward-looking statements" within the meaning of the Federal
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can generally be identified as such
because the context of the statement will include words such as the
Company "believes", "expects", "anticipates", "hopes", or words of




                              - 1 -

<PAGE>
similar import. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance, or achievements of the Company to be
materially different from any future results, performance, or
achievements expressed or implied in such forward-looking 
statements. You are urged to review the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, as well as all
reports filed by the Company subsequent to the Form 10-K with the
Securities and Exchange Commission under the Securities Exchange
Act of 1934.














































                              - 2 -


<PAGE>

SEVENSON ENVIRONMENTAL SERVICES, INC.

Financial Highlights


For the years ended December 31
(In thousands except per share data)    1998      1997      1996
_________________________________________________________________
     
INCOME STATEMENT
Revenue                              $ 84,700   $81,939   $85,749
Net Earnings                         $  6,545   $ 4,719   $ 6,282
Earnings Per Share                   $   0.66   $  0.47   $  0.62
Dividends Paid Per Share:      
     Common                          $   0.14   $  0.14   $  0.14
     Class B Common                  $   0.13   $  0.13   $  0.13
Weighted Average Common 
 Shares Outstanding                     9,946    10,104    10,106
                                     ________   _______   _______

BALANCE SHEET - December 31
Cash, Cash Equivalents and 
 Marketable Securities               $ 59,924   $51,612   $49,597
Working Capital                      $ 62,106   $62,643   $65,738
Total Assets                         $103,464   $99,272   $97,085
Long-Term Debt                       $  2,245   $ 2,000   $ 2,000
Stockholders' Equity                 $ 85,115   $84,373   $80,135
                                     ________   _______   _______

Common Shares Outstanding               9,545    10,124    10,129
                                     ________   _______   _______
Common Share Book Value              $   8.92   $  8.33   $  7.91
                                             























                              - 3 -


<PAGE>

To Our Stockholders:

I am pleased to report that our company made good progress in 1998.
Revenues and margins were up while overhead expense was down.
Perhaps best of all, we ended the year with a record backlog of
work.    

Revenues were up 3% to $84.7 million from $81.9 million in 1997.
More significantly, earnings from operations increased 86% to $6.9
million from $3.7 million in 1997. Most of this improvement was due
to the increased profitability of projects, but lower indirect and
overhead expense also made substantial contributions. In all, these
results demonstrate our success in turning things around after a
disappointing 1997.    

Net earnings for the year were $6.5 million (66 cents per share),
up 38% over 1997's earnings of $4.7 million (47 cents per share).
This increase was achieved despite a loss in the first quarter, our
first such loss since 1990. As the year progressed, margins
improved and for each quarter we reported higher earnings than the
previous year's quarter. Contrast this with the previous year's
downward trend in earnings from the second quarter of that year
continuing through 1998's first quarter.    

The Company ended the year with its strongest quarter of the year
and with a record $91 million backlog to carry into 1999. Earlier
in the year, a lack of quality bid opportunities and stiff
competition caused the Company to experience difficulty in building
backlog. The Company overcame this difficulty in the third quarter
when we received two contracts from EPA Region II with a combined
value of $26 million. With those contracts and others, we ended the
third quarter and year with record backlog.       

In 1999, as always, our success in increasing our backlog by
winning new contracts will depend on ever changing industry
conditions. Nevertheless, we came into 1999 with conditions greatly
improved over the previous year and I am encouraged that we can
build on our good start.    

A disappointment in 1998 was our Brownfields business. Our efforts
to close sales of sites which we currently own were frustrated.
While our attention was devoted to those efforts, work on acquiring
further sites was essentially suspended. We continue to believe
that Brownfields present a significant opportunity for the Company
and hope to make better progress in 1999.    

In 1999 the Company plans to continue to expand its dredging,
dewatering and water treatment capabilities. Throughout the
country, contaminated sediments in waterways, lakes and harbors as
well as in industrial waste lagoons and basins, are targeted for
cleanup over the next several years. The Company has been
performing this type of work for several years and has assembled
the equipment and developed the reputation and expertise to
establish itself as a leader in this business.    


                              - 4 -


<PAGE>
The Company has received its first contract for work at the Oak
Ridge, Tennessee, Department of Energy (DOE) site and another for
work at the DOE's Savannah River site. Both Savannah River and Oak
Ridge are multi-year, multi-billion dollar cleanup programs. We
hope that these new contracts will lead us to other opportunities
at those and other DOE sites.     

On the private sector side of our business, we will continue to
pursue sole source/preferred contractor status with Fortune 100
customers. The Company's outstanding performance and reputation are
key to establishing these relationships. The Company assists
customers from the earliest stages of a project, selecting remedial
approaches, developing budgets and schedules, and expediting the
project through completion. This approach has worked well for the
Company and its customers, resulting in additional projects for the
Company.     

In closing, I thank our stockholders for their patience and
understanding. After a couple of difficult years, we saw a
turnaround in our performance and prospects in 1998. These I expect
will lead to further improvement in 1999.

Cordially,

Michael A. Elia
President and Chief Executive Officer

February 5, 1999




























                              - 5 -


<PAGE>

SEVENSON ENVIRONMENTAL SERVICES, INC.

Financial Review

Five-Year Selected Financial Data 
(In thousands, except per share amounts)                  

                                 Years Ended December 31,
                         1998    1997    1996     1995      1994
                     _________ ________ ________ ________ _______

INCOME STATEMENT DATA:
Revenue              $  84,700 $ 81,939 $ 85,749 $102,472 $77,654
Earnings from 
 Operations              6,862    3,670    6,946   13,851  11,524
Net Earnings             6,545    4,719    6,282   10,119   9,005
Basic and Diluted 
 Earnings Per Share  $    0.66 $   0.47 $   0.62 $   1.00 $  0.89
                     _________ ________ ________ ________ _______

BALANCE SHEET DATA:
DECEMBER 31
Working Capital      $  62,106 $ 62,643 $ 65,738 $ 64,777 $60,130
Total Assets           103,464   99,272   97,085   93,281  87,625
Long-Term Debt 
 (including current
   maturities)           2,245    2,000    2,000    2,000   2,000
Stockholders' Equity    85,115   84,373   80,135   75,715  66,240
                     _________ ________ ________ ________ _______


Applicable per share amounts have been restated for the Company's
stock split. 























                              - 6 -


<PAGE>

Management's Discussion and Analysis of Financial Condition
and Results of Operations

RESULTS OF OPERATIONS

The following table sets forth certain items of selected
consolidated financial information as a percentage of revenues for
the periods indicated. This table and the subsequent discussion
should be read in conjunction with the selected financial
information and the Consolidated Financial Statements and Notes to
Consolidated Financial Statements of the Company included elsewhere
in this Annual Report.                                  
       
                                    Years Ended December 31,      
                                  1998        1997      1996 

Revenue                          100.0%      100.0%    100.0%
Gross Profit                      19.6        16.8      19.3
Selling, General & 
 Administrative Expenses          11.5        12.3      11.2
Earnings from Operations           8.1         4.5       8.1
Earnings Before Income Taxes      11.7         8.5      10.9
Net Earnings                       7.7         5.8       7.3

1998 Versus 1997 - Revenues for 1998 were $84.7 million, or 3%
higher than 1997 revenues of $81.9 million. The minor increase was
due to higher second quarter revenues ($28.9 million compared to
$19.9 the prior year). One larger ($8.9 million) project begun and
completed in the second quarter, was responsible for higher second
quarter revenues. Revenues in the other quarters were either lower
(first and third quarters) or only slightly higher (fourth quarter)
than the prior year's corresponding quarters. Revenues were
relatively flat over the years 1998 and 1997 for two reasons.
First, the Company's backlog of signed contracts at the beginning
of both years was about the same ($60.6 million in 1998 and $65.0
million in 1997). Second, the Company experienced difficulty
building backlog from the fourth quarter of 1997 through the first
half of 1998. Competition and weak private sector demand were
primary causes of the difficulty.   

The inability to build backlog ended in the third quarter with
receipt of two contracts from EPA Region II with a combined value
of $26.9 million. Backlog at September 30 was a record $98.7
million (compared to the previous record for that date of $76.0
million a year earlier). At year's end, back-log stood at $91.1
million which is a record for that date (compared to $60.6 million
a year earlier and $65.0 million two years earlier, the previous
record).   

Earnings from operations increased 86% to $6.9 million from $3.7
million in 1997. The increase was attributable to higher gross
margin (19.6% versus 16.8%) and, to a lesser extent, lower selling,
general and administrative expense (SG&A).   

Gross margin reflects the profit margin of projects performed
during the year. Individual project profitability varies dependent
upon the nature of the project, competition, and the impact of

                              - 7 -
<PAGE>
operational conditions upon project execution, all of which are
unique to each project. For the years prior to 1996, the Company's
gross margin was in the range of 20% to 25%. The gross margin of
19.6% realized in 1998 was slightly below this range. Without the
impact of an $8 million project, which was performed under dispute
and is the subject of a claim (no effect of which is included in
the year's results), gross margin would have been in excess of 22%. 
Gross margin was also higher due to lower indirect costs. Indirect
costs for equipment repair and maintenance, insurance and
transportation were all lower. The decline in these costs was in
part due to an initiative by management to control and reduce these
costs.   

SG&A expense was down 4% to $9.7 million compared to $10.1 million
in 1997. Marketing, main office, and legal and accounting expenses
were lower, but the decreases in these categories were partially
offset by higher branch office expense. Again, this reduction was
due in part to a management initiative to reduce expense.   

Interest income was $2.4 million, virtually unchanged from 1997.
The Company realized gain on sale of marketable securities of
$852,000, also virtually the same in 1997.   

The effective tax rate was 33.8% as compared to 32.5% in 1997. The
higher rate was due to higher earnings from operations as a
percentage of pre-tax earnings versus interest income. Interest
income consists primarily for tax exempt and dividend income which
have a lower effective tax rate.

1997 Versus 1996 - Revenue for 1997 was $81.9 million 4% lower than
1996's revenue of $85.7 million Revenue was affected by
postponement of two large projects which were postponed for reasons
specific to the affected projects. A further cause of lower revenue
was the Company's loss of potential contracts to aggressive bidding
by competitors. While aggressive bidding is not unusual, it was a
greater factor in 1997 due to the size of projects out for bid,
which were generally smaller and thus attracted more bidders.    

At the end of the year, the Company's backlog of signed contracts
stood at $60.6 million compared to $65.0 million a year earlier.
Backlog was lower despite the fact that backlog September 30 was a
record for that date $76.0 million. In the fourth quarter a lack of
new contract opportunities and competition combined to lower
backlog.   

Gross profit margin for 1997 was 16.8% versus 19.3% the prior year.
Gross margin was lower due to a revenue shortfall on one larger
project, and, to a lesser extent, by higher than expected costs on
others. Gross margin was lower than usual in 1997  due principally
to the impact of two projects. Without those two projects, which
had combined 1997 revenue of $9 million, gross margin would have
been 20.9%.   

Partially offsetting lower project gross margin was lower indirect
cost, which raised overall gross margin by about 1%. Indirect costs
were lower due principally to lower insurance costs.   

                              - 8 -

<PAGE>
Selling, general and administrative expense increased 5% to $10.1
million from $9.6 million in 1996. Increases in legal and travel
expense were the principal contributors to the increase. Legal
expense was higher due to litigation costs.     

Interest income was $2.4 million, up 9% from the prior year's
interest income of $2.2 million. Higher interest rates and invested
balances combined to produce the increase.    

In 1997, the Company realized a gain of $.3 million on the sale of
its ownership interest in a Brownfield site, the Company's first
completed Brownfield venture.   

The effective tax rate was 32.5% versus 32.8% for 1996. The lower
effective rate was chiefly due to lower earnings from operations as
a percentage of pre-tax earnings versus interest income. Interest
income consists primarily of tax exempt and dividend income which
have a lower effective tax rate.

Fluctuations in Quarterly Results - The commencement or completion
of projects within a particular quarter, the seasonal,
weather-affected nature of the Company's business, the spending
decisions of major customers, and the timing of regulatory
decisions relating to projects, among other factors, may cause the
Company's results to vary significantly from quarter to quarter and
from year to year.The Company believes that these variations will
continue in the future. The following selected financial data has
been derived from unaudited interim financial statements which, in
the opinion of the Company, include all adjustments (consisting of
normal recurring accruals) necessary to fairly present the
information for such periods. Quarterly results of operations are
not necessarily indicative of results to be achieved for full
fiscal years.

1998                                                      Net
Quarter                                 Revenue         Earnings  
________________________________________________________________
                                             (In thousands)
1st                                     $13,269        $ (239)
2nd                                      28,910         2,135
3rd                                      20,260         2,112
4th                                      22,261         2,537

1997                                                      Net
Quarter                                 Revenue        Earnings   
________________________________________________________________
                                             (In thousands)
1st                                     $15,655        $  714
2nd                                      19,945         2,034
3rd                                      24,855         1,195
4th                                      21,484           776

Liquidity and Capital Resources - Net cash provided by operating
activities was $15.8 million as compared to $10.8 million in 1997.
Higher cash receipts from customers and lower payments to
subcontractors, suppliers and employees were responsible for the

                              - 9 -

<PAGE>
increase. Higher cash receipts were due to timing differences in
the receipt of contract progress payments from customers. The
timing of the receipt of progress payments is a function of project
progress and contract payment terms. Lower payments to
subcontractors etc., reflect, in part, increased margins.   

Net cash used in investing activities was $4.3 million, down from
$6.6 million in 1997. The decrease was due principally to lower
Brownfield sites investment (see below). Also down were capital
expenditures. Capital expenditures are generally for field
equipment, either typical construction equipment, such as trucks,
backhoes and bulldozers, or specialized processing and treatment
equipment and facilities. The Company's decision to invest in such
equipment depends upon the needs of current projects, the
availability of needed equipment (either from the Company's fleet
or by rental),and the anticipated future use of the equipment if
purchased.   

The Company paid a regular quarterly dividend of 3.5 cents per
share of Common Stock and 3.18 cents per share of Class B Common
Stock. Total dividends paid were $1.3 million.   

The Board of Directors has authorized the repurchase of up to
1,200,000 shares of which 1,102,051 had been repurchased through
December 31, 1998. During 1998, the Company repurchased 583,811
shares at a cost of $4.8 million.   

In 1995 the Board of Directors authorized the Company to pursue the
business strategy of acquiring, cleaning-up and disposing of
"Brownfield" sites, real property that is unmarketable or of
substantially reduced value due to the presence of contamination.
In 1996 the Company acquired interests in, and commenced the
cleanup process at, two Brownfield sites. In 1997 the cleanup and
sale of one of these sites were completed and the Company acquired
interests in one additional site. During 1998 no new sites were
purchased nor were any sites sold. However, the Company continued
to invest in the cleanup of the two remaining sites and purchased
the interest of another party in one of the sites.At the end of
1998, the Company's investment in Brownfield sites was $10.2
million. The Company will invest further funds in the cleanup of
one of the remaining sites (cleanup at the other sites is
substantially complete) and intends to make further investments in
the Brownfield redevelopment business. The Company's ultimate total
investment in this business will depend upon the Company's success
in finding and acquiring suitable Brownfield sites.   

On December 31, 1998, the Company had working capital of $62.1
million versus $62.6 million a year earlier. Working capital
included $59.9 million in cash, cash equivalents and marketable
securities. The Company expects that existing funds and cash
generated by operations will be sufficient to meet all working
capital and capital investment needs for the foreseeable future.




                             - 10 -


<PAGE>
Year 2000 - The Company is aware of the "Year 2000" issue which
affects most corporations and concerns the inability of information
systems, primarily computer software programs, to properly 
recognize and process date-sensitive information relating to the
Year 2000 and beyond. The Company believes it is pursuing
appropriate courses of action to identify and address Year 2000
readiness issues including the purchase of an entirely new, Year
2000 ready accounting software system. The Company believes that it
is on schedule to complete its Year 2000 initiatives before
mid-year 1999 and does not expect the cost of compliance to exceed
$200,000.   

The Company does not believe its operations are significantly
imperiled by Year 2000 issues. Other than accounting functions,
which are being addressed, the principal operating functions of the
Company are not dependent on information systems and thus are not
exposed to material disruption by the failure of information
systems to operate properly. To the extent that information systems
are used as tools in these operating functions and their
availability is reduced or lost due to Year 2000 issues, the
Company would revert to manual backup systems without a material
adverse effect on its day-to-day operation.


































                             - 11 -


<PAGE>

SEVENSON ENVIRONMENTAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
_________________________________________________________________
                          1998          1997           1996      
     
REVENUE (Note 10)      $   84,700  $   81,939     $   85,749     
                       __________  __________     __________     
COSTS AND EXPENSES:
  Direct and indirect 
    costs:                 68,109      68,214         69,217     
  Selling, general and
    administrative
    (Note 1)                9,729      10,055          9,586     
                       __________  __________     __________     
                           77,838      78,269         78,803     
                       __________  __________     __________     
EARNINGS FROM 
  OPERATIONS                6,862       3,670          6,946
                       __________  __________     __________     
OTHER:
  Interest income           2,377       2,385          2,168     
  Interest expense           (210)       (226)          (206)     
    
  Realized gain on        
    sale of marketable   
    securities                852         863            414
  Realized gain on sale of
    real estate                 0         299              0      
                       __________  __________     __________     
                            3,019       3,321          2,376
                       __________  __________     __________ 
EARNINGS BEFORE       
  INCOME TAXES              9,881       6,991          9,322

INCOME TAXES
(Notes 1 and 7)             3,336       2,272          3,040
                       __________  __________     __________ 

NET EARNINGS           $    6,545  $    4,719     $    6,282
                       ==========  ==========     ==========     
BASIC AND DILUTED EARNINGS
PER SHARE (Note 1)     $     0.66  $     0.47     $     0.62
                       ==========  ==========     ==========     
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING   9,945,805  10,104,252     10,106,190
                       ==========  ==========     ==========     
CASH DIVIDENDS PER SHARE:
  Common Stock         $     0.14  $     0.14     $     0.14
                       ==========  ==========     ==========     

  Class B Common Stock $     0.13  $     0.13     $     0.13     
                       ==========  ==========     ==========     

See notes to consolidated financial statements.

                             - 12 -
<PAGE>

SEVENSON ENVIRONMENTAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
_________________________________________________________________

ASSETS                                         1998      1997

CURRENT ASSETS:
  Cash and cash equivalents (Note 1)        $ 10,851   $ 4,522
  Marketable securities (Note 2)              49,073    47,090    
  Accounts receivable, net (Note 3)           13,439    16,532
  Costs and estimated earnings on
    contracts in progress in excess of
    related billings (Notes 1 and 4)           2,514     4,847
  Prepaid expenses and other current assets      621       688
                                            ________   _______

    Total current assets                      76,498    73,679
                                            ________   _______

PROPERTY AND EQUIPMENT (Note 1):
  Land                                           307       308
  Buildings and improvements                   3,529     3,507
  Construction and field equipment            18,700    18,040
  Vehicles                                     5,786     5,596
  Office furniture and equipment               1,723     1,671
                                            ________   _______
                                              30,045    29,122
Less accumulated depreciation                 16,996    14,763
                                            ________   _______
  Total property and equipment, net           13,049    14,359
                                            ________   _______

INVESTMENT IN BROWNFIELD REAL ESTATE
  (Note 1)                                    10,192     8,631
                                            ________   _______

OTHER ASSETS (Note 1)                          3,725     2,603
                                            ________   _______

TOTAL ASSETS                                $103,464   $99,272
                                            ========   =======


See notes to consolidated financial statements.









                             - 13 -


<PAGE>
SEVENSON ENVIRONMENTAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
_________________________________________________________________
LIABILITIES AND STOCKHOLDERS' EQUITY           1998      1997

CURRENT LIABILITIES:
  Accounts payable:
    Current                                 $  5,514   $ 5,392
    Retentions                                   396       643
  Note payable - current (Note 5)                662        12
  Compensation, income taxes and other
    current liabilities (Note 7)               2,134     1,773
  Deferred income taxes (Notes 1 and 7)          102       151
  Amounts billed in excess of costs and
    estimated earnings on contracts
    in progress (Note 1 and 4)                 5,584     3,065
                                            ________   _______
    Total current liabilities                 14,392    11,036
                                            ________   _______

DEFERRED INCOME TAXES (Notes 1 and 7)          1,712     1,863
                                            ________   _______

NOTES PAYABLE (Note 5)                         2,245     2,000
                                            ________   _______
STOCKHOLDERS' EQUITY (Notes 1, 6 and 9):
  Common Stock, $.01 and $.10 par value:
    Authorized 12,000,000 shares,
    Issued 3,212,830 and 3,161,240 shares         33       316
  Class B Common Stock, $.01 and $.10 par value:
    Authorized 8,000,000 shares,
    Issued 7,434,850 and 7,486,440 shares         74       748
  Preferred Stock, $.10 par value:
    Authorized 1,000,000 shares,
    Outstanding - none                             0         0
  Additional paid-in capital                  25,420    25,463
  Retained earnings                           67,001    61,872
                                            ________   _______
                                              92,528    87,399
  Treasury stock (1,102,051 shares 
    and 518,240 shares common stock,
    at cost)                                  (8,487)   (3,723)
                                            ________   _______
                                              84,041    83,676
Accumulated other comprehensive income:
  Unrealized gain on marketable
    securities, net of tax (Note 2)            1,074       792
  Cumulative translation adjustment                0       (95)
                                            ________   _______
     Total accumulated other
       comprehensive income                    1,074       697
                                            ________   _______
    Total stockholders' equity                85,115    84,373
                                            ________   _______
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $103,464   $99,272
                                            ========   =======
                             - 14 -
<PAGE>

SEVENSON ENVIRONMENTAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (IN THOUSANDS)
________________________________________________________________
                                    1998        1997      1996
CASH FLOWS FROM OPERATING
ACTIVITIES:
  Cash receipts from customers   $ 92,699    $ 89,368  $ 85,814 
  Cash payments to
   subcontractors, suppliers
   and employees                  (76,074)    (77,976)  (76,900)
  Interest received                 2,377       2,385     2,168 
  Interest paid                      (210)       (226)     (206)
  Taxes paid                       (3,412)     (2,725)   (1,977)
  Tax refunds received                421           8       122 
                                 _________   _________  ________
  Net cash provided by
   operating activities            15,801      10,834     9,021
                                 _________   _________  ________
CASH FLOWS FROM INVESTING
ACTIVITIES:
  Investments purchased           (23,258)    (25,627)  (45,096) 
  Investments sold                 22,054      28,114    42,006
  Capital expenditures             (1,276)     (2,577)   (5,383)
  Acquisition and
   remediation costs               (2,349)     (7,544)   (1,857)
  Change in notes receivable          459           1         1 
  Proceeds from sale of
   fixed assets                         7          13       945 
Proceeds from the sale of real
  estate                               69       1,069         0   
                                  ________    ________  ________
  Net cash used in
   investing activities            (4,294)     (6,551)   (9,384) 
                                  ________    ________  ________
CASH FLOWS FROM FINANCING
ACTIVITIES:
  Debt proceeds                     1,073          41       331 
  Principal payments of debt         (166)       (360)     (749) 
  Proceeds from exercise of
   stock options                        0         388        31 
  Acquisition of treasury stock    (4,764)          0      (709) 
  Dividends paid                   (1,321)     (1,302)   (1,295) 
                                  ________    ________  ________
  Net cash used in
   financing activities            (5,178)     (1,233)   (2,391)  
                                  ________    ________  ________
NET CHANGE IN CASH AND
CASH EQUIVALENTS                    6,329       3,050    (2,754) 
                                  ________    ________  ________
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR                   4,522       1,472     4,226 
                                  ________    ________  ________
CASH AND CASH EQUIVALENTS,
END OF YEAR                       $10,851     $ 4,522   $ 1,472
                                  ========    ========  ========
See notes to consolidated financial statements.
                             - 15 -
<PAGE>

                                   1998        1997       1996

RECONCILIATION OF NET EARNINGS
TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
  Net earnings                   $ 6,545     $ 4,719   $  6,282
  Adjustments to reconcile
  net earnings to net cash
  provided by operating
  activities:
    Bad debt expense                   0           0         24
    Depreciation and
      amortization                 2,548       2,406      2,405
    Increase in cash
      surrender value of life
      insurance                     (331)       (326)      (222)
    Provision for deferred
      income taxes                  (395)        412        482 
    Loss (gain) on sale of
      real estate                     40        (299)         0
    Gain on sale of
      marketable securities         (852)       (863)      (414)
    Loss (gain) on sale
      of fixed assets                 15          17        (15)
    Change in assets and
      liabilities affecting
      cash flow:
        Accounts receivable        3,093       8,103      1,916 
        Costs and estimated
          earnings on contracts
          in progress in excess
          of related billings      2,333      (1,551)      (740)
        Prepaid expenses and
          other current assets        67          17        141 
        Other assets                 (17)         (4)        13 
        Accounts payable            (125)     (2,241)    (1,242)
        Compensation, income
          taxes and other
          current liabilities        361        (416)     1,486 
        Amounts billed in excess
          of costs and estimated
          earnings on contracts
          in progress              2,519         860     (1,095)
                                 _______     _______    _______

NET CASH PROVIDED BY 
OPERATING ACTIVITIES             $15,801     $10,834    $ 9,021
                                 =======     =======    =======


See notes to consolidated financial statements.





                             - 16 -


<PAGE>
<TABLE>
<CAPTION>
SEVENSON ENVIRONMENTAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (NOTE 5)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
____________________________________________________________________________________________________


                                                                                    OTHER
                                                                             COMPREHENSIVE INCOME
                                                                           ________________________
                                                                           UNREALIZED
                                                                              GAIN
                                   CLASS B  ADDITIONAL                     (LOSS) ON
                            COMMON  COMMON  PAID-IN   RETAINED  TREASURY   MARKETABLE   CUMULATIVE
                    TOTAL   STOCK   STOCK   CAPITAL   EARNINGS   STOCK     SECURITIES   TRANSLATION
____________________________________________________________________________________________________
<S>                <C>       <C>    <C>     <C>      <C>        <C>         <C>          <C>    
Balance,
January 1, 1996    $75,715   $191   $472    $24,445   $53,468   $(3,014)    $ 248        $ (95)
Conversion of
 27,280 shares
 Class B common
 stock to common
 stock                   0      2     (2)         0         0         0         0            0
Purchase of
 72,640 treasury
 shares from
 common stock         (709)     0      0          0         0      (709)        0            0
Issuance of 4,480 
 shares upon the
 exercise of
 stock options          31      0      0         31         0         0         0            0
Tax benefits arising
 from the exercise
 of stock options        2      0      0          2         0         0         0            0
Cash dividends
 paid               (1,295)     0      0          0    (1,295)        0         0            0




                                               - 17 -

<PAGE>
Comprehensive
 income:
  Change in
  unrealized
  gain on 
  marketable 
  securities,
  net of tax $54       109      0      0          0         0         0       109            0
Net earnings         6,282      0      0          0     6,282         0         0            0
                   _______   ____   _____   _______   _______   ________    ______       ______
   Total comp-
   rehensive
   income            6,391      0      0          0     6,282         0       109            0 
                   _______   ____   _____   _______   _______   ________    ______       ______
Balance,
December 31, 1996  $80,135   $193   $470    $24,478   $58,455   $(3,723)     $357        $ (95)
____________________________________________________________________________________________________
Conversion of
 38,320 shares
 Class B common
 stock to
 common stock            0      2     (2)         0         0         0         0            0
Eight-for-five stock
 split at par value      0    118    280       (398)        0         0         0            0
Issuance of
 39,200 shares
 upon the
 exercise of
 stock options         327      3      0        324         0         0         0            0
Tax benefits
 arising from the
 exercise of
 stock options          59      0      0         59         0         0         0            0
Cash dividends
 paid               (1,302)     0      0          0    (1,302)        0         0            0
Comprehensive
 income:
  Change in
  unrealized
  gain on 
  marketable 
  securities,
  net of tax $214      435      0      0          0         0         0       435            0
                                               - 18 -
<PAGE>
Net earnings         4,719      0      0          0     4,719         0         0            0
                   _______   ____   _____   _______   _______   ________    ______       ______
   Total comp-
   rehensive
   income            5,154      0      0          0     4,719         0       435            0 
                   _______   ____   _____   _______   _______   ________    ______       ______
Balance,
December 31, 1997  $84,373   $316   $748    $24,463   $61,872   $(3,723)     $792        $ (95)
____________________________________________________________________________________________________
Purchase of 583,811
 treasury shares 
 from common stock  (4,764)     0      0          0         0    (4,764)         0           0
Conversion of 51,590
 shares Class B
 common stock            0      1     (1)         0         0         0          0           0
Conversion to $.01
 par value               0   (284)  (673)       957         0         0          0           0
Cash dividends paid (1,321)     0      0          0    (1,321)        0          0           0
Liquidation of
 Canadian
 subsidiary              0      0      0          0       (95)        0          0          95
Comprehensive
 income:
  Change in
  unrealized
  gain on 
  marketable 
  securities,
  net of tax $138      282      0      0          0         0         0        282           0
Net earnings         6,545      0      0          0     6,545         0          0           0
                   _______   ____   _____   _______   _______   ________    ______       ______
   Total compre-
   hensive income    6,922      0      0          0     6,545         0        282          95 
                   _______   ____   _____   _______   _______   ________    ______       ______
Balance,
December 31, 1998  $85,115   $ 33   $ 74    $25,420   $67,001   $(8,487)    $1,074       $   0 
                   =======   ====   =====   =======   =======   ========    ======       ======
____________________________________________________________________________________________________

See notes to consolidated financial statements.

                                               - 19 -
</TABLE>

<PAGE>

SEVENSON ENVIRONMENTAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
_________________________________________________________________

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of the Business - Sevenson Environmental Services, Inc.
(the "Company") was incorporated in the State of New York in 1977
and changed its state of incorporation to Delaware in 1989.
Effective May 19, 1998, the Company was re-incorporated in New York
as a result of a merger with its predecessor of the same name. The
Company provides a comprehensive range of field services for the
remediation of sites and facilities contaminated by hazardous
materials including some Company-owned Brownfields. The Company's
site remediation field services include on-site treatment,
containment, and excavation and removal of contaminated materials.
Other company services include the decontamination, demolishing,
and closing of deactivated industrial facilities and industrial
cleaning and decontamination services to operating plants and
refineries. The remediation process consists of three phases,
namely, site assessment, remedial design, and site remediation. The
third phase is the field implementation of the site remediation
plan and is the phase in which the Company participates.          

The Company provides its services in the United States. The
Company's customers include major industrial corporations and
government agencies. Because of the nature of the Company's
business, which involves large, discrete contracts often completed
within a year, customers that account for a significant portion of
revenue in one year may represent an immaterial portion of revenue
in subsequent years. Management believes that the loss of the
United States government as a customer would   have a material
adverse effect on its business.

Basis of Presentation - All majority-owned subsidiary companies are
included in the consolidated financial statements of the Company.
All significant intercompany accounts and transactions have been
eliminated.

Related Party Transactions - SCC Contracting, Inc. ("SCC"), a
construction company owned by the five principal shareholders of
the Company, has been, and is expected to continue to be, operated
out of office facilities owned by the Company and has used, and is
expected to continue to use, to varying degrees, the Company's
office personnel, yard and shop facilities, computer resources,
equipment and services of the same management and other personnel.
The Company rents equipment owned by SCC for which the Company pays
the fair market rate.    

A formal agreement between the Company and SCC was adopted to
provide guidelines for the performance and pricing of intercompany
services and use of facilities. This services agreement specifies
various formulae to determine charges to be made for the provision
of services and facilities and equipment usage. The formulae are 


                             - 20 -
<PAGE>
intended to fairly allocate expenses between the businesses. During
the years ended December 31, 1998, 1997, and 1996, expenses
allocated to SCC amounted to $135,722, $195,918 and $148,436, of
which $16,759, $18,604 and $0 remained outstanding as of December
31, 1998, 1997 and 1996, respectively. During the years ended
December 31, 1998, 1997 and 1996, SCC allocated expenses of
$168,348, $53,850, and $228,962, respectively, to the Company
related to the use of equipment, of which $168,348, $53,850, and
$176,679 remained outstanding as of December 31, 1998, 1997 and
1996, respectively.

Segment Information - The business operations of the Company are
concentrated in one segment, which is the remediation of sites and
facilities contaminated by hazardous materials including some
Company-owned Brownfields.     

Cash and Cash Equivalents - Cash and cash equivalents represent
demand deposits with banks, certificates of deposit held by banks
or financial institutions, money market funds and commercial paper,
all having original maturities of three months or less. The Company
places its temporary cash investments with high credit quality
financial institutions.

Investment in Brownfield Real Estate - Investment in Brownfield
real estate represents investments in non-wholly owned subsidiaries
which own various tracts of contaminated land ("Brownfields") which
were acquired during 1997 and 1996. The Company has agreed to
perform site remediation services at the sites. The value of the
asset includes the purchase price in addition to costs incurred in
the site assessment, remedial design and site remediation. 

The Company expects the land to be sold upon remediation. The
Company will recognize any gain or loss on the real estate
transaction at time of sale.   

Other Assets - Other assets represent the cash surrender value of
officers' life insurance policies and various other intangible
assets.

Property, Equipment and Depreciation - Property and equipment are
carried at cost and are being depreciated using straight-line
methods over the estimated useful lives of the related assets.

Method of Accounting for Contracts - The accompanying consolidated
financial statements have been prepared using the
percentage-of-completion method of accounting and, therefore, take
into account the costs, estimated earnings and revenue to date on
contracts not yet completed. The amount of revenue recognized is
not related to the progress billings to customers.  

On all projects, the amount of earnings recognized at statement
date is that portion of the total estimated contract earnings that
the cost expended bears to the anticipated final cost, based on
current estimates of cost to complete the project.             


                             - 21 -


<PAGE>
Contract costs include all direct labor and benefits, materials
installed in the project, subcontractor costs, outside vendor
equipment rental and other direct costs including shop and yard
charges.                                                   

As contracts extend over one or more years, revisions in cost and
earnings estimates during the course of the project are reflected
in the accounting period in which the facts which require the
revision become known.                                       

At the time a loss on a contract becomes known, the entire amount
of the estimated ultimate loss is recognized in the consolidated
financial statements.

Operating Cycle - Assets and liabilities related to contracts are
included in current assets and current liabilities in the
accompanying consolidated balance sheets, as they will be
liquidated in the normal course of contract completion, although
this may require more than one year.

Selling, General and Administrative Expenses - These expenses are
charged to operations as incurred and are not allocated to contract
costs.

Income Taxes - The Company provides for deferred taxes on all
temporary differences (principally depreciation, prepaid expenses,
bad debts and contract reserves) which are transactions reported
for tax purposes in periods other than for financial reporting
purposes.

Method of Accounting for Stock-Based Compensation - The Company
adopted Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation," effective January 1,
1996. As permitted in that standard, the Company has elected to
continue to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related
interpretations in accounting for employee stock-based
compensation.

Earnings Per Share - Effective December 31, 1997, the Company
adopted Financial Accounting Standards Board Statement No. 128,
"Earnings per Share" ("SFAS 128"). SFAS 128 replaces previous
earnings per share ("EPS") reporting requirements and requires the
dual presentation of basic and diluted EPS. Basic EPS excludes
dilution and is computed by dividing net income by the weighted
average number of shares outstanding for the period. Diluted EPS
would reflect the potential dilution that could occur if securities
or other contracts to issue common stock were exercised or
converted into common stock. The calculation of diluted EPS does
not consider the effects of antidilution. The diluted earnings per
share calculation after rounding was not different than basic
earnings per share calculation.

Accounting Standards Pronouncements - During 1998, the Company
adopted Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income". SFAS No. 130 addresses the
reporting and display of comprehensive income and its components.

                             - 22 -
<PAGE>
SFAS No. 130 divides comprehensive income into two categories which
are "net income" and "other comprehensive income". The category
known as "other comprehensive income" refers to all changes in
stockholders' equity during a period except changes resulting from
net income or loss, investments by stockholders and distributions
to stockholders. Items considered comprehensive income include
unrealized gains and losses on certain investments in debt and
equity securities. The adoption of SFAS 130 resulted in additional
disclosures, including a revision of previously disclosed
information, but had no effect on the financial condition or
results of operations of the Company. The Company has elected to
display comprehensive income in the statements of stockholders
equity, net of reclassification adjustments. Reclassification
adjustments are made to avoid double counting in comprehensive
income items that are displayed as part of net income for a period
that also had been displayed as part of other comprehensive income
in that period or earlier periods. The reclassification adjustment
before tax for the years ended December 31, 1998, 1997, and 1996
amounted to $(852),$(863), and $(414), respectively. The
reclassification adjustment, net of tax for the years ended
December 31, 1998, 1997 and 1996 amounted to $(571), $(578), and
$(277), respectively.

During 1998, the Company adopted the provisions of SFAS No. 131,
"Disclosures About Segments of the Enterprise and Related
Information." SFAS No. 131 requires disclosure of segments of a
company's business based upon how a company is organized for making
operating decisions and assessing performance. As the Company's
disclosure of business segments did not change in 1998 from that
disclosed in previous years, the adoption of SFAS No. 131 had no
effect on the financial condition or results of operations of the
Company.                               

During 1998, the Company adopted the provisions of SFAS No. 132,
"Employers' Disclosures About Pensions and Other Postretirement
Benefits." The adoption of SFAS No. 132 resulted in additional
disclosures about the Company's defined contribution plans, but had
no effect on the financial condition or results of operations of
the Company.

Estimates - The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements during the reported period. Actual results
could differ from those estimates.

Reclassifications - Certain reclassifications of 1997 and 1996
balances have been made to conform with classifications used in
1998.

2.  MARKETABLE SECURITIES

The portfolio of marketable securities consists of equity
securities, debt securities, mutual funds and certificates of
deposit classified as available-for-sale or trading securities.

                             - 23 -
<PAGE>
Investments are reported at fair value estimated based upon quoted
market prices. Realized holding gains and losses are included in
earnings. Unrealized holding gains and losses for
available-for-sale securities are excluded from earnings and
reported as a separate component of stockholders' equity, net of
income taxes. Unrealized holding gains and losses for trading
securities are included in earnings. The Company classifies debt
securities as trading securities when it is the Company's intent to
resell the securities with the objective of generating profits.

A summary of marketable securities at December 31, 1998 and 1997
follows:                  

                                          (In Thousands)
                                           December 31,
                                          1998       1997
                                        ___________________
Available for sale:
  Common stock                          $  6,056   $  4,884
  Preferred stock                             62        188
  Municipal bond inventory                11,484     13,447 
  Mutual funds                            19,918     19,484  
Trading securities - at market,
  which approximates cost                 11,553      9,087
                                        ________    _______
   Total                                $ 49,073    $47,090 
                                        ========    =======

Gross unrealized holding gains and losses at December 31, 1998
totaled $1,722,000 and $119,000 respectively, and $1,308,000 and
$176,000, respectively, at December 31, 1997.

  Gross unrealized gains and losses by security are as follows:

                                   (In Thousands)
                                    December 31,
                    ____________________________________________
                            1998                  1997
                      Gross      Gross      Gross      Gross
                    Unrealized Unrealized Unrealized Unrealized
                      Gains     Losses      Gains     Losses
                    ____________________________________________

Common Stock        $ 1,145     $ 119     $   711     $  67
Preferred stock          12         0          13         0
Municipal bond
 inventory               73         0         169         0
Mutual Funds            492         0         415       109
                    _______     _____     _______     _____
                    $ 1,722     $ 119     $ 1,308     $ 176
                    =======     =====     =======     =====






                             - 24 -

<PAGE>
Contractual maturities for investments in debt securities
available-for-sale at December 31, 1998 and 1997 (in thousands) are
as follows:       

                                             (In Thousands)
                                               December 31,
                                           1998          1997
                                         _____________________
Due in one year or less                  $ 2,721      $  4,474
Due after one year through
  three years                              3,982         6,857
Due after three years                      4,781         2,116
                                         _______      ________
   Total                                 $11,484       $13,447
                                         =======      ========

Actual maturities may differ from contractual maturities because
some issuers have the right to prepay obligations. Should a need
arise for additional funds, it is the Company's opinion that all
securities are readily marketable thus the total investments in
debt securities available for sale are included as current assets.

Gross gains of $1,262,000 in 1998, and $888,000 in 1997, and
$451,000 in 1996 and gross losses of  $410,000 in 1998, $25,000 in
1997 and $37,000 in 1996 were realized on the sale of investments.
The cost of securities sold is based on the specific identification
method.

3.  ACCOUNTS RECEIVABLE

                                      (In Thousands)
                                        December 31,
                                     1998        1997
                                   ____________________
Current estimates                  $10,883      $14,235
Retentions                           2,338        1,989
Due from related companies,   
  officers and employees               256          333
Other                                    2           16
                                   _______       ______
                                    13,479       16,573
Less allowance for doubtful
  accounts                              40           41
                                   _______      ________
   Total                           $13,439      $16,532
                                   =======      ========

The Company anticipates that substantially all retentions will be
collected within the next year.                                   







                             - 25 -


<PAGE>
4. CONTRACTS IN PROGRESS

                                        (In Thousands)            
                                         December 31,  
                                      ____________________
                                        1998        1997
Accumulated expenditures
 on contracts in progress             $43,660     $55,073
Estimated earnings thereon             10,951      10,128
                                      _______     _______
                                       54,611      65,201
Less applicable progress billings      57,681      63,419        
                                      _______     _______
     Total                            $(3,070)    $ 1,782
                                      =======     =======

The contracts are shown in the accompanying consolidated balance
sheet as follows:                                                 
                                         (In Thousands)           
                                          December 31,     
                                        _________________
                                         1998        1997

Costs and estimated earnings
  on contracts in progress   
  in excess of related billings        $ 2,514     $ 4,847
Billings on contracts in excess
  of costs and estimated earnings       (5,584)     (3,065)   
                                       _______     _______

     Total                             $(3,070)    $ 1,782
                                       =======     =======

5.  NOTES PAYABLE

Notes payable represents: a) $2,000,000 owing to the former
stockholders of a construction company purchased by the Company in
1981. Interest on these notes accrues at the rate of 9% per annum.
These notes must be repaid within six months after each former
stockholder's death. It is anticipated that repayment will be
funded by insurance on the life of each former stockholder; b)
notes for $527,055 and $11,774 were outstanding as of December 31,
1998 and 1997, respectively, with various vendors for the purchase
of construction equipment. These notes mature at various dates
between August 15, 1999 and January 1, 2000 and do not bear
interest. c) additional notes for $380,000 were outstanding as of
December 31, 1998, related to the purchase of National Conservation
Corp. during the year. These notes mature on September 1, 2001 and
do not bear interest.

6.  CAPITAL STOCK

During 1998, the stockholders approved the Company's
re-incorporation in New York State (see Note 1). In connection with
such re-incorporation the par value of Common Stock  and Class B
Common Stock was reduced from $.10 per share to $.01 per share.   

       
                             - 26 -
<PAGE>
During 1997, the Company had an eight-for-five stock split. All per
share and average outstanding common share data were effected
retroactively for the split. As a result of this action
approximately 1,150,000 shares of Common Stock and 2,830,000 shares
of Class B Common Stock were issued to stockholders of record on
October 27, 1997. $398,000 was transferred to common stock from
additional paid-in capital.                            

The authorized capital stock of the Company consists of 12,000,000
shares of Common Stock, $.01 par value, 8,000,000 shares of Class
B Common Stock, $.01 par value, and 1,000,000 shares of Preferred
Stock, $.10 par value. The Company has issued 3,212,830, 3,161,240
and 3,083,720 shares of Common Stock and 7,434,850, 7,486,440 and
7,524,760 shares of Class B Common Stock as of December 31, 1998,
1997 and 1996, respectively. No shares of Preferred Stock have been
issued. Holders of Common Stock are entitled to elect 25% of the
Board of Directors so long as the number of outstanding shares of
Common Stock is at least 10% of the total number of outstanding
shares of both classes of Common Stock.                        

Except for the election or removal of Directors as described above
and except for class votes as required by law, holders of both
classes of common stock vote as a single class on all matters, with
each share of Common Stock having one vote per share and each share
of Class B Common Stock having ten votes per share.  

Cash or property dividends to the holders of common stock may be
paid as follows: 

     (i)  cash or property dividends may be declared and paid on
          the Common Stock without being declared and paid on the
          Class B Common Stock; and   

     (ii) no cash or property dividends may be declared and paid on
          the Class B Common Stock unless dividends at least 10%
          greater in amount per share are paid concurrently on the
          Common Stock.                       

Dividends paid in shares of Common Stock or Class B Common Stock
may be paid as follows:  

     (i)  shares of Common Stock may be paid to holders of shares
          of Common Stock or, if there is no Common Stock
          outstanding, to holders of Class B Common Stock, and
          shares of Class B Common Stock may be paid to holders of
          Class B Common Stock; and           

     (ii) the same number of shares shall be paid in respect of
          each outstanding share of Common Stock and Class B Common
          Stock.                   

At the option of the holder of record, each share  of Class B
Common Stock is convertible at any time into one share of Common
Stock. During 1998, 1997 and 1996, 51,590, 38,320, and 27,280
shares, respectively, of Class B Common Stock were converted into
shares of Common Stock.                     

                             - 27 -

<PAGE>

The authorized Preferred Stock is available for issuance from time
to time in the future at the discretion of the Board of Directors
of the Company, without stockholder approval. The Board of
Directors has authority to prescribe for each series of Preferred
Stock it establishes, the relative ranking with other series, the
voting rights, if any, the dividend rate, the redemption and
liquidation rights, the conversion rights, if any, and any other
rights, preferences, qualifications, limitations or restrictions of
the particular series.                

The stockholders have entered into an agreement pursuant to which
they have a pro rata right of first refusal to purchase shares of
Class B Common Stock proposed to be sold or disposed of by any of
them to persons other than family members or executive officers of
the Company and their family members, so long as such persons are
approved by a majority in interest of the holders of Class B Common
Stock. To the extent the rights of first refusal are not exercised,
such rights may be assigned to the Company. Transferees take their
shares of Class B Common Stock subject to the Stockholders
Agreement. If the right of first refusal is not exercised, the
party proposing to dispose of Class B Common Stock must, prior to
the disposition, convert such shares into shares of Common Stock.

The Class B stockholders are parties to a Voting Agreement pursuant
to which all shares of Class B Common Stock are to be voted in
accordance with the majority vote, except in situations in which
there exist certain conflicts of interest. The Voting Agreement is
for a term of ten years and is subject to renewal.

In November, 1990, the Board of Directors approved a plan to
repurchase up to 320,000 shares, which represents 3% of its
outstanding common stock. In August, 1992, the Board of Directors
increased the number of shares to 480,000, which represents 5% of
its outstanding common stock. In August, 1995, the Board of
Directors increased the number of shares to 800,000, which
represents 8% of its outstanding common stock. In August 1998, the
Board of Directors increased the number of shares to 1,200,000,
which represents 11% of its outstanding common stock. Through
December 31, 1998 the Company had repurchased a total of 1,102,051
shares for $8,487,000.

7.  INCOME TAXES

The provision for income taxes is comprised of the following:     
                                        (In Thousands)
                                    Year ended December 31,
                             _________________________________
                             1998           1997          1996
                                 
Currently payable:
     Federal                $3,043         $1,413        $1,980
     State                     688            447           578
                            ______         ______        ______
                             3,731          1,860         2,558
                            ______         ______        ______


                             - 28 -

<PAGE>
Deferred:    
     Federal                  (337)           346           397
     State                     (58)            66            85
                             ______         ______        ______
                              (395)           412           482
                             ______         ______        ______
     Total                   $3,336         $2,272        $3,040
                             ======         ======        ======

A reconciliation of the federal statutory income tax rate to the
effective income tax rate is as follows:   

                                    Year ended December 31,
                             _________________________________
                             1998           1997          1996

Provision based on   
 statutory rate              34.0%          34.0%         35.0%
State income taxes,   
 net of federal tax
 benefit                      4.2            5.9           4.7
Tax-exempt interest   
 and dividends               (4.6)          (7.8)         (7.4)
Other                         0.2            0.4           0.5 
                             _____          _____         _____
   Total                     33.8%          32.5%         32.8%
                             =====          =====         =====

Deferred taxes relating to temporary differences in the recognition
of revenues and expenses for tax and financial reporting purposes
is as follows:                  

                                        (In Thousands)
                                    Year ended December 31,
                             _________________________________
                             1998           1997          1996

Depreciation               $ (247)         $ 195         $ 526
Prepaid expenses              (21)            76           (13)
Contract reserves             136             24             0
Contingency reserve             0            138             0
Investment in joint   
 ventures                    (282)             0             0
Other                          19            (21)          (31)
                           _______         ______        ______
Total                      $ (395)         $ 412         $  482
                           =======         ======        ======

At December 31, 1998 the components of net deferred tax
assets/liabilities are as follows:                        

                                           (In Thousands)
                                            December 31, 
                                        ____________________
                                           1998       1997
Total of all deferred tax assets         $  734     $  467
Total of all deferred tax liabilities    $2,548     $2,481

                             - 29 -
<PAGE>
Management has evaluated the available evidence about the future
taxable income and other possible sources of realization of
deferred tax assets. A valuation allowance against deferred tax
assets at the balance-sheet date is not considered necessary
because it is more likely than not the deferred tax asset will be
fully realized.                                             

The Company and its domestic subsidiaries file a consolidated U.S.
Federal income tax return.Such returns have been audited and
settled through the year 1995.

8.  PENSION PLANS

The Company participates in industry-wide pension, welfare and
health benefit funds for union employees. These plans are defined
contribution plans. Total pension cost in the industry-wide
pension, welfare and health benefit funds for union employees for
the years ended December 31, 1998, 1997 and 1996 amounted to
approximately $1,100,000, $1,600,000 and $1,600,000. Other eligible
employees participate in a Company-sponsored defined contribution
money purchase pension plan covering salaried and office employees
and certain hourly employees of the Company for which contributions
are made at the rate of 7.0% of defined compensation up to $60,600
and then 10.5% thereafter. No contribution will be calculated on
compensation in excess of $150,000. Total pension expense for
employees in the defined contribution plans for the years ended
December 31, 1998, 1997, and 1996 amounted to $640,000, $580,000
and $520,000, respectively.                                       
              
In addition, the Company has a defined contribution  profit-sharing
plan covering most regular non-union employees. The amount of
contribution, if any, is at the discretion of the Board of
Directors, and is not to exceed the maximum amount deductible for
income tax purposes. Contributions of $200,000, $180,000 and
$200,000 were made for the years ended December 31, 1998, 1997 and
1996, respectively. 

No significant changes occurred during the period that affected
comparability for the aforementioned pension plans, such as a
change in the rate of employer contributions, a business
combination, or a divestiture. The Company does not maintain any
other post-retirement benefit plans.

9.  INCENTIVE STOCK PLAN

Effective March 1, 1989, the Company adopted the Sevenson
Environmental Services, Inc. 1989 Incentive Stock Plan. The Plan is
administered by the Compensation Committee of the Board of
Directors and no member of the Committee may participate in the
Plan, except that non-employee Directors, who may be members of the
Committee, will receive a non-discretionary option of 4,800 shares
of common stock thirty business days after their election to the
Board. The Plan authorizes the Committee to grant to key employees,
as it sees fit, incentive stock options, nonqualified stock
options, stock appreciation rights and restricted stock. No
incentive stock options may be granted after March 1, 1999. Up to
600,000 shares of Common Stock are available for issuance under the
Plan.                   
                             - 30 -
<PAGE>
Incentive stock options may be granted with durations of no more
than ten years from the date of grant and the option price per
share of incentive and nonqualified stock options and stock
appreciation rights may not be less than the fair market value of
the Common Stock at the time the option is granted. The total
number of shares granted under these options  at December 31, 1998
is 406,700, of which 200,740 shares are currently exercisable and
45,780 shares have been canceled. These options expire  ten years
from the date the options were granted and are subject to
forfeiture if certain employment requirements are not met.  

The following summarizes incentive stock option activity for the
three years ended December 31, 1998:                              
                                             Price Ranges         
                            Shares             Per Share
                            ___________________________________
Outstanding   
 January 1, 1996            164,000          $6.88-$12.34         
  Granted                    68,800             $10.63
  Exercised                  (4,480)         $6.88-$7.50
  Cancelled                 (14,400)         $6.88-$10.78
                            ________
Outstanding   
 December 31, 1996           213,920         $6.88-$12.34
  Granted                     58,500            $14.00
  Exercised                  (39,200)        $6.88-$10.78
  Cancelled                   (7,900)        $6.88-$10.78
                             ________
Outstanding   
December 31, 1997            225,320         $6.88-$14.00
 Granted                      57,000            $8.00
 Cancelled                    (4,280)        $10.78-$14.00
                             ________
Outstanding   
December 31, 1998            278,040         $6.88-$14.00
                             ========

                                    Options Outstanding
                        ________________________________________
                            Number       Weighted       Weighted
                        Outstanding at   Average        Average
                         December 31,    Remaining      Exercise
Range of Exercise Prices     1998     Contractual Life   Price
________________________________________________________________

$6.88 - $8.75              138,500        6.9 years     $ 8.26
$10.63 - $14.00            139,540        8.1 years      12.96
                           _______
                           278,040
                           =======







                             - 31 -

<PAGE>
                                        Options Exercisable      
                                    Number              Weighted
                                Exercisable at          Average
                                 December 31,           Exercise
Range of Exercise Prices             1998                Price
________________________________________________________________
$6.88 - $8.75                       70,720              $ 7.72
$10.63 - $14.00                    130,020               11.47
                                   _______
                                   200,740
                                   =======

The Plan also provides for the award of shares of the Company's
Common Stock subject to restrictions on disposition ("Restricted
Stock"). While the restrictions remain in effect, the participant
cannot sell or transfer the shares of Restricted Stock, but he or
she has the other rights of a stockholder, including the right to
vote and to receive dividends. Restricted Stock awarded under the
plan is subject to the terms and conditions of the Plan and to
other terms and conditions as the Committee specifies. The
participant will forfeit to the Company his or her Restricted Stock
if his or her employment with the Company and its subsidiaries
terminates for any reason excepting death, prior to the expiration
of the restrictions. No Restricted Stock has been awarded under the
Plan.

At December 31, 1998 and 1997, the Company had 278,040 and 225,320
shares outstanding related to stock options with a range of
exercise prices of $6.88 to $14.00 in both years at a
weighted-average exercise price of $10.62 and $11.31, respectively,
and with a weighted-average remaining contractual life in years of
7.5 for each year. Stock options with respect to 186,340 and
155,520 shares were exercisable at December 31, 1998 and 1997,
respectively at a weighted-average exercise price of $10.15 and
$10.36, respectively. The weighted-average fair value of stock
options granted for the years ended December 31, 1998 and 1997,
were $3.37 and $9.00, respectively.     

Pro forma information regarding net income and earnings per common
share is required by SFAS No. 123 and has been determined as if the
Company had accounted for its employee stock options and awards
under the fair value method of that standard. The fair value of
those stock options were estimated at the date of grant using a
binomial option pricing model with the following weighted-average
assumptions for the years ended December 31, 1998 and 1997:
risk-free interest rates of 7.75% and 8.50%, respectively; dividend
yields of 1.8% and 1.2%, respectively;   volatility factors of the
expected market price of the Company's common stock of 28% and 44%,
respectively; and a weighted-average expected life of 7.5 for each
year.                                

For purposes of pro forma disclosures, the estimated fair value of
the options is amortized to expense over the options' vesting
period. The Company's pro forma net earnings and net earnings per
common share for the years ended December 31, 1998, 1997, and 1996
were $6,416, $4,364, and $5,997 and $.65, $.43, and $.59
respectively.
                             - 32 -

<PAGE>
10.  MAJOR CUSTOMERS

The Company's two largest customers in 1998 accounted for 28% and
14% of 1998 revenues. The Company's largest customer in 1997
accounted for 28% of 1997 revenues. The Company's two largest
customers in 1996 each accounted for 22% of 1996 revenues. Due to
the nature of the Company's business, major customers fluctuate
from year to year. No other customer accounted for more than 10% of
total revenues in any of the three years in the period ended
December 31, 1998.

11.  CONTINGENCIES

The Company is a defendant or plaintiff in various  claims and
lawsuits arising in the normal course of business. The ultimate
outcome of these actions cannot presently be determined. It is the
opinion of management and its counsel that there will not be any
material adverse effects on the Company's consolidated financial
statements as a result of these actions.

12. BACKLOG

The following schedule shows a reconciliation of backlog
representing the amount of revenue the Company expects to realize
from work to be performed on uncompleted contracts in progress at
December 31, 1998, 1997 and 1996 and from contractual agreements on
which work has not yet begun.                               

                                     (In Thousands)
                                 1998      1997      1996
                              ____________________________
Balance, January 1            $ 60,596  $ 64,961  $ 43,613 
Contract adjustments            19,756     4,261    16,928
New contracts                   95,953    72,286    90,649
                              ________  ________  ________
                               176,305   141,508   151,190
Less contract revenue earned    85,212    80,912    86,229
                              ________  ________  ________
Balance, December 31          $ 91,093  $ 60,596  $ 64,961
                              ========  ========  ========

13.  QUARTERLY RESULTS (UNAUDITED)

Unaudited summarized results for each quarter in 1998, 1997 and
1996 are as follows (in thousands, except per-share data):  

                         First     Second    Third     Fourth
                         Quarter   Quarter   Quarter   Quarter
_______________________________________________________________
1998:  
  Revenues               $ 13,269  $ 28,910  $ 20,260  $ 22,261
  Gross margin              1,263     5,376     4,904     5,048
  Provision for income 
   taxes                     (266)    1,242     1,096     1,264
  Net earnings               (239)    2,135     2,112     2,537
  Basic and diluted 
   earnings per share       (0.02)     0.21      0.21      0.26
_______________________________________________________________
                             - 33 -
<PAGE>
1997:   
  Revenues               $ 15,655  $ 19,945  $ 24,855  $ 21,484
  Gross margin              2,956     4,997     3,551     2,692
  Provision for income 
   taxes                      291     1,160       599       222
  Net earnings                714     2,034     1,195       776
  Basic and diluted 
   earnings per share        0.07      0.20      0.12      0.08
_______________________________________________________________
1996:  
  Revenues               $ 13,858  $ 19,092  $ 23,374  $ 29,425
  Gross margin              2,284     4,597     4,573     5,078
  Provision for income 
   taxes                      250       923       969       898
  Net earnings                483     1,985     1,816     1,998
  Basic and diluted 
   earnings per share        0.05      0.20      0.17      0.20
 ______________________________________________________________






































                             - 34 -


<PAGE>

                  INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders
Sevenson Environmental Services, Inc.
Niagara Falls, New York

We have audited the accompanying consolidated balance sheets of
Sevenson Environmental Services, Inc. and subsidiaries as of
December 31, 1998 and 1997, and the related consolidated statements
of earnings, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of
Sevenson Environmental Services, Inc. and subsidiaries as of
December 31, 1998 and 1997, and the results of their operations and
their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting
principles.

DELOITTE & TOUCHE LLP

Buffalo, New York
February 5, 1999
















                             - 35 -


<PAGE>

Management

Board of Directors

Michael A. Elia
President and Chief Executive Officer

Arthur A. Elia
Former President and Chief Executive Officer

Laurence A. Elia
Vice President 

Richard A. Elia
Executive Vice President

William J. McDermott 
Vice President, Chief Financial Officer and Secretary

Dena M. Armstrong
Treasurer and Assistant Vice President

Joseph J. Castiglia
Former President and Chief Executive Officer, Pratt & Lambert
United, Inc. (paint, industrial coatings and adhesives
manufacturer)

Robert S. Kelso
Former President and Chief Executive Officer, Calspan Corporation
(an aerospace research and development company) 

Audit Committee 
Joseph J. Castiglia
Robert S. Kelso

Officers

Michael A. Elia
President and Chief Executive Officer

Richard A. Elia
Executive Vice President

Laurence A. Elia
Vice President

William J. McDermott
Vice President, Chief Financial Officer and Secretary 

Dena M. Armstrong
Treasurer and Assistant Vice President

Paul C. Thomson
Vice President

Mason G. Wheeler
Vice President

                             - 36 -
<PAGE>
Paul J. Hitcho, Ph.D.
Vice President and Director of Health and Safety

John C. Robbins, P.E.
Vice President

Philip R. DeLuca
Vice President

Michael L. Lock
Vice President

Corporate Information

Headquarters
2749 Lockport Road
Niagara Falls, NY 14302-0396
(716) 284-0431
Internet: http://www.sevenson.com

Offices

Atlanta
105 Bradford Square
Suite A
Fayetteville, GA 30215
(770) 460-4620

Chicago
9245 Calumet Avenue 
Suite 101
Munster, Indiana 46321
(219) 836-0116

Philadelphia
4 Lake View Drive
Chadds Ford, PA 19317
(215) 388-0721

Pittsburgh
100 Rock Springs Road
Delmont, PA 15626
(412) 468-3377

Subsidiaries

Sevenson Environmental Services of PA, Inc.

Sevenson Industrial Services, Inc.
2749 Lockport Road
Niagara Falls, NY 14302-0396
(716) 284-0431
                                
Waste Stream Technology Inc.
302 Grote Street
Buffalo, NY 14207
(716) 876-5290

                             - 37 -
<PAGE>
Auditors

Deloitte & Touche LLP
50 Fountain Plaza
Suite 250
Buffalo, New York 14202

Transfer Agent and Registrar 

American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005

Stock Listing

National Market tier of The Nasdaq Stock Market (registered) under
the symbol SEVN

Form 10-K 

Single copies of the Company's 1998 Annual Report on Securities 
and Exchange Commission Form 10-K will be provided without charge
to stockholders upon written request directed to the Secretary,
Sevenson Environmental Services, Inc., 2749 Lockport Road, Niagara
Falls, New York 14302-0396.































                             - 38 -


<PAGE>

                           EXHIBIT 21


                      List of Subsidiaries
                        All Wholly-Owned



     Subsidiary                              Where Incorporated

Sevenson Environmental Ltd.                       Canada
     
Waste Stream Technology Inc.                      New York

Sevenson Industrial Services, Inc.                New York

Sevenson Environmental Services of PA, Inc.       Pennsylvania

Sevenson Resources, Inc.                          California

Senviro Investment Holdings, Inc.                 Delaware



































                                   


<PAGE>
                           EXHIBIT 23


DELOITTE &
 TOUCHE

               Deloitte & Touche LLP  Telephone: (716) 843-7200
               Suite 250              Facsimile: (716) 856-7760
               Key Bank Tower
               50 Fountain Plaza
               Buffalo, New York 14202


INDEPENDENT AUDITORS' CONSENT


We consent to the incorporation by reference in the Registration
Statement of Sevenson Environmental Services, Inc. on Form S-8
(No. 333-70223) of our report dated February 5, 1999, appearing in
and incorporated by reference in the Annual Report on Form 10-K of
Sevenson Environmental Services, Inc. for the year ended
December 31, 1998.


Deloitte & Touche LLP



March 30, 1999
Buffalo, N.Y.






















________________
Deloitte Touche
Tohmatsu
________________

                                   

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