UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-Q

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

                For the Quarterly Period Ended September 30, 2005

                                       OR

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

  For the transition period from _____________________to_____________________


                         Commission File Number 0-11688


                          AMERICAN ECOLOGY CORPORATION
                          ----------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

              DELAWARE                                      95-3889638
              --------                                      ----------
  (State or other jurisdiction of                       (I.R.S. Employer
   incorporation or organization)                    Identification Number)

            Lakepointe Centre I,
      300 E. Mallard Drive, Suite 300
                Boise, Idaho                                  83706
                ------------                                  -----
 (Address of principal executive offices)                   (Zip Code)

                                 (208) 331-8400
                                 --------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
                                Yes  [X]  No  [ ]

Indicate  by  check  mark  whether  the  registrant  is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Exchange  Act).
                                Yes  [X]  No  [ ]

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12b-2  of  the  Exchange  Act).
                                Yes  [ ]  No  [X]

At November 1, 2005 Registrant had outstanding 17,734,920 shares of its Common
Stock.


<PAGE>
<TABLE>
<CAPTION>
                          AMERICAN ECOLOGY CORPORATION
                      QUARTERLY REPORT ON FORM 10-Q FOR THE
                      THREE MONTHS ENDED SEPTEMBER 30, 2005


                                TABLE OF CONTENTS


                          PART I. FINANCIAL INFORMATION


                                                                                         PAGE
<S>                                                                                      <C>
Item 1.     Financial Statements

            Consolidated Balance Sheets
              (Unaudited)                                                                   4

            Consolidated Statements of Operations
              (Unaudited)                                                                   5

            Consolidated Statements of Cash Flows
              (Unaudited)                                                                   6

            Notes to Consolidated Financial Statements                                      7

Item 2.     Management's Discussion and Analysis of Financial Condition and Results of
            Operations                                                                     15

Item 3.     Quantitative and Qualitative Disclosures About Market Risk                     25

Item 4.     Controls and Procedures                                                        25


                                PART II.   OTHER INFORMATION


Item 1.     Legal Proceedings                                                              26

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds                    27

Item 3.     Defaults Upon Senior Securities                                                27

Item 4.     Submission of Matters to a Vote of Security Holders                            27

Item 5.     Other Information                                                              28

Item 6.     Exhibits                                                                       28

            Signatures                                                                     28
</TABLE>


                                        2
<PAGE>
<TABLE>
<CAPTION>
OFFICERS                                          CORPORATE OFFICE
--------                                          ----------------
<S>                                               <C>
Stephen A. Romano                                 Lakepointe Centre I
Chief Executive Officer, President and Chief      American Ecology Corporation
Operating Officer                                 300 East Mallard Drive, Suite 300
                                                  Boise, Idaho 83706
James R. Baumgardner                              (208) 331-8400
Senior Vice President, Chief Financial Officer    (208) 331-7900 (fax)
Treasurer and Secretary                           www.americanecology.com
                                                  -----------------------
Michael J. Gilberg
Vice President and Controller

Steven D. Welling                                 COMMON STOCK
Vice President, Sales & Marketing                 ------------
                                                  American Ecology Corporation's common stock
John M. Cooper                                    trades on the Nasdaq National Market under the
Vice President and Chief Information Officer      symbol ECOL.


DIRECTORS                                         FINANCIAL REPORTS
---------                                         -----------------
Edward F. Heil, Chairman                          A copy of American Ecology Corporation
Independent Businessman                           Annual and Quarterly Reports, as filed on Form 10-K
                                                  and 10-Q with the Securities and Exchange
Rotchford L. Barker                               Commission, may be obtained by writing:
Independent Businessman                           Lakepointe Centre I
                                                  300 E. Mallard Drive, Suite 300
Roy C. Eliff                                      Boise, Idaho 83706
Independent Businessman                           or at www.americanecology.com
                                                  -----------------------------

Kenneth C. Leung
Managing Director, Sanders
Morris Harris                                     TRANSFER AGENT
                                                  --------------
Richard Riazzi                                    American Stock Transfer & Trust Company
Independent Businessman                           59 Maiden Lane
                                                  New York, New York 10038
Stephen A. Romano                                 (718) 921-8289
Chief Executive Officer, President and Chief      or at www.amstock.com
Operating Officer                                 ---------------------

General Jimmy D. Ross                             AUDITOR
U.S. Army, Retired                                -------
                                                  Moss Adams LLP
General Richard T. Swope                          1001 Fourth Avenue, Suite 2900
U.S. Air Force, Retired                           Seattle, WA  98154
</TABLE>


                                        3
<PAGE>
<TABLE>
<CAPTION>
PART I.  FINANCIAL INFORMATION
------------------------------
ITEM 1.  FINANCIAL STATEMENTS.

                                         AMERICAN ECOLOGY CORPORATION
                                    CONSOLIDATED BALANCE SHEETS (Unaudited)
                                     ($ IN 000'S EXCEPT PER SHARE AMOUNTS)


                                                                        September 30,2005   December 31, 2004
                                                                        ------------------  ------------------
<S>                                                                     <C>                 <C>
ASSETS
Current Assets:
  Cash and cash equivalents                                             $            2,808  $            2,160
  Short term investments                                                            20,971              10,967
  Receivables, net                                                                  15,866               8,963
  Insurance receivable                                                                 636               1,285
  Prepayments and other                                                              2,311               1,469
  Deferred income taxes                                                              5,613               5,613
                                                                        ------------------  ------------------
    Total current assets                                                            48,205              30,457

Property and equipment, net                                                         35,274              27,363
Facility development costs                                                              --               6,478
Other assets                                                                           956                 462
Deferred income taxes                                                                6,595              12,473
                                                                        ------------------  ------------------
    Total assets                                                        $           91,030  $           77,233
                                                                        ==================  ==================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Current portion of long term debt                                     $            1,460  $            1,457
  Accounts payable                                                                   3,385               3,022
  Deferred revenue                                                                   1,684                 724
  State burial fees payable                                                          1,698               1,446
  Management incentive plan payable                                                    995                 934
  Customer advances                                                                  1,784                  --
  Customer refunds                                                                     657               2,512
  Accrued liabilities                                                                1,690                 725
  Accrued closure and post closure obligation, current portion                       1,577               2,323
                                                                        ------------------  ------------------
    Total current liabilities                                                       14,930              13,143

Long term debt                                                                       1,638               2,734
Long term customer advances                                                          1,574                  --
Long term accrued liabilities                                                          498                 441
Accrued closure and post closure obligation, excluding current portion               9,421               9,304
                                                                        ------------------  ------------------
    Total liabilities                                                               28,061              25,622
                                                                        ------------------  ------------------

Commitments and contingencies
Shareholders' equity:
  Convertible preferred stock, 1,000,000 shares authorized,
  Common stock, $.01 par value, 50,000,000 authorized, 17,635,919
    and 17,398,494 shares issued and outstanding                                       176                 174
  Additional paid-in capital                                                        52,718              51,015
  Retained earnings                                                                 10,075                 422
                                                                        ------------------  ------------------
    Total shareholders' equity                                                      62,969              51,611
                                                                        ------------------  ------------------

Total Liabilities and Shareholders' Equity                              $           91,030  $           77,233
                                                                        ==================  ==================

See notes to consolidated financial statements
</TABLE>


                                        4
<PAGE>
<TABLE>
<CAPTION>
                                           AMERICAN ECOLOGY CORPORATION
                                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                                   (UNAUDITED)
                                      ($ IN 000'S EXCEPT PER SHARE AMOUNTS)

                                                                    Three Months Ended        Nine Months Ended
                                                                       September 30,            September 30,
                                                                    2005         2004         2005        2004
                                                                -----------  -----------  -----------  ----------
<S>                                                             <C>          <C>          <C>          <C>
Revenue                                                         $   24,791   $   12,929   $   56,124   $  40,629
Direct operating costs                                              14,822        7,396       33,094      22,457
                                                                -----------  -----------  -----------  ----------

Gross profit                                                         9,969        5,533       23,030      18,172
Selling, general and administrative expenses                         3,103        2,967        8,975       8,417
Business interruption insurance claim                                   --           --          (41)         --
                                                                -----------  -----------  -----------  ----------
Operating income                                                     6,866        2,566       14,096       9,755

Interest income                                                        164           52          342         133
Interest expense                                                        45           48          140         146
Gain on settlement of Nebraska litigation                            5,327           --        5,327          --
Other income (loss)                                                    (31)           9            8          74
                                                                -----------  -----------  -----------  ----------

Income before income tax and discontinued operations                12,281        2,579       19,633       9,816
Income tax expense (benefit)                                         4,545          884        7,335      (9,290)
                                                                -----------  -----------  -----------  ----------

Income before discontinued operations                                7,736        1,695       12,298      19,106
Gain (loss) from discontinued operations - Oak Ridge Facility           --           (1)          --       1,068
                                                                -----------  -----------  -----------  ----------

Net income                                                      $    7,736   $    1,694   $   12,298   $  20,174
                                                                ===========  ===========  ===========  ==========

Basic earnings from continuing operations                              .44          .10          .70        1.12
Basic earnings from discontinued operations                             --          .00           --         .06
                                                                -----------  -----------  -----------  ----------
Basic earnings per share                                        $      .44   $      .10   $      .70   $    1.18
                                                                ===========  ===========  ===========  ==========

Diluted earnings from continuing operations                            .43          .10          .68        1.08
Diluted earnings from discontinued operations                           --          .00           --         .06
                                                                -----------  -----------  -----------  ----------
Diluted earnings per share                                      $      .43   $      .10   $      .68   $    1.14
                                                                ===========  ===========  ===========  ==========

Dividends paid per common share                                 $      .15   $       --   $      .15   $      --
                                                                ===========  ===========  ===========  ==========
</TABLE>

See notes to consolidated financial statements.


                                        5
<PAGE>
<TABLE>
<CAPTION>
                                AMERICAN ECOLOGY CORPORATION
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED, $ IN 000'S)

                                                         Nine Months Ended September 30,
                                                      -------------------------------------
                                                             2005               2004
                                                      -----------------  ------------------
<S>                                                   <C>                <C>
Cash flows from operating activities:
  Net income                                          $         12,298   $          20,174
  Adjustments to reconcile net income to net
    cash provided by operating activities:
  Depreciation, amortization, and accretion                      4,851               4,508
  Gain on settlement of Nebraska litigation                     (5,327)                 --
  Income from discontinued operations                               --              (1,068)
  Income tax benefit on exercise of stock options                  654                  --
  Deferred tax asset                                             5,878              (9,323)
  Stock compensation                                               180                  --
Changes in assets and liabilities:
  Receivables                                                   (6,903)              4,268
  Other assets                                                  (1,398)               (152)
  Closure and post closure obligation                           (1,440)               (773)
  Income taxes payable/receivable                                   --                (226)
  Accounts payable and accrued liabilities                       4,161               2,016
                                                      -----------------  ------------------
    Net cash provided by operating activities                   12,954              19,424

Cash flows from investing activities:
  Capital expenditures                                         (12,118)             (2,964)
  Proceeds from sale of assets                                     878                 116
  Proceeds from settlement of Nebraska litigation               11,805                  --
  Transfers from cash to short term investments, net           (10,004)             (4,989)
                                                      -----------------  ------------------
    Net cash used by investing activities                       (9,439)             (7,837)

Cash flows from financing activities:
  Payments of indebtedness                                      (1,093)             (1,120)
  Retirement of common stock warrants                               --              (5,500)
  Dividends paid                                                (2,645)                 --
  Stock options exercised                                          871                 996
                                                      -----------------  ------------------
    Net cash provided (used) by financing activities            (2,867)             (5,624)
                                                      -----------------  ------------------

Increase in cash and cash equivalents                              648               5,963
Net cash used in discontinued operations                            --              (2,925)
Cash and cash equivalents at beginning of period                 2,160               6,674
                                                      -----------------  ------------------
Cash and cash equivalents at end of period            $          2,808   $           9,712
                                                      =================  ==================

Supplemental disclosures of cash flow information:
Cash paid during the year for:
  Interest                                            $            140   $             146
  Income taxes paid                                                804                 274
Non-cash investing and financing activities:
  Common stock dividends accrued                                    --               4,345
  Common stock issued for director compensation                    180                  --
</TABLE>

See notes to consolidated financial statements.


<PAGE>
AMERICAN ECOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  BASIS OF PRESENTATION

In  the opinion of management, the accompanying unaudited consolidated financial
statements  contain  all adjustments and disclosures necessary to present fairly
the  financial  position,  results  of  operations,  and  cash flows of American
Ecology  Corporation  and  its  wholly-owned subsidiaries (the "Company"). These
financial  statements and notes should be read in conjunction with the financial
statements  and  notes  included in the Company's Annual Report on Form 10-K for
the  year  ended  December  31,  2004,  filed  with  the Securities and Exchange
Commission.

Certain  reclassifications of prior quarter amounts have been made to conform to
current  quarter  presentation,  none  of  which  affect previously recorded net
income.

NOTE 2.  EARNINGS PER SHARE

Basic  earnings  per  share are computed based on net income available to common
shareholders and the weighted average number of common shares outstanding during
the  quarter.  Diluted earnings per share reflect the assumed issuance of common
shares  for  outstanding  options. The computation of diluted earnings per share
does  not  assume  exercise  or conversion of securities whose exercise price is
greater  than the average common share market price as the assumed conversion of
these  securities  would  increase  earnings  per  share.

<TABLE>
<CAPTION>
                                                           Three Months Ended       Nine Months Ended
                                                         -----------------------  ---------------------
                                                              September 30,           September 30,
                                                              -------------           -------------
    (in thousands except per share amounts)                 2005         2004        2005       2004
                                                         ----------  -----------  ---------  ----------
<S>                                                      <C>         <C>          <C>        <C>
Income before discontinued operations                    $    7,736  $    1,695   $  12,298  $   19,106
Income from operations of discontinued segments                  --          (1)         --       1,068
                                                         ----------  -----------  ---------  ----------
Net income                                               $    7,736  $    1,694   $  12,298  $   20,174
                                                         ==========  ===========  =========  ==========

Weighted average shares outstanding-
  Common shares                                              17,636      17,257      17,519      17,183
  Effect of dilutive stock options                              503         527         455         488
                                                         ----------  -----------  ---------  ----------

Average shares                                               18,139      17,784      17,974      17,671
                                                         ==========  ===========  =========  ==========

Basic earnings per share from continuing operations      $      .44  $      .10   $     .70  $     1.12
Basic earnings per share from discontinued operations            --         .00          --         .06
                                                         ----------  -----------  ---------  ----------
Basic earnings per share                                 $      .44  $      .10   $     .70  $     1.18
                                                         ==========  ===========  =========  ==========

Diluted earnings per share from continuing operations    $      .43  $      .10   $     .68  $     1.08
Diluted earnings per share from discontinued operations          --         .00          --         .06
                                                         ----------  -----------  ---------  ----------
Diluted earnings per share                               $      .43  $      .10   $     .68  $     1.14
                                                         ==========  ===========  =========  ==========
</TABLE>


NOTE 3.  EQUITY

On  May  26,  2005  the  Company declared a dividend of $.15 per common share to
stockholders  of  record  on July 1, 2005.  The dividend was paid out of cash on
hand  on  July  15,  2005  and  totaled  $2,645,000.

NOTE 4.  LINE OF CREDIT

On  May  25,  2005  the  Company  entered  into  an  Amended and Restated Credit
Agreement  with  Wells Fargo Bank ("Bank") which extended its $8,000,000 line of
credit  maturity  to  June  15,  2007,  eliminated  the  Bank's  security


                                        7
<PAGE>
interest  in  Company assets and, among other things, allowed for the payment of
quarterly dividends and/or stock repurchases subject to specified covenants.

NOTE 5.  OPERATING SEGMENTS

The  Company  operates  within  two  segments, Operating Disposal Facilities and
Non-Operating Disposal Facilities, based on its internal reporting structure and
nature  of  services offered. The Operating Disposal Facility segment represents
facilities accepting hazardous and radioactive waste. The Non-Operating Disposal
Facility  segment  represents  facilities that are no longer accepting hazardous
and/or radioactive waste or formerly proposed new disposal facilities.

On December 27, 2002, the Company committed to discontinue commercial operations
within  its  Processing  and  Field  Services  segment  which  aggregated,
volume-reduced,  and  performed  remediation  and  other services on radioactive
material,  but  excluded  processing  performed  at its disposal facilities. All
prior  segment  information has been restated in order to present the operations
at  its  former  Oak  Ridge  facility  and associated Field Services division as
discontinued operations. On June 30, 2004 the Oak Ridge assets were sold.

Income  taxes are assigned to Corporate, but all other items are included in the
segment  where  they originated. Inter-company transactions have been eliminated
from the segment information and are not significant between segments.

Summarized financial information concerning the Company's reportable segments is
shown  in  the  following  table:

<TABLE>
<CAPTION>
                                             Operating       Non-Operating       Discontinued
                                              Disposal          Disposal        Processing and
                                             Facilities        Facilities       Field Services      Corporate          Total
<S>                                     <C>               <C>               <C>               <C>               <C>
THREE MONTHS ENDED SEPTEMBER 30, 2005
-------------------------------------
Revenue                                 $        24,774   $            17                     $            --   $        24,791
Direct operating cost                            14,707               115                                  --            14,822
                                        ----------------  ----------------                    ----------------  ----------------
Gross profit (loss)                              10,067               (98)                                 --             9,969
S,G&A                                             1,154                 3                               1,946             3,103
                                        ----------------  ----------------                    ----------------  ----------------
Income (loss) from operations                     8,913              (101)                             (1,946)            6,866
Interest income, net                                 11                --                                 108               119
Gain on settlement of Nebraska
litigation                                           --             5,327                                  --             5,327
Other income (expense)                              (31)               --                                  --               (31)
                                        ----------------  ----------------                    ----------------  ----------------
Income (loss) before income tax                   8,893             5,226                              (1,838)           12,281
Income tax expense                                   --                --                               4,545             4,545
                                        ----------------  ----------------                    ----------------  ----------------
Net Income (loss)                                 8,893             5,226                              (6,383)            7,736
                                        ================  ================                    ================  ================
Depreciation, amortization, and
accretion                               $         1,470   $             1                     $             6   $         1,785
Capital Expenditures                    $         4,898   $             3                     $            --   $         4,901
Total Assets                            $        52,844   $            43                     $        38,143   $        91,030
THREE MONTHS ENDED SEPTEMBER 30, 2004
-------------------------------------
Revenue                                 $        12,923   $             6   $            --   $            --   $        12,929
Direct operating cost                             7,289               107                --                --             7,396
                                        ----------------  ----------------  ----------------  ----------------  ----------------
Gross profit (loss)                               5,634              (101)               --                --             5,533
S,G&A                                             1,395                 1                --             1,571             2,967
                                        ----------------  ----------------  ----------------  ----------------  ----------------
Income (loss) from operations                     4,239              (102)               --            (1,571)            2,566
Interest income (expense), net                       14                --                --               (10)                4
Other income (expense)                               (1)               --                --                10                 9
                                        ----------------  ----------------  ----------------  ----------------  ----------------
Income (loss) before income tax and
discontinued operations                           4,252              (102)               --            (1,571)            2,579


                                        8
<PAGE>
Income tax expense                                   --                --                --               884               884
Discontinued operations                              --                --                (1)               --                (1)
                                        ----------------  ----------------  ----------------  ----------------  ----------------
Net Income (loss)                                 4,252              (102)               (1)           (2,455)            1,694
                                        ================  ================  ================  ================  ================
Depreciation, amortization, and
accretion                               $         1,470   $             1   $            --   $             8   $         1,479
Capital Expenditures                    $           570   $            --   $            --   $            --   $           570
Total Assets                            $        35,751   $         6,534   $            43   $        34,417   $        76,745

                                             Operating       Non-Operating       Discontinued
                                              Disposal          Disposal        Processing and
                                             Facilities        Facilities       Field Services      Corporate          Total
NINE MONTHS ENDED SEPTEMBER 30, 2005
------------------------------------
Revenue                                 $        56,073   $            51                     $            --   $        56,124
Direct operating cost                            32,770               324                                  --            33,094
                                        ----------------  ----------------                    ----------------  ----------------
Gross profit (loss)                              23,303              (273)                                 --            23,030
S,G&A                                             3,518                10                               5,447             8,975
Business interruption insurance claim               (41)               --                                  --               (41)
                                        ----------------  ----------------                    ----------------  ----------------
Income (loss) from operations                    19,826              (283)                             (5,447)           14,096
Interest income, net                                 31                --                                 171               202
Gain on settlement of Nebraska
litigation                                           --             5,327                                  --             5,327
Other income (expense)                                8                --                                  --                 8
                                        ----------------  ----------------                    ----------------  ----------------
Income (loss) before income tax and
discontinued operations                          19,865             5,044                              (5,276)           19,633
Income tax expense (benefit)                         --                --                               7,335             7,335
                                        ----------------  ----------------                    ----------------  ----------------
Net Income (loss)                                19,865             5,044                             (12,611)           12,298
                                        ================  ================                    ================  ================
Depreciation, amortization, and
accretion                               $         4,825   $             5                     $            21   $         4,851
Capital Expenditures                    $        12,115   $             3                     $            --   $        12,118
Total Assets                            $        52,844   $            43                     $        38,143   $        91,030
NINE MONTHS ENDED SEPTEMBER 30, 2004
------------------------------------
Revenue                                 $        40,576   $            53   $            --   $            --   $        40,629
Direct operating cost                            22,127               330                --                --            22,457
                                        ----------------  ----------------  ----------------  ----------------  ----------------
Gross profit (loss)                              18,449              (277)               --                --            18,172
S,G&A                                             3,766                25                --             4,626             8,417
                                        ----------------  ----------------  ----------------  ----------------  ----------------
Income (loss) from operations                    14,683              (302)               --            (4,626)            9,755
Interest income (expense), net                       39                --                --               (52)              (13)
Other income (expense)                               17                19                --                38                74
                                        ----------------  ----------------  ----------------  ----------------  ----------------
Income (loss) before income tax and
discontinued operations                          14,739              (283)               --            (4,640)            9,816
Income tax expense (benefit)                         --                --                --            (9,290)           (9,290)
Discontinued operations                              --                --             1,068                --             1,068
                                        ----------------  ----------------  ----------------  ----------------  ----------------
Net Income (loss)                                14,739              (283)            1,068             4,650            20,174
                                        ================  ================  ================  ================  ================
Depreciation, amortization, and
accretion                               $         4,479   $             5   $            --   $            24   $         4,508
Capital Expenditures                    $         2,932   $            --   $            --   $            32   $         2,964
Total Assets                            $        35,751   $         6,534   $            43   $        34,417   $        76,745
</TABLE>

NOTE 6.  STOCK OPTION PLANS

The  Company  had  two  stock-based  compensation plans, which are accounted for
under  the  recognition  and  measurement  principles  of  APB  Opinion  No. 25,
Accounting  for  Stock  Issued  to  Employees  and  related


                                        9
<PAGE>
Interpretations.  No  stock-based employee compensation cost is reflected in net
income.  The  following  table illustrates the effect on net income and earnings
per  share  applying the fair value recognition provisions of FASB Statement No.
123, Accounting for Stock-Based Compensation to stock-based compensation for the
three  and  nine  months  ended  September  30,  2005  and  2004:

<TABLE>
<CAPTION>

                                                                 Three Months Ended        Nine Months Ended
                                                              ------------------------  -----------------------
                                                                  2005         2004        2005        2004
                                                              -----------  -----------  ----------  -----------
<S>                                                           <C>          <C>          <C>         <C>
Net income, as reported                                       $    7,736   $    1,694   $  12,298   $   20,174
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards, net         (94)         (94)       (321)        (708)
                                                              -----------  -----------  ----------  -----------
of related tax effects
Pro forma net income                                          $    7,642   $    1,600   $  11,977   $   19,466
                                                              ===========  ===========  ==========  ===========

EARNINGS PER SHARE:
  Basic - as reported                                         $      .44   $      .10   $     .70   $     1.18
                                                              ===========  ===========  ==========  ===========
  Basic - pro forma                                           $      .43   $      .09   $     .68   $     1.13
                                                              ===========  ===========  ==========  ===========
  Diluted - as reported                                       $      .43   $      .10   $     .68   $     1.14
                                                              ===========  ===========  ==========  ===========
  Diluted - pro forma                                         $      .42   $      .09   $     .67   $     1.10
                                                              ===========  ===========  ==========  ===========
</TABLE>

The stock option plan summary and changes during the three and nine months ended
September  30  are  as  follows:

<TABLE>
<CAPTION>
                                                                    Three Months Ended        Nine Months Ended
                                                                 ------------------------  -----------------------
                                                                     2005         2004        2005         2004
                                                                 -----------  -----------  ----------  -----------
<S>                                                              <C>          <C>          <C>         <C>
Options outstanding, beginning of period                            674,031    1,091,281     913,708    1,266,281
Granted                                                                  --           --       7,500       57,500
Exercised                                                              (210)    (167,573)   (222,387)    (345,073)
Canceled                                                                 --           --     (25,000)     (55,000)
                                                                 -----------  -----------  ----------  -----------
  Options outstanding, end of period                                673,821      923,708     673,821      923,708
                                                                 ===========  ===========  ==========  ===========

Weighted average exercise price of options, beginning of period  $     4.65   $     4.05   $    4.40   $     3.90
Weighted average exercise price of options granted               $       --   $       --   $   11.53   $     9.20
Weighted average exercise price of options exercised             $     3.50   $     2.59   $    3.92   $     2.69
Weighted average exercise price of options canceled              $       --   $       --   $    4.00   $    10.13
Weighted average exercise price of options, end of period        $     4.65   $     4.31   $    4.65   $     4.31

Options exercisable at end of period                                521,151      618,368     521,151      618,368
                                                                 ===========  ===========  ==========  ===========

Options available for future grant at end of period                 188,976      507,176     188,976      507,176
                                                                 ===========  ===========  ==========  ===========
</TABLE>

The  following  table summarizes information about the stock options outstanding
under the Company's option plans as of September 30, 2005

<TABLE>
<CAPTION>
                        Weighted
                         average                       Weighted                      Weighted
                        remaining                       average                       average
Range of exercise   contractual life     Number     exercise price     Number     exercise price
price per share          (years)       outstanding     per share     exercisable     per share
------------------  -----------------  -----------  ---------------  -----------  ---------------
<S>                 <C>                <C>          <C>              <C>          <C>
  $1.00 - $1.47            1.9              27,500  $          1.26       27,500  $          1.26
  $1.60 - $2.25            3.6              20,000  $          2.13       20,000  $          2.13
  $2.42 - $3.50            7.2             184,522  $          2.93      130,126  $          2.90
  $3.75 - $4.50            7.1             258,046  $          4.41      194,585  $          4.38


                                       10
<PAGE>
      $6.50                7.4             131,253  $          6.50       96,440  $          6.50
  $9.20 - $12.15           8.8              52,500  $          9.95       52,500  $          9.95
                                       -----------                   -----------
                                           673,821                       521,151
                                       ===========                   ===========
</TABLE>

As  of  September 30, 2005, the 1992 Stock Option Plan for Employees had options
outstanding  to  purchase  514,121  common  shares with 188,976 shares remaining
available  for  issuance  under  option  grants.

Effective  March  28, 2005, the Company's Board of Directors terminated the 1992
Amended  and  Restated  Outside  Director  Stock  Option Plan, except for option
grants  then  outstanding.  As  of  September 30, 2005 the 1992 Outside Director
Stock  Option  Plan  had  options outstanding to purchase 159,700 common shares.

The  fair  value  of  each  option  grant  is  estimated using the Black-Scholes
option-pricing  model  with  the following weighted-average assumptions used for
grants during the three and nine months ended September 30:

<TABLE>
<CAPTION>
                                                 Three Months Ended      Nine Months Ended
                                                --------------------  -----------------------
                                                  2005        2004       2005         2004
                                                ---------  ---------  -----------  ----------
<S>                                             <C>        <C>        <C>          <C>
     Expected volatility                               --         --          50%         73%
     Risk-free interest rates                          --         --         4.1%       4.72%
     Expected lives                                    --         --    10 years    10 years
     Dividend yield                                    --         --         2.7%          0%
     Weighted-average fair value of options
     granted during the period (Black-Scholes)         --         --  $     5.28   $    7.42
</TABLE>

NOTE 7.  2005 NON-EMPLOYEE DIRECTOR COMPENSATION PLAN

The  2005  Non-Employee  Director  Compensation  Plan  ("Plan")  was approved by
shareholders at the Company's May 25, 2005 Annual Meeting. The Plan provides for
Non-Employee  Directors  to  be  paid an annual retainer of $16,000 in cash plus
$25,000  in  restricted  stock.  The  Plan  also  provides for each Non-Employee
Director  to be paid a meeting fee of $750 or $1,000 for each Committee or Board
meeting  that  they attend, as well as an additional payment, when appointed, of
$4,000  for  each standing committee Chairman and $20,000 to the Chairman of the
Board.  The  current  Chairman  waived  the  chairman's  fee  for  2005.

As  of  September 30, 2005, 14,700 shares of restricted stock had been issued to
the  Non-Employee  Directors  and  185,300  shares of stock remain available for
issuance  under  the  Plan.

NOTE 8.  LITIGATION

The  Company  is  not presently involved in any material litigation. Significant
developments  have  occurred  on  the following legal matters since December 31,
2004:

ENTERGY  ARKANSAS,  INC.  ET  AL, CENTRAL INTERSTATE LOW-LEVEL RADIOACTIVE WASTE
--------------------------------------------------------------------------------
COMMISSION  AND  US  ECOLOGY,  INC. ("PLAINTIFFS") V. STATE OF NEBRASKA, ET AL.,
------------------------------------------------------------------------------
CASE NO. 4:98CV3411, U.S. DISTRICT COURT, DISTRICT OF NEBRASKA

This  action  was  brought  in  federal court in 1999 by electric utilities that
generate  LLRW within the Central Interstate Low-Level Radioactive Waste Compact
("CIC").  The  action sought declaratory relief and damages for bad faith in the
State  of  Nebraska's  processing  and  denial  of  the Company's application to
develop  and  operate  a LLRW disposal facility near Butte, Nebraska. US Ecology
was  the  CIC's  contractor  and  intervened  as  a  plaintiff.

In  2002, the US District Court for the District of Nebraska entered judgment in
favor  of the CIC for $153 million. Of this amount, USE's share was $6.2 million
plus  $6.1 million for prejudgment interest. The Company carried $6.5 million on
its balance sheet for capitalized facility development costs. The State appealed
the judgment to the Eighth Circuit Court of Appeals, which affirmed the District
Court  ruling  in  its  entirety.


                                       11
<PAGE>
In  August,  2004 Nebraska and the CIC entered into a settlement under which the
State  agreed to pay in full, or to make four equal payments of $38.5 million to
the  CIC  beginning  August 1, 2005. The full $154 million settlement reflects a
principal  amount  of $140.5 million, plus interest of 3.75% compounded annually
and  beginning August 1, 2004. During its 2005 session, the Nebraska legislature
appropriated  the  full  $154  million  settlement  amount.  The  State Attorney
General's  Office  subsequently  paid  the  CIC  in  full. On August 1, 2005 the
Company  received  $11,805,000  from  the  CIC, fully resolving its claim on the
Nebraska  settlement  proceeds.  The Company is presently completing agreed upon
transition  activities preparatory to terminating its contract with the CIC. The
matter  is  considered  closed.

MANCHAK  V.  US  ECOLOGY,  INC., U.S. DISTRICT COURT FOR THE DISTRICT OF NEVADA,
--------------------------------
CASE  NO.  CV-S-97-0655.

In  1996,  Frank  Manchak,  Jr.  ("Manchak")  filed  suit  against subsidiary US
Ecology,  Inc.,  alleging infringement of a sludge treatment patent to stabilize
hazardous  waste  at  the  Company's  Beatty,  Nevada  hazardous waste facility.
Manchak  sought  unspecified damages for infringement, treble damages, interest,
costs  and  attorney  fees.  In  2002,  the United States District Court for the
District of Nevada dismissed the matter. Manchak's subsequent appeal to the U.S.
Court  of  Appeals  for the Federal Circuit was also dismissed, and his requests
for  reconsideration  and en banc review were rejected in 2003. In January 2004,
Manchak  filed  a  motion  in the Nevada District Court seeking relief from that
Court's  orders  granting  summary  judgment  of  non-infringement  and  denying
reconsideration.  Manchak  appealed a March 2004 District Court order.  On March
18, 2005 the United States Court of Appeals for the Federal Circuit affirmed the
lower Court's ruling rejecting Manchak's claim. The matter is considered closed.

DAVID  W.  CROW  V.  AMERICAN ECOLOGY CORPORATION, U.S. DISTRICT COURT OF HARRIS
--------------------------------------------------
COUNTY,  TEXAS;  280TH  JUDICIAL  DISTRICT.

Former  employee  David  Crow alleged he was hired by the Company as its General
Counsel  in  October  1995 and that his compensation package included options to
purchase  Company  common  stock  with  an  oral agreement that the options were
exercisable  for  ten  years.  The complaint alleged breach of written contract,
breach  of  oral  contract, fraudulent inducement, and declaratory judgment that
Crow  was  entitled  to purchase 150,000 shares of stock at a strike price of $4
per  share. Crow estimated his damages as between $1,050,000 and $1,258,500. The
lawsuit,  initially  filed in Texas District Court was removed to federal court.
On  June 13, 2005, the United States District Court for the Southern District of
Texas  granted  the  Company's  motion  of  summary judgment. In early July, the
deadline  for  timely appeal passed without any known filing by Crow. The matter
is  considered  closed.

US ECOLOGY, INC. V. THE STATE OF CALIFORNIA, ET AL., CASE NO.GIC747562, SUPERIOR
---------------------------------------------------
COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN DIEGO

In 2000, subsidiary US Ecology, Inc. sued the State of California in state court
for  monetary  damages  exceeding  $162  million  based  on California's alleged
abandonment of the formerly proposed Ward Valley LLRW disposal project. In 2003,
the Superior Court ruled that the Company failed to establish causation and that
its  claim  was  further  barred  by the doctrine of unclean hands. Based on the
trial  court's  adverse  decision,  the Company wrote off a $20,951,000 deferred
site development asset in March 2003. In June 2003, the Company appealed. On May
25, 2005, the California Court of Appeal, Fourth Appellate District affirmed the
trial  court.  No  further  appeal  applies and the matter is considered closed.

NOTE 9.  COMMITMENTS AND CONTINGENCIES

Effective  January  1,  2003,  the  Company  established  the  American  Ecology
Corporation  Management  Incentive Plan ("MIP"). The Plan provides for specified
participants  to  receive bonuses based on pre-tax operating income levels. Plan
bonuses  are  to  be paid out over three years with a maximum in any one year of
$1,125,000  if  pre-tax  operating  income exceeds $12,000,000 including all MIP
costs.  The  Company  has  accrued  for  the  MIP  as  follows:

<TABLE>
<CAPTION>
                                 Three Months Ended September 30,     Nine Months Ended September 30,
                              ------------------------------------  -----------------------------------
($ in thousands)                     2005              2004               2005              2004
                              -----------------  -----------------  ----------------  -----------------
<S>                           <C>                <C>                <C>               <C>

MIP expense included in SG&A  $             365  $             267  $            906  $             881
</TABLE>


                                       12
<PAGE>
In  June 2005, the Company entered into a five year operating lease for 152 rail
cars  at  $475  a  month  for  each  car  leased.

The  Company  has  committed to purchase 150 rail cars for an aggregate purchase
price  of  $10,900,000  with  scheduled delivery dates between November 2005 and
March  2006.

The  Company  intends that shareholders of record on October 3, 2005 and January
2,  2006  will  receive  a  $.15  per  share dividend subject to compliance with
applicable  Bank  covenants.

NOTE 10.  CLOSURE AND POST CLOSURE OBLIGATIONS

Closure and post closure obligations are recorded when environmental assessments
and/or  remedial efforts are probable, and the costs can be reasonably estimated
consistent  with Statement of Financial Accounting Standards ("SFAS") No. 5 with
the  liability  calculated in accordance with SFAS No. 143. The Company performs
periodic  reviews  of  both  non-operating  and operating facilities and revises
accruals for estimated post-closure, remediation and other costs when necessary.
The  Company's  recorded  liabilities are based on its current best estimates of
costs and are updated periodically to reflect existing environmental conditions,
current  technology, laws and regulations, inflation and other economic factors.

Changes to reported closure and post closure obligations were as follows ($ in
thousands):

<TABLE>
<CAPTION>
                                 Accrued Closure and
                               Post Closure Obligation
                               -----------------------
<S>                            <C>
January 1, 2005 obligation     $               11,627
Accretion of obligation                           811
Payment of obligation                          (1,440)
Adjustment of obligation                           --
                               -----------------------
September 30, 2005 obligation  $               10,998
                               =======================
</TABLE>

At  September 30, 2005, none of the Company's assets were legally restricted for
purposes  of  meeting  closure  and  post  closure  obligations.

NOTE  11.  DISCONTINUED  OPERATIONS

In  December  27, 2002, the facility ceased revenue-producing operations and all
on-site waste was subsequently shipped to off-site processors and disposers. The
Oak  Ridge  assets  were  sold to Toxco, Inc. in June 2004.  As of September 30,
2005,  there  were  no  "Assets  held  for  sale  or  closure"  associated  with
discontinued  Oak  Ridge  operations.  The  revenue, costs and expenses and cash
flows  for these former operations have been excluded from continuing operations
results and reported as "Gain (loss) from discontinued operations" and "Net cash
used  in  discontinued  operations". Prior periods have been restated to reflect
this.

Operating  results for the discontinued operations were as follows for three and
nine  months  ending  September  30  2004:

<TABLE>
<CAPTION>
                                               Processing and Field
($in thousands)                                Services Operations
<S>                                           <C>

     Three months ending September 30, 2004
     --------------------------------------
     Revenues, net                            $                  --
     Operating income (loss)                                     (1)
     Net income (loss)                                           (1)
     Basic earnings (loss) per share                            .00
     Diluted earnings (loss) per share                          .00


                                       13
<PAGE>
     Nine months ending September 30, 2004
     -------------------------------------
     Revenues, net                            $                  --
     Operating income (loss)                                    138
     Net income (loss)                                        1,068
     Basic earnings (loss) per share                            .06
     Diluted earnings (loss) per share                          .06
</TABLE>

Costs incurred at the former Oak Ridge facility during the three and nine months
ended  September  30,  2004  are  summarized  as  follows:  ($  in  thousands)

<TABLE>
<CAPTION>
                                                                Three Months     Nine Months
                                                                ------------     -----------
<S>                                                             <C>              <C>
Net operating costs in excess of previous accruals                     $    21           $   163
Additional impairment of property and equipment                             --                --
Accounts receivable collected in excess of valuation allowance              (9)             (274)
Gain on sale of facility                                                    --              (930)
Decrease in estimated cost to dispose of removed waste                     (11)              (27)
                                                                       --------          --------

Net (income) for the three and nine months ended September 30          $     1           $(1,068)
                                                                       ========          ========
</TABLE>

Cost  changes  for  Oak  Ridge  activities  and disposal liabilities for removed
wastes are as follows for the nine months ending September 30, 2004:

<TABLE>
<CAPTION>
                          December 31,2003    Cash Payments       Adjustments     September 30,2004
                          ----------------  -----------------  -----------------  -----------------
<S>                       <C>               <C>                <C>                <C>

Waste disposal liability               623              (485)               (27)                111
On-site discontinued
operation cost liability               442              (469)                27                  --
</TABLE>

Adjustments  reflect differences between the estimated costs accrued at December
31,  actual  costs  incurred  during  the  first  three  quarters  of  2004, and
differences between estimated and actual costs incurred for disposition of waste
removed  from  the  facility.

NOTE 12.  HONEYWELL INTERNATIONAL CONTRACT

On  June  8,  2005,  the  Company  entered  into  a  contract  with  Honeywell
International,  Inc.  to transport, treat, and dispose of an estimated 1 million
tons  of  chromite  ore  processing  residue over an estimated four to five year
period. Waste disposal at the Company's Grand View, Idaho facility began in July
2005.  A $3,500,000 advance payment was received from, and will be credited back
to  Honeywell  during  the contract term. The contract provides that the Company
will  receive  99%  of  the  material  shipped  off-site  for  disposal.

NOTE 13.  PARTIAL SERVICE INTERRUPTION AT ROBSTOWN, TEXAS FACILITY

Hazardous  waste  treatment  operations at the Company's Robstown Texas facility
were  suspended  following a July 1, 2004 fire in the facility's waste treatment
building.  Treatment  revenue  previously  represented  approximately 50% of the
Texas  facility's  revenue.  Direct disposal operations, which continued without
interruption  after the fire, represented the balance of the facility's revenue.
On August 8, 2005 the Texas facility resumed full treatment services.

While  the  Company  is  insured  for property and equipment damage and business
interruption,  insurance  deductibles, operational upgrades and loss of customer
business have, and may continue to negatively impact financial performance.  The
Company  filed  a property insurance claim and received $790,000 of the $954,000
recognized as of September 30, 2005. The balance of the claim is under review by
its  insurance  carrier.  The Company has also filed approximately $2,400,000 in
claims  under  its  business interruption insurance policy for July 2004 through
April  2005, of which $472,000 has been recognized in the consolidated statement
of  operations  through  September  30,


                                       14
<PAGE>
2005.  This  claim  is also under review by its insurer. The Company anticipates
recognizing  the  value  of  the  claims  after  its insurer accepts or confirms
amounts.  No  assurance  can be given that the Company will be able to recognize
the  pending  insurance  claims.

NOTE 14. WASHINGTON SUBLEASE

On  July  27,  2005  the  Company entered into a new sublease for the Washington
disposal  facility.  The  agreement  provides for a ten year sublease with four,
ten-year  renewal  options  and  an  annual inflation-adjusted rental payment of
approximately  $63,000.

NOTE 15. SUBSEQUENT EVENTS

On  October  3, 2005 the Company declared a dividend of $.15 per common share to
stockholders  of record on October 3, 2005. The dividend was paid out of cash on
hand  on  October  14,  2005  and  totaled  $2,645,000.

On  October  6,  2005  Honeywell  filed  a  motion  in US District Court for the
District  of  New  Jersey citing changed circumstances and seeking to reduce the
waste material shipped off-site by 53%. This motion and related motions filed by
other  parties are now under review by the Court. No assurance can be given that
the  total  estimated  volume  of  waste  under  the  Honeywell contract will be
disposed  of  by  the  Company.

In  late October 2005 the Company was notified by Honeywell that the preliminary
phase  of  excavation  and waste shipments at the project site was complete, but
that  the  main excavation of waste material at the site would be delayed for up
to  90  days.  Unless  otherwise  agreed,  the  Company  will  assess  specified
deficiency  fees  to  Honeywell  for  not  meeting  minimum  average  shipment
requirements in accordance with its existing Contract. The Company will also pay
certain deficiency fees to a subcontractor.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS.

This document contains forward-looking statements that involve known and unknown
risks  and  uncertainties  which  may  cause actual results in future periods to
differ  materially from those indicated herein. These risks include, but are not
limited  to,  compliance  with  and  changes to applicable laws, regulations and
permits,  enforcement  actions, exposure to and results of litigation, access to
capital,  access  to  insurance  and  financial  assurances,  new  technologies,
competitive  environment,  labor  disputes,  general  economic  conditions,
transportation and reagent costs, and loss or diminution of major contracts. The
Form 10-K for the year ending December 31, 2004 contains additional risk factors
and  an  expanded  disclosure  of  these risks. When the Company uses words like
"will",  "may,"  "believes,"  "expects,"  "anticipates,"  "should," "estimates,"
"project,"  "plans,"  their  opposites  and  similar expressions, the Company is
making forward-looking statements. These terms are most often used in statements
relating  to  business  plans,  strategies,  anticipated benefits or projections
about  the  anticipated  revenues,  earnings  or  other aspects of our operating
results.  The  Company  makes these statements in an effort to keep stockholders
and  the  public  informed  about  our  business  based  on management's current
expectations  about future events. Such statements should be viewed with caution
and  are  not  guarantees of future performance or events. As noted elsewhere in
this  report,  our  business  is  subject  to  uncertainties,  risks  and  other
influences,  many  of which the Company has no control over. Additionally, these
factors, either alone or taken together, could have a material adverse effect on
the  Company  and  could change whether any forward-looking statement ultimately
turns  out  to be true. The Company undertakes no obligation to publicly release
updates  or  revisions  to  these statements. The following discussion should be
read  in  conjunction with the audited consolidated financial statements and the
notes thereto filed on Form 10-K for the year ending December 31, 2004.

Transportation and Waste  Treatment  Reagent Costs:  During  the  quarter  ended
---------------------------------------------------
September  30,  2005  transportation  services  and  expenses  represented  an
increasing  portion  of  the  Company's  business.  While the Company is able to
impose  fuel  surcharges on certain customers, the Company's exposure to changes
in  transportation  related costs has increased. Additionally, the cost of waste
treatment  reagents  has  also  increased, in certain cases significantly. These
factors  may,  over  time, affect the Company's ability to compete for treatment
and  disposal  projects  in  the  future.  This  is  also a key component of the
Company's strategy to bundle rail transportation and disposal services for large
projects.  This  may  expose the Company to increased costs and decreasing gross
margins.


                                       15
<PAGE>
<TABLE>
<CAPTION>
                                     Three Months Ended September 30,     Nine Months Ended September 30,
                                  ------------------------------------  -----------------------------------
($ in thousands)                         2005               2004               2005               2004
                                  -----------------  -----------------  -----------------  ----------------
<S>                               <C>                <C>                <C>                <C>
Transportation Costs included in
Direct Operating Costs            $           8,435  $           2,142  $          15,471  $          7,445
</TABLE>

Unless otherwise described, changes discussed relate to the increase or decrease
from  the three and nine month periods ended September 30, 2004 to the three and
nine  month  periods  ended  September  30,  2005.

INTRODUCTION
------------

The  Company  is  a  hazardous, PCB, industrial and radioactive waste management
company  providing transportation, treatment and disposal services to commercial
and  government entities including, but not limited to nuclear power plants, oil
refineries,  chemical  manufacturing plants, steel mills, biomedical facilities,
universities and research institutions. The majority of its revenues are derived
from fees charged for use of the Company's four fixed waste disposal facilities.
The Company and its predecessors have been in business for 52 years.

A significant portion of the Company's revenue is attributable to discrete waste
clean-up  projects  ("Event  Business")  which  vary  substantially  in size and
duration.  The one-time nature of Event Business necessarily creates variability
in  revenue and earnings. Moreover, the types and amounts of waste received from
recurring  ("Base  Business")  customers  also  varies quarter to quarter. These
variations  in  service  mix  are  difficult to forecast with precision, and can
produce  large  quarter to quarter swings in revenue, gross profit, gross margin
and  operating  profit.  Management's  strategy  is  to  continue  expanding its
recurring  customer  business  while simultaneously securing both short term and
extended  duration  Event  Business  projects.  When the Company's Base Business
covers  the  Company's  fixed costs, a significant portion of the Event Business
revenue  generally  falls  through  to  the  bottom  line.  This  strategy takes
advantage of the largely fixed cost nature of the waste disposal business.

OVERALL COMPANY PERFORMANCE
---------------------------

The  Company's  operational performance for the three months ended September 30,
2005 was substantially improved over the third quarter of 2004.  All four of the
Company's  disposal  facilities  improved  performance  over the same quarter in
2004,  and  three of the four sites improved performance over the second quarter
of  2005.  Another  significant  factor  in  this improvement was an increase in
second  and  third  quarter waste shipments to the Company's Idaho facility from
multiple,  previously  delayed  clean-up  projects.

Year to date comparisons are materially affected by several non-operating events
including  a  gain  on  the  Oak Ridge asset sale, the reversal of the valuation
allowance on the Company's deferred tax assets, and receipt of proceeds from the
Nebraska  litigation  settlement.  These  events and the Honeywell International
contract  are  discussed  in  more  detail  below.

Oak Ridge Asset Disposition: On June 30, 2004 the Company sold substantially all
----------------------------
of  its  assets  and  related  environmental liabilities associated with its Oak
Ridge  operations to Toxco, Inc ("Toxco"). Toxco received $1,650,000 in cash and
$2,060,000  in  property  and  equipment. In return, Toxco assumed $4,625,000 in
estimated  environmental  and other liabilities. The Company recorded a $930,000
gain  on  sale  of the facility which is included in the results of discontinued
operations  for  the  three  months  ending  June  30,  2004.

Income  Tax  Expense:  Based  on evaluation of year-to-date 2004 pre-tax income,
---------------------
expectations  of  continued  profitability,  and  disposition  of  the Oak Ridge
facility,  the deferred tax asset's valuation allowance was reversed at June 30,
2004. This resulted in an income tax benefit of $11,338,000 for the three months
ended  June  30,  2004.


                                       16
<PAGE>
Settlement  of  Nebraska  Litigation:  On  August  1,  2005 the Company received
-------------------------------------
$11,805,000,  from the CIC, fully resolving its claim on the Nebraska settlement
proceeds.  The Company is presently completing agreed upon transition activities
preparatory  to  terminating  its  contract  with  the  CIC.

Honeywell  International  Contract:  On  June 8, 2005 the Company entered into a
-----------------------------------
contract  to  transport,  treat and dispose of contaminated soils from a site in
Jersey  City,  New  Jersey.  Initial engineering studies estimate that 1 million
tons of chromite ore processing residues ("COPR") are present at the Jersey City
site.  Depending  on  the  volume of material shipped off-site and the Company's
ability  to  successfully  perform  under  the  contract,  the Company initially
estimated  revenue in the range of $175 to $240 million over a four to five year
period.  A  significant  portion  of the revenue under the contract will include
transportation services. As a result, management expects that while revenue will
increase, the Company's gross profit relative to revenue i.e. gross margin, will
decrease.

Under  terms  of  the  contract,  the  Company  will  treat  and  dispose of the
contaminated  soil  at  Company  owned  hazardous waste disposal facilities. The
contract  specifies that the Company will receive substantially all of the waste
shipped offsite, subject to applicable contract conditions. The Company plans to
expand  its  facilities and increase rail transport capabilities at an estimated
cost of up to $12 million. Off-site disposal of the material began in July 2005.
On  October  6,  2005  Honeywell  filed  a  motion  in US District Court for the
District  of  New Jersey citing changed circumstances and requested the judge to
allow  53%  of  the  COPR material to remain in place. No assurance can be given
that the initially estimated waste volume will be shipped for disposal.

In  late October 2005 the Company was notified by Honeywell that the preliminary
phase  of  excavation  and waste shipments at the project site was complete, but
that  the  main excavation of waste material at the site would be delayed for up
to  90  days.  Unless  otherwise  agreed  in  writing,  the  Company will assess
deficiency  fees  to  Honeywell  for  not  meeting  minimum  average  shipment
requirements  in  accordance with its existing Contract, and will pay deficiency
fees  to  a  subcontractor.

CRITICAL  ACCOUNTING  POLICIES
------------------------------

In  preparing  the  financial  statements,  management  makes many estimates and
assumptions  that  affect  the  Company's  financial  position  and  results  of
operations.  Accounting  for  the  July  1,  2004  Texas Fire, Disposal Facility
Accounting,  and  Litigation  involve  subjective  judgments,  estimates  and
assumptions  that would likely produce a materially different financial position
and  result of operations if different judgments, estimates, or assumptions were
used.  These  matters  are  discussed  below.

ACCOUNTING FOR THE JULY 1, 2004 TEXAS FIRE

A  July  1, 2004 fire in the Robstown, Texas facility's waste treatment building
resulted  in  an insurance claim for Property and Equipment damaged in the fire.
As  of  December  31,  2004  the Company had fully impaired the $679,000 in book
value  of  assets  damaged in the fire and recognized $954,000 of Fire insurance
proceeds.  This  amount  represents the stated values submitted to the insurance
carrier  at  the  inception  of  coverage  and the probable recovery expected by
management.  As  of  September 30, 2005, $790,000 in property insurance proceeds
had  been  received  by  the  Company.

As  of  September  30,  2005,  the Company has filed approximately $2,400,000 in
business  interruption  insurance  claims with its insurer, of which $472,000 of
incremental  costs  due  to  the  fire have been recognized. The Company has not
recognized  significant  lost  revenue  associated  with suspension of treatment
services  following  the  fire  pending  determination  of  the  actual  amounts
recoverable  from  its  insurer.

DISPOSAL  FACILITY  ACCOUNTING

In  general  terms,  a  disposal  cell  development asset exists for the cost of
building  usable  disposal  space  and  a  closure liability exists for closing,
maintaining  and  monitoring  the disposal unit once this space has been filled.
Major  assumptions  and  judgments used to calculate cell development assets and
closure  liabilities  are  as  follows:


                                       17
<PAGE>
-    Personnel  and  equipment  costs  incurred  to construct disposal cells are
     capitalized  as  a  cell  development  asset.

-    The  cell  development  asset  is amortized as each available cubic yard of
     disposal  space  is  filled.  Periodic  independent  engineering survey and
     inspection  reports  are  used to determine the remaining volume available.
     These  reports  take  into account waste volume, compaction rates and space
     reserved  for  capping filled cells. Additionally, changes in the estimated
     useful  lives  of the cells or related expansion plans have a direct effect
     on  the  amortization expense related to those cells during future periods.

-    The closure liability is the present value based on a current cost estimate
     prepared,  or  concurred in by an independent engineering firm of the costs
     to  close, maintain and monitor filled disposal units. Management estimates
     the  timing  of payment, accretes the current cost estimate by an estimated
     cost  of living (1.5%), and then discounts (9.3%) the accreted current cost
     estimate  back  to a present value. Final payments of the closure liability
     are  estimated  as being paid in 2056 based upon current permitted capacity
     and  estimated  annual  usage.

A  periodic  review  of  the  current  cost  estimate  to close and maintain the
Company's  Non-Operating deep well injection operation in Winona, Texas is being
undertaken in consultation with State of Texas officials and with the support of
an  independent  engineering firm. While the closure and post-closure activities
and the associated costs and their duration have not yet been established by the
responsible  regulatory  agency,  the  Company  may  be required to perform such
activities  for a longer time period it has currently accounted for.  Management
expects  to  complete  its  periodic  review and revise its estimates during the
fourth  quarter  of  2005.

LITIGATION

The Company is periodically involved in litigation requiring estimates of timing
and  loss  potential  whose disposition is controlled by the judicial process or
other factors. The Company is not presently involved in any material litigation.
Significant  developments  have  occurred  on  the following legal matters since
December  31,  2004:

ENTERGY  ARKANSAS,  INC.  ET  AL, CENTRAL INTERSTATE LOW-LEVEL RADIOACTIVE WASTE
--------------------------------------------------------------------------------
COMMISSION  AND  US  ECOLOGY,  INC. ("PLAINTIFFS") V. STATE OF NEBRASKA, ET AL.,
------------------------------------------------------------------------------
CASE NO. 4:98CV3411, U.S. DISTRICT COURT, DISTRICT OF NEBRASKA

This  action  was  brought  in  federal court in 1999 by electric utilities that
generate  LLRW within the Central Interstate Low-Level Radioactive Waste Compact
("CIC").  The  action sought declaratory relief and damages for bad faith in the
State  of  Nebraska's  processing  and  denial  of  the Company's application to
develop  and  operate  a LLRW disposal facility near Butte, Nebraska. US Ecology
was  the  CIC's  contractor  and  intervened  as  a  plaintiff.

In  2002, the US District Court for the District of Nebraska entered judgment in
favor  of the CIC for $153 million. Of this amount, USE's share was $6.2 million
plus  $6.1 million for prejudgment interest. The Company carried $6.5 million on
its balance sheet for capitalized facility development costs. The State appealed
the judgment to the Eighth Circuit Court of Appeals, which affirmed the District
Court  ruling  in  its  entirety.

In  August,  2004 Nebraska and the CIC entered into a settlement under which the
State  agreed to pay in full, or to make four equal payments of $38.5 million to
the  CIC  beginning  August 1, 2005. The full $154 million settlement reflects a
principal  amount  of $140.5 million, plus interest of 3.75% compounded annually
and  beginning August 1, 2004. During its 2005 session, the Nebraska legislature
appropriated  the  full  $154  million  settlement  amount.  The  State Attorney
General's  Office  subsequently  paid  the  CIC  in  full. On August 1, 2005 the
Company  received  $11,805,000  from  the  CIC, fully resolving its claim on the
Nebraska  settlement  proceeds.  The Company is presently completing agreed upon
transition  activities preparatory to terminating its contract with the CIC. The
matter  is  considered  closed.

MANCHAK  V.  US  ECOLOGY,  INC., U.S. DISTRICT COURT FOR THE DISTRICT OF NEVADA,
--------------------------------
CASE  NO.  CV-S-97-0655.

In  1996,  Frank  Manchak,  Jr.  ("Manchak")  filed  suit  against subsidiary US
Ecology,  Inc.,  alleging infringement of a sludge treatment patent to stabilize
hazardous  waste  at  the  Company's  Beatty,  Nevada  hazardous waste facility.
Manchak  sought  unspecified damages for infringement, treble damages, interest,
costs  and  attorney  fees.  In  2002,  the United States District Court for the
District of Nevada dismissed the matter. Manchak's subsequent appeal to the U.S.
Court  of  Appeals  for the Federal Circuit was also dismissed, and his requests
for  reconsideration  and  en  banc


                                       18
<PAGE>
review  were  rejected  in  2003. In January 2004, Manchak filed a motion in the
Nevada  District  Court seeking relief from that Court's orders granting summary
judgment  of  non-infringement  and  denying reconsideration. Manchak appealed a
March  2004  District  Court order. On March 18, 2005 the United States Court of
Appeals  for  the  Federal  Circuit  affirmed the lower Court's ruling rejecting
Manchak's  claim.  The  matter  is  considered  closed.

DAVID  W.  CROW  V.  AMERICAN ECOLOGY CORPORATION, U.S. DISTRICT COURT OF HARRIS
--------------------------------------------------
COUNTY,  TEXAS;  280TH  JUDICIAL  DISTRICT.

Former  employee  David  Crow alleged he was hired by the Company as its General
Counsel  in  October  1995 and that his compensation package included options to
purchase  Company  common  stock  with  an  oral agreement that the options were
exercisable  for  ten  years.  The complaint alleged breach of written contract,
breach  of  oral  contract, fraudulent inducement, and declaratory judgment that
Crow  was  entitled  to purchase 150,000 shares of stock at a strike price of $4
per  share. Crow estimated his damages as between $1,050,000 and $1,258,500. The
lawsuit,  initially  filed in Texas District Court was removed to federal court.
On  June 13, 2005, the United States District Court for the Southern District of
Texas  granted  the  Company's  motion  of  summary judgment. In early July, the
deadline  for  timely appeal passed without any known filing by Crow. The matter
is  considered  closed.

US ECOLOGY, INC. V. THE STATE OF CALIFORNIA, ET AL., CASE NO.GIC747562, SUPERIOR
---------------------------------------------------
COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN DIEGO

In 2000, subsidiary US Ecology, Inc. sued the State of California in state court
for  monetary  damages  exceeding  $162  million  based  on California's alleged
abandonment of the formerly proposed Ward Valley LLRW disposal project. In 2003,
the Superior Court ruled that the Company failed to establish causation and that
its  claim  was  further  barred  by the doctrine of unclean hands. Based on the
trial  court's  adverse  decision,  the Company wrote off a $20,951,000 deferred
site development asset in March 2003. In June 2003, the Company appealed. On May
25, 2005, the California Court of Appeal, Fourth Appellate District affirmed the
trial court. No further appeal applies and the matter is considered closed.

RESULTS  OF  OPERATIONS
-----------------------

The  following table presents, for the periods indicated, the operating costs as
a percentage of revenues in the consolidated income statement:

<TABLE>
<CAPTION>
                                              Three Months Ended September 30,      Nine Months Ended September 30,
                                           ------------------------------------  ------------------------------------
             ($ in 000's)                          2005              2004               2005               2004
                                                  -----              ----               ----               ----
                                            $               %  $              %  $               %  $               %
                                            --------  -------  -------  -------  --------  -------  --------  -------
<S>                                         <C>       <C>      <C>      <C>      <C>       <C>      <C>       <C>

Revenue                                      24,791             12,929            56,124             40,629
Direct operating costs                       14,822     59.8%    7,396    57.2%   33,094     59.0%   22,457     55.3%
                                            --------           -------           --------           --------

Gross profit                                  9,969     40.2%    5,533    42.8%   23,030     41.0%   18,172     44.7%
SG & A                                        3,103     12.5%    2,967    22.9%    8,975     16.0%    8,417     20.7%
Business interruption insurance claim            --      0.0%       --     0.0%      (41)    -0.1%       --      0.0%
                                            --------           -------           --------           --------

Income from operations                        6,866     27.7%    2,566    19.8%   14,096     25.1%    9,755     24.0%

Interest income                                 164      0.7%       52     0.4%      342      0.6%      133      0.3%
Interest expense                                 45      0.2%       48     0.4%      140      0.2%      146      0.4%

Gain on settlement of Nebraska litigation     5,327     21.5%       --     0.0%    5,327      9.5%       --      0.0%
Other income (expense)                          (31)    -0.1%        9     0.1%        8      0.0%       74      0.2%
                                            --------           -------           --------           --------

Net income before income taxes and
discontinued operations                      12,281     49.5%    2,579    19.9%   19,633     35.0%    9,816     24.2%
Income tax expense (benefit)                  4,545     18.3%      884     6.8%    7,335     13.1%   (9,290)   -22.9%
                                            --------           -------           --------           --------


                                       19
<PAGE>
Net income before discontinued operations     7,736     31.2%    1,695    13.1%   12,298     21.9%   19,106     47.0%
                                            ========           =======           ========           ========
</TABLE>

COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
------------------------------------------------------------

REVENUE
-------

For the three months ended September 30, 2005, the Company reported consolidated
revenue  of  $24,791,000,  a  92% increase over the $12,929,000 reported for the
same period in 2004. All four waste disposal facilities generated higher revenue
during  the third quarter of 2005 as volumes increased 71% over the same quarter
last year. Higher quarterly waste volume was slightly offset by a 2% decrease in
average selling price ("ASP") for the Company's treatment and disposal services.
The  increase  in waste volume primarily resulted from an increase in project or
Event  work  during  the  quarter.  The  decrease  in  ASP reflects an increased
percentage of revenue derived from large Event projects during the third quarter
of  2005.  The following customers accounted for more than 10% of revenue during
the  three  months  ended  September  30:

<TABLE>
<CAPTION>
                                  Three Months Ended September 30,
                               ------------------------------------
<S>                            <C>                <C>
(% of revenue, $in thousands)              2005               2004
                               -----------------  -----------------

U.S. Army Corps of Engineers                 27%                37%
Honeywell International                      18%                --
Sevenson Environmental                       13%                --
</TABLE>

Operating  Disposal  Facilities
-------------------------------

At the Richland, Washington LLRW disposal facility revenue increased 38% for the
three  months  ended  September  30,  2005  from  the  same period in 2004. This
increase  in  revenue  was due to above average shipments to the facility during
the third quarter of 2005. For 2005, the Washington Utilities and Transportation
Commission  has  approved  an  annual  revenue requirement of $5,346,000 for the
Richland  facility's  rate-regulated  low-level  radioactive  waste  interstate
compact  business.

At  the Grand View, Idaho disposal facility, a 95% increase in waste volumes and
a  294%  increase  in  transportation  services  were  slightly  offset by an 8%
decrease  in  ASP.  However, the higher volumes drove a 126% increase in revenue
over  the  same  quarter  last  year.

At  the  Beatty,  Nevada  hazardous  treatment  and  disposal  facility, revenue
increased 22% for the three months ended September 30, 2005 from the same period
in 2004. The increased revenue reflects a 2% increase in waste volumes and a 22%
increase  in ASP. Higher ASP reflected greater delivery of specialized treatment
services,  including  receipt  of  corrosive  wastes,  allowed by the facility's
recently  renewed  five  year  hazardous  waste  permit.

At  the  Robstown,  Texas  hazardous  treatment  and  disposal facility, revenue
increased 97% for the three months ended September 30, 2005 over the same period
in  2004.  The increased revenue reflected a 67% increase in waste volumes and a
21%  increase  in  ASP  associated  with a favorable service mix compared to the
third  quarter  of 2004. In July 2004 a fire occurred in the permitted treatment
building  at  the  Robstown  facility resulting in no waste being treated at the
facility  during  the  third  quarter  of  2004.

DIRECT OPERATING COSTS
----------------------

For  the  three  months  ended September 30, 2005, consolidated direct operating
costs  increased  100% to $14,822,000 compared to $7,396,000 for the same period
in  2004.  This  primarily  reflects  increased  waste  volumes and a $6,293,000
increase  in  transportation  costs  due  to the Company's increased delivery of
bundled  transportation  and  disposal  services.  Relative  to  revenue, direct
operating  costs  increased  from 57% of revenue in the third quarter of 2004 to
60%  for  the  same  quarter  this  year.


                                       20
<PAGE>
Operating  Disposal  Facilities
-------------------------------

Direct costs at all four operating disposal facilities increased from the same
quarter last year. The increase in consolidated direct operating costs was
largely driven by a $6,871,000 increase in direct costs at the Grand View, Idaho
facility. The higher direct costs were principally caused by transportation
costs and other volume related variable expenses. Specifically, transportation
costs increased almost 300% as the Company shipped waste under bundled
transportation and disposal jobs. In the third quarter of this year,
transportation costs represented 57% of total direct costs. In the same quarter
last year, transportation costs only represented 29% of total direct costs. Also
impacting direct costs in the quarter were higher costs for waste treatment
reagents, increased disposal airspace amortization directly associated with
higher disposal volumes, increased maintenance costs due to higher equipment
utilization, and higher labor costs caused by increased overtime, additional
hiring and operating second shifts to support the higher waste volumes at its
Grand View, Idaho facility.

Non  Operating  Disposal  Facilities
------------------------------------

Non  Operating  Disposal  Facilities  incur  current  period  expenses  for  the
accretion  of  engineering,  laboratory  and other contractor expenses and labor
costs  required to meet the Company's obligations subsequent to operational use.
For  the  three  months  ended September 30, 2005 and 2004, the Company reported
$5,000  and  $22,000  of expenses on formerly proposed development projects, and
$110,000  and  $85,000  of  costs  in 2005 and 2004 for closure and post-closure
expenses  for  discontinued  operations.

GROSS  PROFIT
-------------

Significantly  higher quarterly revenue drove an 80% increase in gross profit or
$9,969,000, compared with a gross profit of $5,533,000 for the same quarter last
year.  Increased disposal direct costs at all four disposal facilities were more
than  offset  by  the  higher  revenue  although at a decreased rate relative to
revenue.  As  a result, gross margin decreased to 40% of revenue compared to 43%
of  revenue  in  2004.  Large Event projects can significantly increase earnings
while  simultaneously  decreasing  gross  margins,  particularly when low margin
transportation  services  are  bundled with higher margin treatment and disposal
services.  The Company seeks to maximize contribution margin and gross profit by
controlling  direct  costs  and  increasing  waste  volumes.

Selling, General and Administrative Costs (SG&A)
------------------------------------------------

For  the  three  months  ended  September 30, 2005, the Company reported SG&A of
$3,103,000  (13% of revenue), a 5% increase from the $2,967,000 (23% of revenue)
for  the  same  three  months  of  2004.

Operating  Disposal  Facilities
-------------------------------

During  the quarter ended September 30, 2005, Operating Disposal Facilities SG&A
decreased $240,000 primarily due to the reclassification of certain personnel to
Corporate  SG&A.

Corporate
---------

During  the  quarter ended September 30, 2005, Corporate SG&A increased $374,000
over the same period last year. The increase in SG&A reflects a $365,000 accrual
in  the  third  quarter  of  2005 for the Management Incentive Plan, or $102,000
higher  than  the  third quarter 2004 MIP accrual. The Company has fully accrued
the  costs  for  the 2005 Management Incentive Plan as of September 30, 2005. As
noted  above,  certain  personnel  were  reclassified  to  Corporate  SG&A  from
Operating  Disposal  Facilities,  resulting in a further increase Corporate SG&A
over  third  quarter  2004  Corporate  SG&A.

Non  Operating  Disposal  Facilities
------------------------------------

Non  Operating  Disposal  Facilities  incur primarily legal costs to recover the
Company's  investment in formerly proposed disposal site development projects in
Ward  Valley,  California  and  Butte,  Nebraska.  For  the  three  months


                                       21
<PAGE>
ended  September  30,  2005  and 2004, the Company reported $3,000 and $1,000 of
such  SG&A  expenses for close-out activities following resolution of previously
settled  litigation.

COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
-----------------------------------------------------------
REVENUE
-------

For  the nine months ended September 30, 2005, the Company reported consolidated
revenue  of  $56,124,000,  a  38% increase over the $40,629,000 reported for the
same  period  in  2004.  All four operating disposal facilities generated higher
revenue  in  the  first  nine  months  of 2005 than the same period in 2004. The
higher  revenue  reflected  increased  waste volumes and slightly higher average
selling price ("ASP"). At the three hazardous waste disposal facilities, volumes
increased  33%  over  the  same  nine  months last year. This increase primarily
reflects  an  increase in Event work performed during the period, although there
was  also  an  increase  in  recurring Base business. There was a 1% increase in
year-to-date  2005  ASP  compared  to  2004.  The  balance  of  the  increase in
consolidated  revenue  reflects  increased transportation revenue as the Company
continued  to  execute  its strategy of selective bundling of disposal with rail
transportation services to win targeted contracts. During the nine months ending
September  30, 2005 and 2004, revenue from the Grand View, Idaho site's contract
with  the U.S. Army Corps of Engineers accounted for $16,105,000 and $13,693,000
or  29%  and  34%  of revenue, respectively. The Army and other federal agencies
continue  to ship waste under this contract, which was renewed for five years in
the  second  quarter  of  2004.

Operating  Disposal  Facilities
-------------------------------

At  the  Richland,  Washington  disposal facility, revenue increased 11% for the
nine months ended September 30, 2005 from the same period in 2004. This increase
was  due  to  above  average non rate-regulated shipments to the facility during
2005.  The  Washington  Utilities  and Transportation Commission has approved an
annual  2005  revenue  requirement  of  $5,346,000  for  the Richland facility's
rate-regulated  low-level radioactive waste interstate compact business of which
$3,871,000  was  recognized  during  the  nine  months ended September 30, 2005.

At  the  Grand View, Idaho disposal facility, higher waste volumes and flat ASPs
drove  a 55% increase in revenue over the same nine months last year. During the
first  nine  months of 2005, the facility disposed of 47% more waste volume than
in  the  same  period  last  year.

At  the  Beatty,  Nevada  disposal  facility, revenue increased 14% for the nine
months  ended  September  30,  2005  from the same period in 2004. The increased
revenue  was  due  to  an  8%  increase in ASP despite a 4% decrease in disposal
volume.  This  decrease  resulted  from  fewer lower priced remediation projects
compared  to  2004.  Shipments  from recurring Base business customers increased
slightly.  During  the  second quarter of 2005, the facility received regulatory
approval  to  treat  corrosive  wastes which contributed to the increase in ASP.

At  the  Robstown,  Texas  disposal facility, revenue increased 26% for the nine
months  ended  September  30,  2005  over the same period in 2004. The increased
revenue  reflected  a  more  favorable mix of wastes received at the site, a 10%
increase  in  ASP  and  a  15% increase in waste volume. A fire in the permitted
containment  building  on  July  1, 2004 limited the scope of treatment services
offered  until  the new permitted containment building was operational on August
8,  2005.

DIRECT OPERATING COSTS
----------------------

For  the  nine  months  ended  September 30, 2005, consolidated direct operating
costs increased 47% to $33,094,000 (59% of revenue) compared to $22,457,000 (55%
of  revenue)  for  the  same  period in 2004. This primarily reflected increased
transportation  costs  and  waste  volumes.  Direct  operating  costs  increased
relative  to  revenue,  reflecting  an  increase  in  low  margin transportation
services  provided  in  conjunction  with  disposal services. The Company's rail
transportation  assets  were  fully  utilized by the end of the third quarter of
2005,  an improvement over the first quarter of 2005 when Event project shipment
delays  caused  substantial  underutilization  of  the  Company's leased railcar
fleet.

Operating  Disposal  Facilities
-------------------------------


                                       22
<PAGE>
Direct costs at all four disposal facilities increased from the same nine months
last  year.  The increase in consolidated direct operating costs for the Company
was  largely driven by an $8,928,000 increase in direct costs at the Grand View,
Idaho  facility.  This  increase  was due to increased waste volumes and related
transportation  costs. Approximately $6,293,000 or 70% of the increase in direct
operating  costs  at Grand View was for costs incurred to transport waste to the
facility.  During  the  nine  months  ended  September  30,  2005  higher  waste
treatment reagent and fuel charges increased costs over the same period of 2004.

Non Operating Disposal Facilities
---------------------------------

Non  Operating  Disposal  Facilities  incur  current  period  expenses  for  the
accretion  of  engineering,  laboratory  and other contractor expenses and labor
costs  required to meet the Company's obligations subsequent to operational use.
For  the  nine  months  ended  September 30, 2005 and 2004, the Company reported
$31,000 and $44,000 in expenses on the formerly proposed Nebraska and California
development  projects,  and  $293,000  and  $286,000 in closure and post-closure
expenses  at  discontinued  operations.

GROSS  PROFIT
-------------

Significantly  higher  revenue allowed the Company to generate a 27% increase in
gross  profit, pushing gross profit to $23,030,000, compared with a gross profit
of $18,172,000 for the same nine months last year. Increased disposal revenue at
all  operating disposal facilities produced a greater earnings contribution when
combined  with a more favorable service mix and the favorable operating leverage
produced  by  high  volume  throughput. Gross margin decreased to 41% of revenue
from  45%  of  revenue due to increased low margin rail transportation services.

SELLING, GENERAL AND ADMINISTRATIVE COSTS (SG&A)
------------------------------------------------

For  the  nine  months  ended  September  30, 2005, the Company reported SG&A of
$8,975,000  (16% of revenue), a 7% increase from the $8,417,000 (21% of revenue)
for  the  same  nine  months  of  2004. The increase in SG&A primarily reflected
increased  legal  expenses, auditing, consulting, and director fees. No material
lawsuits  are currently outstanding, which should, reduce legal fees and free up
management  time  and  resources  to  focus  on  growing  the  business.

Operating  Disposal  Facilities
-------------------------------

During  the  nine months ended September 30, 2005, Operating Disposal Facilities
SG&A  decreased  $248,000  primarily  due  to  the  assignment  of certain sales
personnel  to  Corporate  SG&A.

Corporate
---------

During  the  nine  months  ended  September  30,  2005, Corporate SG&A increased
$821,000.  The  increase in SG&A reflects increased legal, auditing, consulting,
and  director  fees,  all  of which management expects to decrease in the fourth
quarter  of  2005.  The Company also reclassified certain personnel as Corporate
SG&A  from  the  Operating  Disposal  Facilities, resulting in the other primary
change from SG&A for the nine months ended September 30, 2004.

The  Company continued to maintain compliance with internal control requirements
of  Section  404  of  the  Corporate  Reform Act of 2002 (Sarbanes-Oxley) in the
second  quarter  of  2005.  While  the  Company  continues to devote significant
resources  to  this  effort,  the time and cost required to maintain Section 404
compliance  is  less  than  2004  levels.

Non  Operating  Disposal  Facilities
------------------------------------

Non  Operating  Disposal  Facilities  incurred  primarily  legal  costs  seeking
recovery  of  the  Company's  previous  investments  in  the discontinued Butte,
Nebraska  and  Ward Valley, California projects. As litigation involving both of
these  projects  has  concluded, no further material costs are expected. For the
nine  months  ended  September  30,


                                       23
<PAGE>
2005  and  2004,  the  Company  reported  $10,000  and $25,000 of SG&A expenses,
respectively,  at  Non  Operating  Disposal  Facilities.

COMPARISON OF THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
---------------------------------------------------------------------

INTEREST INCOME
---------------

For  the  three  and  nine  months  ended September 30, 2005, the Company earned
$164,000  and $342,000 of interest income, an increase from $52,000 and $133,000
in  the same periods of 2004. This was caused by higher cash balances and higher
interest  rates available on short term investments. Interest income is earnings
on  cash balances, short-term investments, and notes receivable for which income
is  a  function  of  prevailing  market  rates.

INTEREST  EXPENSE
-----------------

For  the  three  and  nine months ended September 30, 2005, the Company reported
interest  expense  of $45,000 and $140,000, a decrease from $48,000 and $146,000
in  2004.  The  primary cause of this decrease was a $1,400,000 reduction in the
average  debt  outstanding  from  September  30,  2004 to 2005, offset by rising
interest rates. For the nine months ending September 30, 2005, the interest rate
paid on its single outstanding term loan was 5.5%, an increase of 1.69% from the
3.81%  at  September  30,  2004.

OTHER INCOME (LOSS)
-------------------

Other  Income is composed of the following for the periods ended September 30 ($
in thousands):

<TABLE>
<CAPTION>
                                                       Three Months Ended,       Nine Months Ended,
                                                        2005         2004         2005        2004
                                                    -----------  ------------  ----------  -----------
<S>                                                 <C>          <C>           <C>         <C>
Data processing services                                    --            10           --           44
Cash receipts for sale or rent of property rights          (31)           --            8           22
Other miscellaneous income, net                             --            (1)          --            8
                                                    -----------  ------------  ----------  -----------

Total other income (loss)                           $      (31)  $         9   $        8  $        74
                                                    ===========  ============  ==========  ===========
</TABLE>

INCOME TAXES
------------

The  components  of  the  income tax provision (benefit) were as follows for the
periods ended September 30 (in thousands):

<TABLE>
<CAPTION>
                                                       Three Months Ended      Nine Months Ended
                                                     ----------------------  ----------------------
                                                        2005        2004        2005        2004
                                                     ----------  ----------  ----------  ----------
<S>                                                  <C>         <C>         <C>         <C>
State income tax expense                             $      343  $       48  $      553  $      48
Federal income tax expense                                4,202         836       6,782      3,593
Reversal of deferred tax asset valuation allowance           --          --          --    (12,931)
                                                     ----------  ----------  ----------  ----------
Income tax expense (benefit)                         $    4,545  $      884  $    7,335  $  (9,290)
                                                     ==========  ==========  ==========  ==========
</TABLE>

The  tax effects of temporary differences between income for financial reporting
and income taxes give rise to deferred tax assets and liabilities. The potential
realization of a significant portion of net deferred tax assets is based in part
on  the  Company's  estimates  of  the  timing of reversals of certain temporary
differences  and  on  the  generation  of  taxable income before such reversals.

The  net  operating  loss  carryforward  at September 30, 2005 was approximately
$22,000,000  and  expires  on  various  dates  between 2011 and 2020. Due to the
Company's  net  operating  loss  carryforwards,  2005  income  tax  expense  of
approximately  8% of pretax income is expected to be paid quarterly in cash. The
remaining approximately 29% of income tax expense will be offset against the net
operating  loss  carry  forwards.


                                       24
<PAGE>
On  July  20,  2005,  a  registration  statement  on Form S-3 was filed with the
Securities and Exchange Commission allowing two Directors of the Company to sell
their shares without certain restrictions under the securities laws. Section 382
of  the  Internal Revenue Code imposes an annual limitation on the amount of net
operating  loss  carryforwards  that may be used to offset taxable income when a
corporation  has undergone significant changes in its ownership. Should a change
of  control  occur, as defined by applicable IRS regulations, as a result of the
two  Directors  selling  their  shares,  the Company may be subject to an annual
limitation  on  usage  of its net operating loss carryforwards. The Company will
continue to assess the deferred tax asset for utilization as needed but at least
annually.

SEASONAL EFFECTS
----------------

Operating  revenues  are  generally  lower  in the winter months than the warmer
summer months when more short duration Event projects tend to occur.  While both
disposal and processing revenue are generally more affected by market conditions
than  seasonality,  weather related clean-up project delays did have an material
adverse  impact  on  the  first  quarter  of 2005 and a correspondingly positive
effect  on  the  second  and third quarters of 2005 as previously expected waste
shipments  resumed.

CAPITAL RESOURCES AND LIQUIDITY
-------------------------------

At  September  30, 2005, cash and short term investments totaled $23,779,000, an
increase  of  $10,652,000  from  December  31,  2004. The large increase in cash
reflects  the  $11,805,000  payment  received  from  settlement  of the Nebraska
litigation,  and  the  Company's  capital  expenditures  and  growth in accounts
receivable  offset  by  the  Company's  continued  profitability  and an advance
payment received under its contract with Honeywell.

During  the  first  nine  months  of  2005, the Company's days sales outstanding
("DSO")  decreased  at  September  30,  2005,  to 58 days compared to 60 days at
December  31,  2004.

As  of  September  30,  2005 the Company's liquidity, as measured by the current
ratio,  was  3.2  to  1.0.  The  debt  to  equity  ratio decreased to 0.4:1.0 at
September 30, 2005. While the current ratio has materially improved with receipt
of  the  $11,805,000  Nebraska  settlement  proceeds,  there  have  not been any
substantial  changes  to  the  debt to equity ratio during the nine months ended
September  30,  2005.  The  debt to equity ratio is defined as total liabilities
divided  by  stockholders  equity.

SOURCES  OF  CASH

On September 30, 2005, the Company had an unsecured $8,000,000 revolving line of
credit  with  Wells  Fargo  Bank  in  Boise,  Idaho  maturing  June 15, 2007. At
September  30,  2005, this revolving line of credit remained unused. The Company
borrows  and  repays  according to business demands and availability of cash. It
currently  reserves $5,000,000 of the line of credit for use as collateral on an
insurance  policy.

The  Company  has  entered  into preliminary discussions with its bank and other
parties  regarding  potential financing of 150 railcars.  The Company may or may
not  finance  the railcars depending upon the available terms and competing uses
of  cash.

On  June 8, 2005, the Company was awarded a contract to transport, treat dispose
of  approximately  1  million tons of waste over a four to five year period from
the  Honeywell  International  Event project.  A $3,500,000 advance was received
from, and will be credited back to Honeywell during the contract term.

Company  operations  produced  an average of almost $4,000,000 a quarter in cash
flow over the past three years. Management expects 2005 quarterly cash flow from
operations  to,  on  average,  be higher. The $23,779,000 in cash and short term
investments  at September 30, 2005 was comprised of short term investments which
were  not required for operations of $20,971,000, cash immediately available for
operations  of  $3,686,000,  and  a net checks outstanding amount of ($878,000).

On  August 1, 2005 the Company received $11,805,000 in proceeds in resolution of
the  Company's  claim  to  proceeds


                                       25
<PAGE>
in  the  settlement  between  the  Central  Interstate  Compact and the State of
Nebraska.

USES OF CASH

Capital  spending  may  reach  $20,000,000  in  2005,  including  investments to
increase  rail  transportation  and  waste  unloading  capabilities  to  more
efficiently  manage  waste  received  at the Idaho facility under contracts with
Honeywell  International,  the U.S. Army Corps of Engineers and other customers.
Disposal  cell expansion at each of the Company's four sites is also underway in
2005.  In  addition, a new waste treatment building was completed in Texas and a
similar  building  is  in  the  design phase for the Nevada facility. Certain of
these  cash  outlays  will  extend  into  2006.

The  Company  paid  a  $0.15 quarterly dividend on July 15, 2005 and October 14,
2005  out  of cash on hand. The Company also intends that shareholders of record
on  January  2,  2006  will  also  receive  a $.15 per share dividend subject to
compliance  with  applicable  Bank  covenants.

The  Company  meets  it  financial  assurance  obligations  for facility closure
through  an  annual  insurance  policy that matures in December 2005. Collateral
requirements  are  presently  met through a $5,000,000 standby letter of credit.
Renewal  of  this  policy, or the purchase of an alternative financial assurance
mechanism, could require significant additional cash or collateral.

The  Company believes that cash on hand and cash flow from operations, augmented
as needed by periodic borrowings under the line of credit, will be sufficient to
meet  the  Company's  cash  needs  for  the  foreseeable  future.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The  Company  does not maintain equities, commodities, derivatives, or any other
instruments  for  trading  or  any  other  purposes,  and  does  not  enter into
transactions denominated in currencies other than the U.S. Dollar.

The Company has minimal interest rate risk on investments or other assets due to
the  preservation  of  capital  approach  to investments adopted by its Board of
Directors.  At September 30, 2005, approximately $23,800,000 was held in cash or
short term investments at terms ranging from overnight to four months. Together,
these  items  earned  interest  at approximately 3% and comprised 26% of assets.

The Company has interest rate risk on debt instruments due on a fully amortizing
term  loan  due  Wells Fargo Bank. At September 30, 2005, $3,033,000 of variable
rate  debt  was owed under the term loan, accruing interest at the rate of 5.5%.
A  hypothetical  change  of  1%  in  interest rates would change annual interest
expense  paid  by  the  Company  by  approximately  $23,000.

ITEM 4.  CONTROLS  AND  PROCEDURES.

(a)  As  of  the  end  of  the  period covered by this quarterly report, Company
management,  under  the  direction  of  the  Chief  Executive  Officer and Chief
Financial  Officer, carried out an evaluation of the effectiveness of the design
and  operation  of  the Company's disclosure controls and procedures pursuant to
Rule  13a-14  of the Securities Exchange Act of 1934 (Exchange Act).  Based upon
that evaluation, the Chief Executive Officer and Chief Financial Officer believe
that  the  Company's  disclosure controls and procedures are effective in timely
alerting  them to material information required to be disclosed in the Company's
Exchange  Act  filings.

(b)  The  Company  maintains  a system of internal controls that are designed to
provide reasonable assurance that its records and filings accurately reflect the
transactions  engaged in.  For the quarter ending September 30, 2005, there were
no changes to internal controls or in other factors that could materially affect
these  internal  controls.

On April 25, 2005 the Company filed an Amended Form 10-K with the Securities and
Exchange  Commission that contained the opinions of management and the Company's
Independent  Registered  Public Accounting firm regarding the Company's internal
controls  over  financial  reporting.  Both  Management  and  the  Independent
Registered  Public  Accounting  firm  found  that  the  Company's  controls over
financial  reporting  at  December  31,  2004  were  effective


                                       26
<PAGE>
and that no material weaknesses existed.

Part II OTHER INFORMATION.
--------------------------
ITEM 1.  LEGAL PROCEEDINGS.

Significant  developments  have  occurred  on  the following legal matters since
December  31,  2004:

ENTERGY  ARKANSAS,  INC.  ET  AL, CENTRAL INTERSTATE LOW-LEVEL RADIOACTIVE WASTE
--------------------------------------------------------------------------------
COMMISSION  AND  US  ECOLOGY,  INC. ("PLAINTIFFS") V. STATE OF NEBRASKA, ET AL.,
------------------------------------------------------------------------------
CASE NO. 4:98CV3411, U.S. DISTRICT COURT, DISTRICT OF NEBRASKA

This  action  was  brought  in  federal court in 1999 by electric utilities that
generate  LLRW within the Central Interstate Low-Level Radioactive Waste Compact
("CIC").  The  action sought declaratory relief and damages for bad faith in the
State  of  Nebraska's  processing  and  denial  of  the Company's application to
develop  and  operate  a LLRW disposal facility near Butte, Nebraska. US Ecology
was the CIC's contractor and intervened as a plaintiff.

In  2002, the US District Court for the District of Nebraska entered judgment in
favor  of the CIC for $153 million. Of this amount, USE's share was $6.2 million
plus  $6.1 million for prejudgment interest. The Company carried $6.5 million on
its balance sheet for capitalized facility development costs. The State appealed
the judgment to the Eighth Circuit Court of Appeals, which affirmed the District
Court  ruling  in  its  entirety.

In  August,  2004 Nebraska and the CIC entered into a settlement under which the
State  agreed to pay in full, or to make four equal payments of $38.5 million to
the  CIC  beginning  August 1, 2005. The full $154 million settlement reflects a
principal  amount  of $140.5 million, plus interest of 3.75% compounded annually
and  beginning August 1, 2004. During its 2005 session, the Nebraska legislature
appropriated  the  full  $154  million  settlement  amount.  The  State Attorney
General's  Office  subsequently  paid  the  CIC  in  full. On August 1, 2005 the
Company  received  $11,805,000  from  the  CIC, fully resolving its claim on the
Nebraska  settlement  proceeds.  The Company is presently completing agreed upon
transition  activities preparatory to terminating its contract with the CIC. The
matter  is  considered  closed.

MANCHAK  V.  US  ECOLOGY,  INC., U.S. DISTRICT COURT FOR THE DISTRICT OF NEVADA,
--------------------------------
CASE  NO.  CV-S-97-0655.

In  1996,  Frank  Manchak,  Jr.  ("Manchak")  filed  suit  against subsidiary US
Ecology,  Inc.,  alleging infringement of a sludge treatment patent to stabilize
hazardous  waste  at  the  Company's  Beatty,  Nevada  hazardous waste facility.
Manchak  sought  unspecified damages for infringement, treble damages, interest,
costs  and  attorney  fees.  In  2002,  the United States District Court for the
District of Nevada dismissed the matter. Manchak's subsequent appeal to the U.S.
Court  of  Appeals  for the Federal Circuit was also dismissed, and his requests
for  reconsideration  and en banc review were rejected in 2003. In January 2004,
Manchak  filed  a  motion  in the Nevada District Court seeking relief from that
Court's  orders  granting  summary  judgment  of  non-infringement  and  denying
reconsideration.  Manchak  appealed a March 2004 District Court order.  On March
18, 2005 the United States Court of Appeals for the Federal Circuit affirmed the
lower Court's ruling rejecting Manchak's claim. The matter is considered closed.

DAVID  W.  CROW  V.  AMERICAN ECOLOGY CORPORATION, U.S. DISTRICT COURT OF HARRIS
--------------------------------------------------
COUNTY,  TEXAS;  280TH  JUDICIAL  DISTRICT.

Former  employee  David  Crow alleged he was hired by the Company as its General
Counsel  in  October  1995 and that his compensation package included options to
purchase  Company  common  stock  with  an  oral agreement that the options were
exercisable  for  ten  years.  The complaint alleged breach of written contract,
breach  of  oral  contract, fraudulent inducement, and declaratory judgment that
Crow  was  entitled  to purchase 150,000 shares of stock at a strike price of $4
per  share. Crow estimated his damages as between $1,050,000 and $1,258,500. The
lawsuit,  initially  filed in Texas District Court was removed to federal court.
On  June 13, 2005, the United States District Court for the Southern District of
Texas  granted  the  Company's  motion  of  summary judgment. In early July, the
deadline  for  timely appeal passed without any known filing by Crow. The matter
is  considered  closed.

US ECOLOGY, INC. V. THE STATE OF CALIFORNIA, ET AL., CASE NO.GIC747562, SUPERIOR
---------------------------------------------------
COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN DIEGO


                                       27
<PAGE>
In 2000, subsidiary US Ecology, Inc. sued the State of California in state court
for  monetary  damages  exceeding  $162  million  based  on California's alleged
abandonment of the formerly proposed Ward Valley LLRW disposal project. In 2003,
the Superior Court ruled that the Company failed to establish causation and that
its  claim  was  further  barred  by the doctrine of unclean hands. Based on the
trial  court's  adverse  decision,  the Company wrote off a $20,951,000 deferred
site development asset in March 2003. In June 2003, the Company appealed. On May
25, 2005, the California Court of Appeal, Fourth Appellate District affirmed the
trial  court.  No  further  appeal  applies and the matter is considered closed.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

None.

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

None

ITEM 5.  OTHER INFORMATION.

None.

ITEM 6.  EXHIBITS.

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

<TABLE>
<CAPTION>
----------------  ----------------------------------------------------------------------------------------
     Exhibit No.  Description
----------------  ----------------------------------------------------------------------------------------
<S>               <C>
        31.1      Certifications of September 30, 2005 Form 10-Q by Chief Executive Officer dated November
                  1, 2005
----------------  ----------------------------------------------------------------------------------------
        31.2      Certifications of September 30, 2005 Form 10-Q by Chief Financial Officer dated November
                  1, 2005
----------------  ----------------------------------------------------------------------------------------
        32.1      Certifications of September 30, 2005 Form 10-Q by Chief Executive Officer dated November
                  1, 2005
----------------  ----------------------------------------------------------------------------------------
        32.2      Certifications of September 30, 2005 Form 10-Q by Chief Financial Officer dated November
                  1, 2005
----------------  ----------------------------------------------------------------------------------------
</TABLE>


SIGNATURES
----------

Pursuant  to  the  requirements  of  the  Securities  Exchange  Act of 1934, the
registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized.


                                        AMERICAN ECOLOGY CORPORATION
                                        (Registrant)


Date:  November 1, 2005                 By:/s/ Stephen A. Romano
                                        ------------------------
                                        Stephen A. Romano
                                        President, Chief Executive Officer and
                                        Chief Operating Officer


                                       28
<PAGE>
Date:  November 1, 2005                 By:/s/ James R. Baumgardner
                                        ---------------------------
                                        James R. Baumgardner
                                        Senior Vice President,
                                        Chief Financial Officer,
                                        Secretary and Treasurer


                                       29
<PAGE>
<TABLE>
<CAPTION>
                                             EXHIBIT INDEX

Exhibit                                       Description
-------                                       -----------
<S>      <C>
   31.1  Certifications of September 30, 2005 Form 10-Q by Chief Executive Officer dated November 1,
         2005
   31.2  Certifications of September 30, 2005 Form 10-Q by Chief Financial Officer dated November 1,
         2005
   32.1  Certifications of September 30, 2005 Form 10-Q by Chief Executive Officer dated November 1,
         2005
   32.2  Certifications of September 30, 2005 Form 10-Q by Chief Financial Officer dated November 1,
         2005
</TABLE>


                                       30