UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




_______________________________





FORM
10-Q


_______________________________






QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934






For
      the Quarterly Period Ended:  September 30,
      2008
            Commission File
      Number:  0-11688







AMERICAN
      ECOLOGY CORPORATION(Exact
      Name of Registrant as Specified in Its Charter)




Delaware
            
            
            95-3889638(State
      of Incorporation)
            
            
            (I.R.S.
      Employer Identification Number)




Lakepointe
      Centre I,
              300
      E. Mallard, 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 Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
“Exchange Act”) during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.





Yes xNoo





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large accelerated
      filer     o
            Accelerated
      filer                        
      xNon-accelerated
      filer       o  (Do not check if smaller reporting company)
            Smaller Reporting
      Company     o





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).




Yes o  Nox





The
number of shares of the registrant’s common stock, $0.01 par value, outstanding
as of October 29, 2008 was 18,299,314.














AMERICAN
ECOLOGY CORPORATION





TABLE
OF CONTENTS





PART
      I.
            
            FINANCIAL
      INFORMATIONItem
      1.
            
            Financial
      Statements (Unaudited)Consolidated
      Balance Sheets as of September 30, 2008 and December 31,
    2007
            1Consolidated
      Statements of Operations for the three and nine months ended
              September
      30, 2008 and 2007
            2Consolidated
      Statements of Cash Flows for the nine months ended September 30, 2008 and
      2007
            3Notes
      to Consolidated Financial Statements
            4Item
      2.
            
            Management’s Discussion and
      Analysis of Financial Condition and Results of
      Operations
            12Item
      3.
            
            Quantitative and Qualitative
      Disclosures About Market Risk
            20Item
      4.
            
            Controls and
      Procedures
            20PART
      II.
            
            OTHER
      INFORMATIONCautionary
      Statement
            21Item
      1.
            
            Legal
      Proceedings
            21Item
      1A.
            
            Risk
      Factors
            21Item
      2.
            
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            21Item
      3.
            
            Defaults
      Upon Senior Securities
            21Item
      4.
            
            Submission
      of Matters to a Vote of Security Holders
            22Item
      5.
            
            Other
      Information
            22Item
      6.
            
            Exhibits
            22SIGNATURE
            23







PART
I. FINANCIAL INFORMATION





Item
1. Financial
Statements




AMERICAN
ECOLOGY CORPORATION


CONSOLIDATED
BALANCE SHEETS


(in
thousands, except per share data)





September
      30,2008
              
              
              December
      31,(unaudited)
              
              
              2007AssetsCurrent
      Assets:Cash
      and cash equivalents
              
              $
              19,219
              
              
              $
              12,563Short-term
      investments
              
              
              -
              
              
              
              2,209Receivables,
      net
              
              
              29,730
              
              
              
              29,422Prepaid
      expenses and other current assets
              
              
              2,839
              
              
              
              3,034Income
      tax receivable
              
              
              367
              
              
              
              994Deferred
      income taxes
              
              
              1,312
              
              
              
              667Total
      current assets
              
              
              53,467
              
              
              
              48,889Property
      and equipment, net
              
              
              67,198
              
              
              
              63,306Restricted
      cash
              
              
              4,873
              
              
              
              4,881Total
      assets
              
              $
              125,538
              
              
              $
              117,076Liabilities
      and Stockholders’ EquityCurrent
      Liabilities:Accounts
      payable
              
              $
              5,041
              
              
              $
              4,861Deferred
      revenue
              
              
              4,895
              
              
              
              4,491Accrued
      liabilities
              
              
              4,089
              
              
              
              6,267Accrued
      salaries and benefits
              
              
              2,196
              
              
              
              2,613Current
      portion of closure and post-closure obligations
              
              
              2,139
              
              
              
              803Current
      portion of capital lease obligations
              
              
              10
              
              
              
              8Total
      current liabilities
              
              
              18,370
              
              
              
              19,043Long-term
      closure and post-closure obligations
              
              
              12,375
              
              
              
              14,331Long-term
      capital lease obligations
              
              
              23
              
              
              
              27Deferred
      income taxes
              
              
              2,290
              
              
              
              577Total
      liabilities
              
              
              33,058
              
              
              
              33,978Contingencies
      and commitmentsStockholders’
      EquityCommon
      stock $0.01 par value, 50,000 authorized; 18,299 and18,246
      shares issued and outstanding, respectively
              
              
              183
              
              
              
              182Additional
      paid-in capital
              
              
              60,708
              
              
              
              58,816Retained
      earnings
              
              
              31,589
              
              
              
              24,100Total
      stockholders’ equity
              
              
              92,480
              
              
              
              83,098Total
      liabilities and stockholders’ equity
              
              $
              125,538
              
              
              $
              117,076


See Notes
to Consolidated Financial Statements.


1


AMERICAN
ECOLOGY CORPORATION


CONSOLIDATED
STATEMENTS OF OPERATIONS


(in
thousands, except per share data)


(unaudited)







Three
      Months Ended
              
              
              Nine
      Months EndedSeptember
      30,
              
              
              September
      30,2008
              
              
              2007
              
              
              2008
              
              
              2007Revenue
              
              $
              41,051
              
              
              $
              39,427
              
              
              $
              131,786
              
              
              $
              119,658Transportation
      costs
              
              
              20,477
              
              
              
              18,935
              
              
              
              61,786
              
              
              
              55,866Other
      direct operating costs
              
              
              10,553
              
              
              
              10,224
              
              
              
              32,957
              
              
              
              30,357Gross
      profit
              
              
              10,021
              
              
              
              10,268
              
              
              
              37,043
              
              
              
              33,435Selling,
      general and administrative expenses
              
              
              3,209
              
              
              
              3,636
              
              
              
              10,860
              
              
              
              10,709Operating
      income
              
              
              6,812
              
              
              
              6,632
              
              
              
              26,183
              
              
              
              22,726Other
      income (expense):Interest
      income
              
              
              138
              
              
              
              189
              
              
              
              312
              
              
              
              550Interest
      expense
              
              
              (2
              )
              
              
              -
              
              
              
              (6
              )
              
              
              (2
              )Other
              
              
              78
              
              
              
              10
              
              
              
              237
              
              
              
              62Total
      other income
              
              
              214
              
              
              
              199
              
              
              
              543
              
              
              
              610Income
      before income taxes
              
              
              7,026
              
              
              
              6,831
              
              
              
              26,726
              
              
              
              23,336Income
      tax
              
              
              2,755
              
              
              
              2,313
              
              
              
              10,477
              
              
              
              8,799Net
      income
              
              $
              4,271
              
              
              $
              4,518
              
              
              $
              16,249
              
              
              $
              14,537Earnings
      per share:Basic
              
              $
              0.23
              
              
              $
              0.25
              
              
              $
              0.89
              
              
              $
              0.80Dilutive
              
              $
              0.23
              
              
              $
              0.25
              
              
              $
              0.89
              
              
              $
              0.80Shares
      used in earnings per share calculation:Basic
              
              
              18,261
              
              
              
              18,220
              
              
              
              18,241
              
              
              
              18,215Dilutive
              
              
              18,330
              
              
              
              18,257
              
              
              
              18,301
              
              
              
              18,255Dividends
      paid per share
              
              $
              0.18
              
              
              $
              0.15
              
              
              $
              0.48
              
              
              $
              0.45





See Notes
to Consolidated Financial Statements.




2


AMERICAN
ECOLOGY CORPORATION


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(in
thousands)


(unaudited)


Nine
      Months Ended September 30,2008
              
              
              2007Cash
      Flows From Operating Activities:Net
      income
              
              $
              16,249
              
              
              $
              14,537Adjustments
      to reconcile net income to net cash provided byoperating
      activities:Depreciation,
      amortization and accretion
              
              
              8,195
              
              
              
              7,039Deferred
      income taxes
              
              
              1,068
              
              
              
              1,415Stock-based
      compensation expense
              
              
              629
              
              
              
              420Accretion
      of interest income
              
              
              (15
              )
              
              
              (140
              )Net
      loss (gain) on sale of property and equipment
              
              
              19
              
              
              
              (58
              )Changes
      in assets and liabilities:Receivables
              
              
              (308
              )
              
              
              (908
              )Income
      tax receivable
              
              
              627
              
              
              
              650Other
      assets
              
              
              195
              
              
              
              (1,648
              )Accounts
      payable and accrued liabilities
              
              
              (2,128
              )
              
              
              542Deferred
      revenue
              
              
              404
              
              
              
              712Accrued
      salaries and benefits
              
              
              (417
              )
              
              
              102Income
      tax payable
              
              
              -
              
              
              
              1Closure
      and post-closure obligations
              
              
              (1,546
              )
              
              
              (416
              )Net
      cash provided by operating activities
              
              
              22,972
              
              
              
              22,248Cash
      Flows From Investing Activities:Purchases
      of property and equipment
              
              
              (11,055
              )
              
              
              (13,264
              )Purchases
      of short-term investments
              
              
              (992
              )
              
              
              (22,700
              )Maturities
      of short-term investments
              
              
              3,216
              
              
              
              26,770Proceeds
      from sale of property and equipment
              
              
              11
              
              
              
              92Restricted
      cash
              
              
              8
              
              
              
              (150
              )Net
      cash used in investing activities
              
              
              (8,812
              )
              
              
              (9,252
              )Cash
      Flows From Financing Activities:Dividends
      paid
              
              
              (8,760
              )
              
              
              (8,202
              )Proceeds
      from stock option exercises
              
              
              1,049
              
              
              
              328Tax
      benefit of common stock options
              
              
              215
              
              
              
              203Other
              
              
              (8
              )
              
              
              (5
              )Net
      cash used in financing activities
              
              
              (7,504
              )
              
              
              (7,676
              )Increase
      in cash and cash equivalents
              
              
              6,656
              
              
              
              5,320Cash
      and cash equivalents at beginning of period
              
              
              12,563
              
              
              
              3,775Cash
      and cash equivalents at end of period
              
              $
              19,219
              
              
              $
              9,095Supplemental
      DisclosuresIncome
      taxes paid
              
              $
              8,569
              
              
              $
              6,523Interest
      paid
              
              
              2
              
              
              
              2Non-cash
      investing and financing activities:Capital
      expenditures in accounts payable
              
              
              541
              
              
              
              342Acquisition
      of equipment with capital leases
              
              
              6
              
              
              
              -





See Notes
to Consolidated Financial Statements.




3


AMERICAN
ECOLOGY CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(unaudited)






NOTE
1 – GENERAL





Basis of
Presentation


The
accompanying unaudited consolidated financial statements include the results of
operations, financial position and cash flows of American Ecology Corporation
and its wholly-owned subsidiaries (collectively, “AEC” or “the Company”). All
material intercompany balances have been eliminated.




In the
opinion of management, the accompanying unaudited consolidated financial
statements include all adjustments necessary to present fairly, in all material
respects, the results of the Company for the periods presented. These
consolidated financial statements have been prepared by the Company pursuant to
the rules and regulations of the Securities and Exchange Commission (“SEC”).
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been omitted pursuant to the rules and regulations of
the SEC. These consolidated financial statements should be read in conjunction
with the consolidated financial statements and accompanying notes included in
the Company’s 2007 Annual Report on Form 10-K filed with the SEC on February 27,
2008. The results of operations for the three and nine months ended September
30, 2008 are not necessarily indicative of results to be expected for the entire
fiscal year.




The
Company’s Consolidated Balance Sheet as of December 31, 2007 has been derived
from the Company’s audited Consolidated Balance Sheet as of that
date.




Use of
Estimates


The
preparation of the Company’s consolidated financial statements, in conformity
with accounting principles generally accepted in the United States, requires
management to make estimates and assumptions. Some of these estimates require
difficult, subjective or complex judgments about matters that are inherently
uncertain. As a result, actual results could differ from these estimates, in
some cases materially. These estimates and assumptions affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenue and expenses during the reporting
period.





Reclassifications


The
Company reclassified $2.6 million from Trade receivables to Unbilled revenue
receivables on the consolidated balance sheet at December 31, 2007. The amounts
reclassified represent valid receivables under executed customer contracts that
were not invoiced to the customer as of the balance sheet date.  We
believe these receivables are better presented as Unbilled revenue receivables
as of the balance sheet date.  This reclassification had no impact on net
receivables, current assets, total assets, results of operations or cash flows
and we believe this reclassification is not material to the consolidated
financial statements taken as a whole.





NOTE
2 – EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS




SFAS 157. In September 2006,
the Financial Accounting Standards Board (“FASB”) issued Statement of Financial
Accounting Standard (“SFAS”) 157, Fair Value Measurements
(“SFAS 157”), which defines fair value, establishes a framework for measuring
fair value under generally accepted accounting principles and expands
disclosures about fair value measurements. SFAS 157 applies to other existing
accounting pronouncements that require or permit fair value measurements, the
FASB having previously concluded in those accounting pronouncements that fair
value is the relevant measurement attribute. While SFAS 157 does not require any
new fair value measurements, its application may change the current practice for
fair value measurements. SFAS 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. In February 2008, the FASB issued FSP FAS 157-2, Effective Date of FASB Statement No.
157, which delays the effective date of SFAS 157 for nonfinancial
assets and liabilities to fiscal years beginning after November 15, 2008. The
adoption of SFAS 157 for financial assets and liabilities in the first quarter
of 2008 had no significant impact on our consolidated financial
statements.  We are currently evaluating the impact of SFAS 157 for
non-financial assets and liabilities.




4




SFAS 159. In February 2007,
the FASB issued SFAS 159, The
Fair Value Option for Financial Assets and Financial Liabilities (“SFAS
159”), which permits entities to measure many financial instruments and certain
other items at fair value that are not currently required to be measured at fair
value. SFAS 159 is effective for fiscal years beginning after November 15,
2007 and was adopted by the Company beginning in the first quarter of fiscal
2008. The adoption of SFAS 159 had no impact on our consolidated financial
statements.




SFAS 141 R.  In
December 2007, the FASB issued SFAS 141(revised 2007), Business Combinations (“SFAS
141 R”), which establishes principles and requirements for how an acquirer
recognizes and measures the identifiable assets acquired, the liabilities
assumed and any noncontrolling interest in the acquiree in a business
combination. SFAS 141 R requires that assets and liabilities, including
contingencies, be recorded at the fair value determined on the acquisition date
with changes thereafter reflected in results of operations, as opposed to
goodwill. Additionally, SFAS 141 R modifies the treatment of restructuring costs
associated with a business combination and requires acquisition costs to be
expensed as incurred. The statement also provides guidance on disclosures
related to the nature and financial impact of the business combination. SFAS 141
R is effective for transactions closing after December 15, 2008 and for fiscal
years beginning after December 15, 2008. SFAS 141 R will be adopted for
business combinations entered into by the Company after December 31, 2008.
Although the Company will continue to evaluate the application of SFAS 141 R, we
do not currently believe adoption of SFAS 141 R will have a material impact on
our consolidated financial statements.




SFAS 160.  In
December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51 (“SFAS
160”). This statement establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. This statement is effective prospectively, except for certain
retrospective disclosure requirements, for fiscal years beginning after
December 15, 2008. This statement will be effective for the Company
beginning in the first quarter of 2009. Although the Company will continue to
evaluate the application of SFAS 160, we do not currently believe adoption of
SFAS 160 will have a material impact on our consolidated financial
statements.




SFAS 161.  In March
2008, the FASB issued SFAS 161, Disclosures About Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No.
133 (“SFAS 161”).  SFAS 161 expands quarterly disclosure
requirements in SFAS 133 about an entity’s derivative instruments and hedging
activities.  SFAS is effective for fiscal years beginning after
November 15, 2008.  This statement will be effective for the Company
beginning in the first quarter of 2009.  Although the Company will
continue to evaluate the application of SFAS 161, we do not currently believe
the adoption will have a material impact on our consolidated financial
statements.




SFAS 162.In May
2008, the FASB issued SFAS 162, The Hierarchy of Generally Accepted
Accounting Principles (“SFAS 162”).  SFAS 162 identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of non-governmental
entities that are presented in conformity with generally accepted accounting
principles in the United States.  This statement is effective 60 days
following the SEC’s approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting
Principles.  Although the Company will continue to evaluate the
application of SFAS 162, we do not currently believe the adoption of SFAS 162
will have a material impact on our consolidated financial
statements.




FSP EITF
03-6-1.In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities(“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments
granted in share-based payment transactions are participating securities prior
to vesting and, therefore, need to be included in computing earnings per share
under the two-class method described in SFAS No. 128, “Earnings Per Share.”
FSP EITF 03-6-1 requires companies to treat unvested share-based payment awards
that have non-forfeitable rights to dividend or dividend equivalents as a
separate class of securities in calculating earnings per share. FSP EITF 03-6-1
will be effective for the Company’s fiscal year beginning January 1, 2009,
with early adoption prohibited.  Although the Company will continue to
evaluate the application of FSP EITF 03-6-1 we do not currently believe the
adoption of FSP EITF 03-6-1 will have a material impact on our consolidated
financial statements.




5




FSP 157-3.In
October 2008, the FASB issued FSP 157-3, Determining Fair Value of a
Financial Asset in a Market That Is Not Active (“FSP 157-3”). FSP 157-3
clarified the application of SFAS 157 in an inactive market. It demonstrated how
the fair value of a financial asset is determined when the market for that
financial asset is inactive. FSP 157-3 was effective upon issuance, including
prior periods for which financial statements had not been issued. The
implementation of this standard did not have a material impact on our
consolidated financial position or results of operations.




NOTE 3–CONCENTRATION AND CREDIT
RISK





Major
Customers. The Company has a long-term contract with Honeywell
International, Inc. (“Honeywell”) for transportation, treatment and disposal of
hazardous waste for a clean-up project presently expected to conclude in
November 2009.  Revenue under this contract represented 52% and 45% of
our total revenue for the three months ended September 30, 2008 and 2007,
respectively, and 43% and 40% of total revenue for the nine months ended
September 30, 2008 and 2007, respectively. No other customer represented more
than 10% of total revenue for the three or nine months ended September 30, 2008,
respectively. Receivables from Honeywell represented 53% of our total trade
receivables at September 30, 2008 and 45% of total trade receivables at December
31, 2007.  No other customer’s receivable balances exceeded 10% of our
total trade receivables at September 30, 2008 or December 31, 2007.





Credit
Risk Concentration. We maintain most of our cash and short-term
investments with Wells Fargo Bank. Substantially all balances are uninsured and
are not used as collateral for other obligations. Short-term investments consist
of high-quality commercial paper with a maximum maturity of three
months.





Concentrations
of credit risk on accounts receivable are believed to be limited due to the
number, diversification and character of the obligors and our credit evaluation
process, except for receivables from Honeywell for which significant credit risk
exists.  Credit risk on Honeywell receivables is partially mitigated
by federal court orders requiring that Honeywell perform activities covered by
our contract. Typically, we have not required customers to provide collateral
for such obligations.




NOTE 4–RECEIVABLES




Receivables
were as follows:




September
      30,
              
              
              December
      31,(in
      thousands)
              
              2008
              
              
              2007Trade
              
              $
              24,574
              
              
              $
              26,193Unbilled
      revenue
              
              
              4,701
              
              
              
              3,241Other
              
              
              611
              
              
              
              12229,886
              
              
              
              29,556Allowance
      for doubtful accounts
              
              
              (156
              )
              
              
              (134
              )$
              29,730
              
              
              $
              29,422


6


NOTE 5–PROPERTY AND
EQUIPMENT




September
      30,
              
              
              December
      31,(in
      thousands)
              
              2008
              
              
              2007Cell
      development costs
              
              $
              38,371
              
              
              $
              32,492Land
      and improvements
              
              
              9,158
              
              
              
              8,858Buildings
      and improvements
              
              
              29,282
              
              
              
              26,547Railcars
              
              
              17,375
              
              
              
              17,375Vehicles
      and other equipment
              
              
              21,959
              
              
              
              19,823Construction
      in progress
              
              
              6,339
              
              
              
              6,676122,484
              
              
              
              111,771Accumulated
      depreciation and amortization
              
              
              (55,286
              )
              
              
              (48,465
              )$
              67,198
              
              
              $
              63,306





Depreciation
expense for the three months ended September 30, 2008 and 2007 was $2.2 million
and $2.1 million, respectively.  Depreciation expense for the nine
months ended September 30, 2008 and 2007 was $7.3 million and $6.2 million,
respectively.





NOTE
6 – RESTRICTED CASH





Restricted
cash balances of $4.9 million at both September 30, 2008 and December 31,
2007 represent funds held in third-party managed trust accounts as collateral
for our financial assurance policies for closure and post-closure
obligations.  These restricted cash balances are maintained by
third-party trustees and are invested in money market accounts.





NOTE 7–LINE OF CREDIT





On June
30, 2008, we entered into a new $15.0 million unsecured revolving line of credit
(the “Revolving Credit Agreement”) with Wells Fargo Bank, National Association
(“Wells Fargo”).  This Revolving Credit Agreement expires on June 15,
2010.  Monthly interest only payments are paid based on a pricing grid
under which the interest rate decreases or increases based on our ratio of
funded debt to earnings before interest, taxes, depreciation and amortization.
We can elect to borrow utilizing the offshore London Inter-Bank Offering Rate
(“LIBOR”) plus an applicable spread or the prime rate. The credit agreement
contains certain quarterly financial covenants, including a maximum leverage
ratio, a maximum funded debt ratio and a minimum required tangible net worth.
Pursuant to our credit agreement, we may only declare quarterly or annual
dividends if on the date of declaration, no event of default has occurred, or no
other event or condition has occurred that would constitute an event of default
after giving effect to the payment of the dividend. At September 30, 2008, we
were in compliance with all of the financial covenants in the credit
agreement.





At
September 30, 2008 and December 31, 2007, we had no amounts outstanding on the
revolving line of credit. At September 30, 2008 and December 31, 2007, the
availability under the line of credit was $11.0 million, with $4.0 million of
the line of credit issued in the form of a standby letter of credit utilized as
collateral for closure and post-closure financial assurance.





NOTE
8 – 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 SFAS 5, Accounting for Contingencies
and with the liability calculated in accordance with SFAS 143, Accounting for Asset Retirement
Obligations. We perform periodic reviews of both non-operating and
operating facilities and revise accruals for estimated post-closure, remediation
and other costs when necessary. Our recorded liabilities are based on best
estimates of future costs and are updated periodically to reflect existing
environmental conditions, current technology, laws and regulations, permit
conditions, inflation and other factors.




7




Changes
to reported closure and post-closure obligations were as follows:




(in
      thousands)
              
              Three
      Months Ended
                September
      30, 2008
              
              
              Nine
      Months Ended
                September
      30, 2008Beginning
      obligation
              
              $
              15,244
              
              
              $
              15,134Accretion
      expense
              
              
              309
              
              
              
              927Payments
              
              
              (242
              )
              
              
              (853
              )Adjustments
              
              
              (797
              )
              
              
              (694
              )Ending
      obligation
              
              
              14,514
              
              
              
              14,514Less
      current portion
              
              
              (2,139
              )
              
              
              (2,139
              )Long-term
      portion
              
              $
              12,375
              
              
              $
              12,375





During
the third quarter of 2008, the Company recorded a favorable adjustment to our
closure and post-closure obligations of $857,000 based on written confirmation
from the State of Nevada that cash contributed by the Company and held in a
dedicated state account maintained to satisfy closure and post-closure
obligations at our Beatty, Nevada hazardous waste disposal facility can be used
to fund interim closure activities. We recognized additional closure charges to
close the remaining deep well at our non-operating Winona, Texas facility.
Charges at our Winona, Texas facility were $60,000 and $163,000 for the three
and nine months ended September 30, 2008, respectively. These adjustments to our
closure and post-closure estimates were recorded as an increase to or reduction
in our closure and post-closure expenses included in Other direct operating
costs on the Consolidated Statement of Operations.





NOTE 9–INCOME TAXES





As of
September 30, 2008 and December 31, 2007, we had no unrecognized tax benefits.
We recognize interest assessed by taxing authorities as a component of interest
expense. We recognize any penalties assessed by taxing authorities as a
component of selling, general and administrative expenses.Interest and penalties for
the three and nine months ended September 30, 2008 and 2007 were not
material.





Our
effective income tax rate for the three months ended September 30, 2008 was
39.2%, compared to 33.9% for the same period in 2007.  Our effective
income tax rate for the nine months ended September 30, 2008 was 39.2% compared
to 37.7% for the same period in 2007. The lower effective income tax rate for
the three and nine months ended September 30, 2007 was due primarily to the
realization of higher state investment tax credits on our filed tax returns in
the amount of $325,000.  A reduction in our estimated annual effective
income tax rate from 39.3% to 39.1% also contributed to the lower effective
income tax rate in 2007.





We file
U.S. federal income tax returns with the Internal Revenue Service (“IRS”) as
well as income tax returns in various states. We may be subject to examination
by the IRS for tax years 2003 through 2007. Additionally, we may be subject to
examinations by various state taxing jurisdictions for tax years 2002 through
2007. We are currently not under examination by the IRS or any state taxing
jurisdictions.





NOTE 10–COMMITMENTS AND
CONTINGENCIES





In the
ordinary course of business, we are involved in judicial and administrative
proceedings involving federal, state or local governmental authorities. Actions
may also be brought by individuals or groups regarding the permitting of planned
facility expansions, alleged violations of existing permits, or alleged damages
suffered from exposure to hazardous substances purportedly released from our
operating or non-operating facilities, as well as other litigation. We maintain
insurance intended to cover property and damage claims asserted as a result of
our operations. Periodically, management reviews and may establish reserves for
legal and administrative matters, or fees expected to be incurred in connection
therewith. As of September 30, 2008, we did not have any ongoing, pending or
threatened legal action that management believes would have a material adverse
effect on our financial position, results of operations or cash
flows.




8


NOTE
11 – COMPUTATION OF EARNINGS PER SHARE


(in
      thousands, except per share data)
              
              Three
      Months Ended September 30,2008
              
              
              2007Basic
              
              
              Diluted
              
              
              Basic
              
              
              DilutedNet
      income
              
              $
              4,271
              
              
              $
              4,271
              
              
              $
              4,518
              
              
              $
              4,518Weighted
      average commonshares
      outstanding
              
              
              18,261
              
              
              
              18,261
              
              
              
              18,220
              
              
              
              18,220Dilutive
      effect of stock options andrestricted
      stock
              
              
              
              
              
              
              69
              
              
              
              
              
              
              
              37Weighted
      averageshares
      outstanding
              
              
              
              
              
              
              18,330
              
              
              
              
              
              
              
              18,257Earnings
      per share
              
              $
              0.23
              
              
              $
              0.23
              
              
              $
              0.25
              
              
              $
              0.25Anti-dilutive
      sharesexcluded
      from calculation
              
              
              
              
              
              
              8
              
              
              
              
              
              
              
              155(in
      thousands, except per share data)
              
              Nine
      Months Ended September 30,2008
              
              
              2007Basic
              
              
              Diluted
              
              
              Basic
              
              
              DilutedNet
      income
              
              $
              16,249
              
              
              $
              16,249
              
              
              $
              14,537
              
              
              $
              14,537Weighted
      average commonshares
      outstanding
              
              
              18,241
              
              
              
              18,241
              
              
              
              18,215
              
              
              
              18,215Dilutive
      effect of stock options andrestricted
      stock
              
              
              
              
              
              
              60
              
              
              
              
              
              
              
              40Weighted
      averageshares
      outstanding
              
              
              
              
              
              
              18,301
              
              
              
              
              
              
              
              18,255Earnings
      per share
              
              $
              0.89
              
              
              $
              0.89
              
              
              $
              0.80
              
              
              $
              0.80Anti-dilutive
      sharesexcluded
      from calculation
              
              
              
              
              
              
              61
              
              
              
              
              
              
              
              157





NOTE
12 – OPERATING SEGMENTS





We
operate within two segments, Operating Disposal Facilities and Non-Operating
Disposal Facilities. The Operating Disposal Facilities segment represents
facilities currently accepting waste. The Non-Operating Disposal Facilities
segment represents facilities that are no longer accepting waste.





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




9


Summarized
financial information concerning our reportable segments is shown in the
following tables:




(in
      thousands)
              
              Operating
      Disposal Facilities
              
              
              Non-Operating
      Disposal Facilities
              
              
              Corporate
              
              
              TotalThree months ended
      September 30, 2008Revenue
              
              $
              41,042
              
              
              $
              9
              
              
              $
              -
              
              
              $
              41,051Transportation
      costs
              
              
              20,477
              
              
              
              -
              
              
              
              -
              
              
              
              20,477Other
      direct operating costs
              
              
              10,458
              
              
              
              95
              
              
              
              -
              
              
              
              10,553Gross
      profit
              
              
              10,107
              
              
              
              (86
              )
              
              
              -
              
              
              
              10,021Selling,
      general&
      administration
              
              
              1,086
              
              
              
              -
              
              
              
              2,123
              
              
              
              3,209Operating
      income (loss)
              
              
              9,021
              
              
              
              (86
              )
              
              
              (2,123
              )
              
              
              6,812Interest
      income, net
              
              
              (2
              )
              
              
              -
              
              
              
              138
              
              
              
              136Other
      income
              
              
              78
              
              
              
              -
              
              
              
              -
              
              
              
              78Income
      (loss) before tax
              
              
              9,097
              
              
              
              (86
              )
              
              
              (1,985
              )
              
              
              7,026Tax
      expense
              
              
              -
              
              
              
              -
              
              
              
              2,755
              
              
              
              2,755Net
      income (loss)
              
              $
              9,097
              
              
              $
              (86
              )
              
              $
              (4,740
              )
              
              $
              4,271Depreciation,
      amortization & accretion
              
              $
              2,439
              
              
              $
              72
              
              
              $
              13
              
              
              $
              2,524Capital
      expenditures
              
              $
              3,720
              
              
              $
              -
              
              
              $
              -
              
              
              $
              3,720Total
      assets
              
              $
              97,981
              
              
              $
              62
              
              
              $
              27,495
              
              
              $
              125,538
  (in
      thousands)
              
              Operating
      Disposal Facilities
              
              
              Non-Operating
      Disposal Facilities
              
              
              Corporate
              
              
              TotalThree months ended
      September 30, 2007Revenue
              
              $
              39,420
              
              
              $
              7
              
              
              $
              -
              
              
              $
              39,427Transportation
      costs
              
              
              18,935
              
              
              
              -
              
              
              
              -
              
              
              
              18,935Other
      direct operating costs
              
              
              10,101
              
              
              
              123
              
              
              
              -
              
              
              
              10,224Gross
      profit
              
              
              10,384
              
              
              
              (116
              )
              
              
              -
              
              
              
              10,268Selling,
      general&
      administration
              
              
              1,288
              
              
              
              -
              
              
              
              2,348
              
              
              
              3,636Operating
      income (loss)
              
              
              9,096
              
              
              
              (116
              )
              
              
              (2,348
              )
              
              
              6,632Interest
      income, net
              
              
              5
              
              
              
              -
              
              
              
              184
              
              
              
              189Other
      income
              
              
              10
              
              
              
              -
              
              
              
              -
              
              
              
              10Income
      (loss) before tax
              
              
              9,111
              
              
              
              (116
              )
              
              
              (2,164
              )
              
              
              6,831Tax
      expense
              
              
              -
              
              
              
              -
              
              
              
              2,313
              
              
              
              2,313Net
      income (loss)
              
              $
              9,111
              
              
              $
              (116
              )
              
              $
              (4,477
              )
              
              $
              4,518Depreciation,
      amortization & accretion
              
              $
              2,271
              
              
              $
              77
              
              
              $
              10
              
              
              $
              2,358Capital
      expenditures
              
              $
              4,689
              
              
              $
              -
              
              
              $
              24
              
              
              $
              4,713Total
      assets
              
              $
              91,020
              
              
              $
              60
              
              
              $
              21,409
              
              
              $
              112,489
  10
  (in
      thousands)
              
              Operating
      Disposal Facilities
              
              
              Non-Operating
      Disposal Facilities
              
              
              Corporate
              
              
              TotalNine months ended
      September 30, 2008Revenue
              
              $
              131,767
              
              
              $
              19
              
              
              $
              -
              
              
              $
              131,786Transportation
      costs
              
              
              61,786
              
              
              
              -
              
              
              
              -
              
              
              
              61,786Other
      direct operating costs
              
              
              32,579
              
              
              
              346
              
              
              
              32
              
              
              
              32,957Gross
      profit
              
              
              37,402
              
              
              
              (327
              )
              
              
              (32
              )
              
              
              37,043Selling,
      general&
      administration
              
              
              3,661
              
              
              
              -
              
              
              
              7,199
              
              
              
              10,860Operating
      income (loss)
              
              
              33,741
              
              
              
              (327
              )
              
              
              (7,231
              )
              
              
              26,183Interest
      income, net
              
              
              (3
              )
              
              
              -
              
              
              
              309
              
              
              
              306Other
      income
              
              
              236
              
              
              
              -
              
              
              
              1
              
              
              
              237Income
      (loss) before tax
              
              
              33,974
              
              
              
              (327
              )
              
              
              (6,921
              )
              
              
              26,726Tax
      expense
              
              
              -
              
              
              
              -
              
              
              
              10,477
              
              
              
              10,477Net
      income (loss)
              
              $
              33,974
              
              
              $
              (327
              )
              
              $
              (17,398
              )
              
              $
              16,249Depreciation,
      amortization & accretion
              
              $
              7,943
              
              
              $
              215
              
              
              $
              37
              
              
              $
              8,195Capital
      expenditures
              
              $
              10,996
              
              
              $
              9
              
              
              $
              50
              
              
              $
              11,055Total
      assets
              
              $
              97,981
              
              
              $
              62
              
              
              $
              27,495
              
              
              $
              125,538
  (in
      thousands)
              
              Operating
      Disposal Facilities
              
              
              Non-Operating
      Disposal Facilities
              
              
              Corporate
              
              
              TotalNine months ended
      September 30, 2007Revenue
              
              $
              119,641
              
              
              $
              17
              
              
              $
              -
              
              
              $
              119,658Transportation
      costs
              
              
              55,866
              
              
              
              -
              
              
              
              -
              
              
              
              55,866Other
      direct operating costs
              
              
              30,017
              
              
              
              340
              
              
              
              -
              
              
              
              30,357Gross
      profit
              
              
              33,758
              
              
              
              (323
              )
              
              
              -
              
              
              
              33,435Selling,
      general&
      administration
              
              
              3,875
              
              
              
              -
              
              
              
              6,834
              
              
              
              10,709Operating
      income (loss)
              
              
              29,883
              
              
              
              (323
              )
              
              
              (6,834
              )
              
              
              22,726Interest
      income, net
              
              
              12
              
              
              
              -
              
              
              
              536
              
              
              
              548Other
      income
              
              
              (4
              )
              
              
              66
              
              
              
              -
              
              
              
              62Income
      (loss) before tax
              
              
              29,891
              
              
              
              (257
              )
              
              
              (6,298
              )
              
              
              23,336Tax
      expense
              
              
              3
              
              
              
              -
              
              
              
              8,796
              
              
              
              8,799Net
      income (loss)
              
              $
              29,888
              
              
              $
              (257
              )
              
              $
              (15,094
              )
              
              $
              14,537Depreciation,
      amortization & accretion
              
              $
              6,780
              
              
              $
              232
              
              
              $
              27
              
              
              $
              7,039Capital
      expenditures
              
              $
              13,232
              
              
              $
              5
              
              
              $
              27
              
              
              $
              13,264Total
      assets
              
              $
              91,020
              
              
              $
              60
              
              
              $
              21,409
              
              
              $
              112,489





NOTE 13–SUBSEQUENT EVENT





On
October 1, 2008, we declared a quarterly dividend of $0.18 per common share to
stockholders of record on October 10, 2008. The dividend was paid using cash on
hand on October 17, 2008 in an aggregate amount of $3.3 million.





On
October 28, 2008, our Board of Directors authorized management to repurchase up
to 600,000 shares, or approximately 3%, of our outstanding common stock. The
program will remain in effect until December 31, 2008, unless extended, canceled
or modified by our Board of Directors.  The authorization does not
obligate the Company to acquire any particular amount of common stock and will
be executed at management’s discretion within Board-established stock price
limits.  We anticipate funding any repurchases with cash on
hand.


11




AMERICAN
ECOLOGY CORPORATION


MANAGEMENT'S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS






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





Overview





American
Ecology Corporation, through its subsidiaries, is a hazardous, non-hazardous and
radioactive waste services company providing treatment, disposal and
transportation services to commercial and government entities including oil
refineries, chemical production facilities, manufacturers, electric utilities,
steel mills and medical and academic institutions. The majority of the waste
received is produced in the United States. We generate revenue from fees charged
to manage waste at our four fixed disposal facilities located near Grand View,
Idaho; Richland, Washington; Beatty, Nevada; and Robstown, Texas. We also
arrange transportation of waste to our facilities, which contributes significant
revenue.  We or our predecessor companies have been in the waste
business since 1952.




Our
customers may be divided into categories to help understand period-to-period
changes in our treatment and disposal revenue.  Each of these
categories is described in the table below, along with information on the
percentage of total treatment and disposal revenues for each category during the
three and nine months ended September 30, 2008.




Customer
      Category
              
              Description
              
              %
      of Treatment and
                Disposal
      Revenue (1)
      for the Three Months ended
                September
      30, 2008
              
              %
      of Treatment and
                Disposal
      Revenue (1)
      for the Nine Months ended
                September
      30, 2008Private
              
              Private
      sector clean-up project waste, typically event business.
              
              28%
              
              28%Broker
              
              Companies
      that collect and aggregate waste from their direct customers comprised of
      base business.
              
              24%
              
              25%Government
              
              Federal
      and State government clean-up project waste, typically event
      business.
              
              17%
              
              20%Other
      industry
              
              Category
      for electric utilities, chemical manufacturers and other industries not
      included in other categories. Comprised of both recurring base business
      and event clean-up business.
              
              10%
              
              9%Rate
      regulated
              
              Northwest
      and Rocky Mountain Compact customers paying rate-regulated disposal fees
      set by the State of Washington, typically recurring base
      business.
              
              10%
              
              8%Refinery
              
              Petroleum
      refinery customers comprising both recurring base and event clean-up
      business.
              
              7%
              
              6%Steel
              
              Steel
      mill customers comprising both recurring base and event clean-up
      business.
              
              4%
              
              4%


(1)
Excludes all transportation service revenue




A
significant portion of our disposal revenue is attributable to discrete waste
clean-up projects (“Event Business”) which vary substantially in size and
duration.  Approximately 44% and 52% of our treatment and disposal
revenues were derived from Event Business for the three and nine months ended
September 30, 2008, respectively.  The one-time nature of Event
Business necessarily creates variability in revenue and earnings. This
variability may be influenced by funding availability, changes in laws and
regulations, government enforcement actions, public controversy, litigation,
weather, real estate redevelopment projects and other factors. The types and
amounts of waste received from recurring customers (“Base Business”) also vary
from quarter to quarter. As a result of this variability, we can experience
significant quarter-to-quarter and year-to-year differences in revenue, gross
profit, gross margin, operating income and net income. Also, while many large
projects are pursued years in advance of work performance, both large and small
clean-up project opportunities routinely arise with little prior notice. This
uncertainty, which is inherent to the disposal business, is factored into our
internal budgeting and externally communicated business outlook
statements.  Approximately one quarter of our 2008 revenue budget is
comprised of new Event and Base Business from non-specific sources. Our internal
budgeting process combines historical experience with identified sales pipeline
opportunities and new or expanded service line projections.




12




Depending
on project-specific customer needs and competitive economics, transportation
services may be offered at or near our cost to help secure new business. For
waste transported by rail from New Jersey (for Honeywell), Pennsylvania (for
Chevron/Molycorp) and other locations distant from our Grand View, Idaho
facility, transportation-related revenue can account for as much as
three-fourths (75%) of total project revenue. While bundling transportation and
disposal services reduces overall gross profit as a percentage of total revenue
(“gross margin”), this value-added service has allowed us to win multiple
projects that we may not otherwise have competed for
successfully.  Our investment in a Company-owned railcar fleet has
reduced transportation expenses previously incurred when we relied solely on
railcar operating leases and short-term rentals. The increased waste volumes
resulting from projects won through this bundling strategy have increased
operating leverage and profitability. While waste treatment and other variable
costs are project-specific, the contribution to profitability from each new
project performed generally increases as overall disposal volumes
increase.  Management believes that maximizing operating income and
earnings per share is a higher priority than maintaining or increasing gross
margin.  We will continue to aggressively bid bundled transportation
and disposal services based on this income growth strategy.





We serve
oil refineries, chemical production plants, steel mills, waste
broker-aggregators serving small manufacturers and other customers that are, or
may be, affected by adverse economic conditions. Such conditions may cause our
customers to curtail waste production and/or delay spending on plant
maintenance, waste clean-up work and other activities.  Factors that
can impact general economic conditions and the level of spending by our
customers include but are not limited to consumer spending, increases in fuel
and energy costs, conditions in the real estate and mortgage markets, labor and
healthcare costs, access to credit, consumer confidence and other macroeconomic
factors affecting spending behavior.  Market forces may also induce
customers to reduce or cease operations or relocate to other countries, which
could adversely affect our business.  To the extent our business is
either government funded or driven by government regulations or enforcement
actions, it is less susceptible to general economic conditions.




13


Results
of Operations




The
following table summarizes our results of operations for the three months and
nine months ended September 30, 2008 and 2007 in dollars and as a percentage of
total revenue.




(in
      thousands, except per
              
              Three
      Months Ended September 30,
              
              
              Nine
      Months Ended September 30,share
      amounts)
              
              2008
              
              
              %
              
              
              2007
              
              
              %
              
              
              2008
              
              
              %
              
              
              2007
              
              
              %Revenue
              
              $
              41,051
              
              
              
              100.0%
              
              
              $
              39,427
              
              
              
              100.0%
              
              
              $
              131,786
              
              
              
              100.0%
              
              
              $
              119,658
              
              
              
              100.0%Transportation
      costs
              
              
              20,477
              
              
              
              49.9%
              
              
              
              18,935
              
              
              
              48.0%
              
              
              
              61,786
              
              
              
              46.9%
              
              
              
              55,866
              
              
              
              46.7%Other
      direct operating costs
              
              
              10,553
              
              
              
              25.7%
              
              
              
              10,224
              
              
              
              26.0%
              
              
              
              32,957
              
              
              
              25.0%
              
              
              
              30,357
              
              
              
              25.4%Gross
      profit
              
              
              10,021
              
              
              
              24.4%
              
              
              
              10,268
              
              
              
              26.0%
              
              
              
              37,043
              
              
              
              28.1%
              
              
              
              33,435
              
              
              
              27.9%Selling,
      general andadministrative
      expenses
              
              
              3,209
              
              
              
              7.8%
              
              
              
              3,636
              
              
              
              9.2%
              
              
              
              10,860
              
              
              
              8.2%
              
              
              
              10,709
              
              
              
              8.8%Operating
      income
              
              
              6,812
              
              
              
              16.6%
              
              
              
              6,632
              
              
              
              16.8%
              
              
              
              26,183
              
              
              
              19.9%
              
              
              
              22,726
              
              
              
              19.1%Other
      income (expense):Interest
      income
              
              
              138
              
              
              
              0.3%
              
              
              
              189
              
              
              
              0.5%
              
              
              
              312
              
              
              
              0.2%
              
              
              
              550
              
              
              
              0.4%Interest
      expense
              
              
              (2
              )
              
              
              0.0%
              
              
              
              -
              
              
              
              0.0%
              
              
              
              (6
              )
              
              
              0.0%
              
              
              
              (2
              )
              
              
              0.0%Other
              
              
              78
              
              
              
              0.2%
              
              
              
              10
              
              
              
              0.0%
              
              
              
              237
              
              
              
              0.2%
              
              
              
              62
              
              
              
              0.0%Total
      other income
              
              
              214
              
              
              
              0.5%
              
              
              
              199
              
              
              
              0.5%
              
              
              
              543
              
              
              
              0.4%
              
              
              
              610
              
              
              
              0.4%Income
      before income taxes
              
              
              7,026
              
              
              
              17.1%
              
              
              
              6,831
              
              
              
              17.3%
              
              
              
              26,726
              
              
              
              20.3%
              
              
              
              23,336
              
              
              
              19.5%Income
      tax
              
              
              2,755
              
              
              
              6.7%
              
              
              
              2,313
              
              
              
              5.8%
              
              
              
              10,477
              
              
              
              8.0%
              
              
              
              8,799
              
              
              
              7.4%Net
      income
              
              $
              4,271
              
              
              
              10.4%
              
              
              $
              4,518
              
              
              
              11.5%
              
              
              $
              16,249
              
              
              
              12.3%
              
              
              $
              14,537
              
              
              
              12.1%Earnings
      per share:Basic
              
              $
              0.23
              
              
              
              
              
              
              $
              0.25
              
              
              
              
              
              
              $
              0.89
              
              
              
              
              
              
              $
              0.80Dilutive
              
              $
              0.23
              
              
              
              
              
              
              $
              0.25
              
              
              
              
              
              
              $
              0.89
              
              
              
              
              
              
              $
              0.80Shares
      used in earningsper
      share calculation:Basic
              
              
              18,261
              
              
              
              
              
              
              
              18,220
              
              
              
              
              
              
              
              18,241
              
              
              
              
              
              
              
              18,215Dilutive
              
              
              18,330
              
              
              
              
              
              
              
              18,257
              
              
              
              
              
              
              
              18,301
              
              
              
              
              
              
              
              18,255Dividends
      paid per share
              
              $
              0.18
              
              
              
              
              
              
              $
              0.15
              
              
              
              
              
              
              $
              0.48
              
              
              
              
              
              
              $
              0.45




Three
Months Ended September 30, 2008 Compared to Three Months Ended September 30,
2007





Revenue -
Revenue increased 4% to $41.1 million for the third quarter of 2008, up from
$39.4 million for the third quarter of 2007. This increase reflects higher
revenue from transportation services on bundled rail transportation and disposal
projects. In the third quarter of 2008, we disposed of 263,000 tons of waste in
our landfills, down 2% from the 269,000 tons disposed in the third quarter of
2007. Our average selling price for treatment and disposal services (excluding
transportation) for the third quarter of 2008 was 8% higher than the same
quarter last year.  Increases in average selling price reflect normal
variations in service mix that are inherent to the disposal
business.





During
the third quarter of 2008, treatment and disposal revenue from recurring Base
Business was 7% higher than the third quarter of 2007 and comprised 56% of
non-transportation revenue, as compared to 49% of non-transportation revenue in
the third quarter of 2007. Base Business revenue increased as a result of growth
in our broker and other industry categories. Event Business revenue in the third
quarter of 2008 decreased 16% over the same quarter in 2007, and comprised 44%
of non-transportation revenue during the quarter. As discussed further below,
this primarily reflects decreased treatment and disposal revenue from government
and private clean-up projects, including the Molycorp project as well as smaller
projects.  Increased shipments from the Honeywell Jersey City private
clean-up project in the third quarter of 2008 over the third quarter of 2007
partially offset these decreases.





The
following table summarizes our third quarter 2008 revenue growth (both Base and
Event Business) by customer type as compared with the third quarter of
2007.




14




Treatment
      and Disposal Revenue Growth
                Three
      Months Ended September 30, 2008 vs.
                Three
      Months Ended September 30, 2007Broker
              
              27%Steel
              
              -6%Private
              
              -10%Other
      industry
              
              -11%Government
              
              -15%Rate
      Regulated
              
              -20%Refinery
              
              -32%


Our
broker business increased 27% in the third quarter of 2008 compared to the same
quarter in 2007.  This reflects continued success working with
national and smaller regional waste broker companies that do not compete with us
for disposal business.




Treatment
and disposal revenue from our steel mill customers decreased 6% in the third
quarter of 2008 compared to the third quarter of 2007. This decline was
primarily caused by the completion of a contract with a Midwestern steel mill in
December 2007.




Treatment
and disposal revenue from private clean-up customers decreased approximately 10%
during the third quarter of 2008 over the same period last year. This decrease
was attributable to clean-up projects shipping in the third quarter of 2007
which were not fully replaced in the third quarter of 2008 and decreased
shipments from the Molycorp project in the third quarter of 2008 compared to the
same period of 2007. Shipments under our bundled transportation and disposal
contract with Molycorp contributed 2% of total revenue (including
transportation) in the third quarter of 2008, or $1.0 million, compared to 8% of
total revenue (including transportation) or $3.2 million in the third quarter of
2007. The Molycorp project, which delayed shipments during the third quarter of
2008, has not yet been completed.  These decreases were partially
offset by increased shipments on the Honeywell Jersey City project and other
smaller event projects.  The Honeywell Jersey City project contributed
52% of total revenue (including transportation) in the third quarter of 2008 and
45% of total revenue (including transportation) in the third quarter of 2007, or
$21.4 million and $17.9 million, respectively.




Our other
industry revenue decreased 11% in the third quarter of 2008 compared to the
third quarter of 2007. This decrease reflects a large rate-regulated brokered
project served by our Richland, Washington facility that was completed in the
third quarter of 2007.  The decrease was partially offset by increased
revenues from electric utility, chemical manufacturers and other industrial
customers.




Government
clean-up business revenue decreased 15% in the third quarter of 2008 compared to
the third quarter of 2007. This decline reflects a decrease in Event Business
clean-up work under our contract with the U.S. Army Corps of Engineers
(“USACE”), which contributed $1.9 million or 5% of total revenue in the third
quarter of 2008, compared to $2.9 million or 7% of total revenue in the third
quarter of 2007. This quarterly decrease was due to individual clean-up project
timing and reallocation of funds initially budgeted for disposal and other work
to cover increased fuel surcharges on transportation during the final quarter of
the federal government’s fiscal year. No USACE projects served by the Company
were cancelled or reassigned to competitors.




Rate-regulated
business at our Richland, Washington low-level radioactive waste facility
decreased 20% in the third quarter of 2008 compared to the third quarter of
2007. Our Richland facility operates under a State-approved revenue
requirement.  This decrease reflects both the timing of revenue
recognition for the rate-regulated portion of the business and a decrease in our
state-approved revenue requirement for 2008 compared to 2007.




Treatment
and disposal revenue from our refinery customers decreased 32% in the third
quarter of 2008 compared to the same quarter in 2007. This decline reflects
decreased waste volumes in the third quarter of 2008 from one refinery customer
due to refining process changes.  We expect revenue in this category
to increase in the future based on increased thermal desorption recycling
throughput at our Robstown, Texas facility.




Gross
Profit.Gross
profit for the third quarter of 2008 decreased by 2% to $10.0 million, down from
$10.3 million in the third quarter of 2007. This decrease primarily reflects
lower volumes of waste disposed in the third quarter of 2008 compared to the
same period in 2007.  The decrease was partially offset bya
favorable adjustment to our closure and post-closure obligations of $857,000
based on written confirmation from the State of Nevada that cash contributed by
the Company and held in a dedicated state account maintained to satisfy closure
and post-closure obligations at our Beatty, Nevada hazardous waste disposal
facility can be used to fund interim closure activities.  The Company
recognized $60,000 in additional charges to close the remaining deep well at our
non-operating Winona, Texas facility during the third quarter of 2008. These
adjustments to our closure and post-closure estimates were recorded as an
increase to or reduction in our closure and post-closure expenses included in
Other direct operating costs on the Consolidated Statement of
Operations.




15




Gross
margin was 24% in the third quarter of 2008, down from 26% in the third quarter
of 2007.  This decrease in gross margin reflects increased
transportation revenue which is generally provided as a value-added service with
little or no margin.  Excluding transportation revenue, disposal gross
margins were 49% in the third quarter of 2008 and 51% in the third quarter of
2007. The lower
disposal margin in the third quarter of 2008 compared to the third quarter of
2007 was a result of decreased waste volumes and a higher percentage of waste
that required treatment prior to disposal.





Selling, General
and Administrative (“SG&A”). As a percentage of total
revenue, SG&A expenses for the third quarter of 2008 and 2007 were 8% and
9%, respectively.  SG&A expenses decreased 12% to $3.2 million,
down from $3.6 million for the third quarter of 2007. The decline in SG&A
expense was due primarily to lowerengineering
and consulting expenses, performance-based compensation and insurance
costs.





Interest
income.During the third
quarter of 2008, we earned $138,000 of interest income, down from $189,000 in
the third quarter of 2007. This decrease reflects a lower average rate of
interest earned on investments.





Other
expense/income.Other
expense/income includes business activities not included in current year
ordinary and usual revenue and expenses. In the third quarter of 2008, we
recognized $78,000 in royalty income from a previously sold municipal waste
landfill in Texas. In the third quarter of 2007, we recognized a gain of $10,000
on the sale of property and equipment no longer required to operate our
business.





Income tax
expense. Our effective income tax rate for the three months ended
September 30, 2008 was 39.2%, compared to 33.9% for the same period in
2007.  The lower effective income tax rate for the three months ended
September 30, 2007 was due primarily to the realization of higher state
investment tax credits on our filed income tax returns in the amount of
$325,000.  A reduction in our estimated annual effective income tax
rate from 39.3% to 39.1% also contributed to the lower rate in
2007.





As of
September 30, 2008 and December 31, 2007, we had no unrecognized tax benefits.
We recognize interest assessed by taxing authorities as a component of interest
expense. We recognize any penalties assessed by taxing authorities as a
component of SG&A expenses.Interest and penalties for
the three months ended September 30, 2008 and 2007 were not
material.





Nine
months Ended September 30, 2008 Compared to Nine months Ended September 30,
2007





Revenue -
Revenue increased 10% to $131.8 million for the first nine months of 2008, up
from $119.7 million for the first nine months of 2007. This increase reflects
higher treatment and disposal revenue and higher revenue from bundled rail
transportation and disposal contracts. In the nine months ended September 30,
2008, we disposed of 931,000 tons of waste, up 15% from 812,000 tons disposed in
the first nine months of 2007. Our average selling price for treatment and
disposal services (excluding transportation) in the first nine months of 2008
was 2% lower than in the first nine months of 2007. This decline reflects normal
variations in service mix that are inherent to the disposal
business.





During
the nine months ended September 30, 2008, treatment and disposal revenue from
recurring Base Business grew 9% over the same period of 2007 and comprised 48%
of non-transportation revenue.  Base Business was 48% of
non-transportation revenue for the same period in 2007.  Base Business
revenue increased due to growth in our broker, other industry, and government
categories. Event Business revenue in the nine months ended September 30, 2008
increased 12% over the same period in 2007 and was 52% of non-transportation
revenue. Event Business was 52% of non-transportation revenue for the nine
months ended September 30, 2007. As discussed further below, this primarily
reflects increased disposal revenue from our government and other industry
customers in the first nine months of 2008.




16




The
following table summarizes our revenue growth (both Base and Event Business) by
industry customer type for the nine months ended September 30, 2008 as compared
to the nine months ended September 30, 2007.


Treatment
      and Disposal Revenue Growth
                Nine
      Months Ended September 30, 2008 vs.
                Nine
      Months Ended September 30, 2007Other
      industry
              
              41%Broker
              
              19%Government
              
              16%Private
              
              0%Rate
      Regulated
              
              0%Steel
              
              -15%Refinery
              
              -17%




Other
industry revenue increased 41% in the first nine months of 2008 compared to the
same period in 2007. This increase was due primarily to a large polychlorinated
biphenyls (“PCB”) waste clean-up for an electric utility customer shipped to our
Grand View, Idaho facility that was substantially completed in the first quarter
of 2008.




Our
broker business increased 19% in the nine months ended September 30, 2008
compared to the same period in 2007, reflecting continued success increasing
revenue from national and smaller regional waste broker companies.




Government
clean-up business revenue increased 16% in the first nine months of 2008
compared to the first nine months of 2007.  This increase reflects a
state-funded clean-up project which shipped to our Robstown, Texas facility in
the second quarter of 2008 and increased shipments from the Department of
Defense in the second quarter of 2008.  Cleanup work under the USACE
contract contributed 6% of total revenue or $7.7 million in the first nine
months of 2008 compared to 7% of total revenue or $8.9 million in the first nine
months of 2007. This decrease reflects shipment timing as task orders are
completed and new task orders commence under our multi-year contract with the
USACE as well as reallocation of funds initially budgeted for disposal and other
work to cover increased fuel surcharges on transportation during the final
quarter of the federal government’s fiscal year.




Treatment
and disposal revenue from private clean-up customers for the nine months ended
September 30, 2008 remained flat when compared to the nine months ended
September 30, 2007. Shipments from the Honeywell Jersey City project increased
during the first nine months of 2008 compared to the same period of 2007,
offsetting shipments to our Nevada facility from a large Brownfield
redevelopment project that was completed in 2007. The Honeywell project
contributed 43% of total revenue (including transportation) for the nine months
ended September 30, 2008, or $56.7 million compared to 40% of total revenue
(including transportation), or $48.4 million, for the same period of
2007.  These increases were offset by reduced revenue from our bundled
transportation and disposal contract with Molycorp, which began in the second
quarter of 2007.  The Molycorp project contributed 5% of total revenue
(including transportation), or $7.0 million for the nine months ended September
30, 2008, as compared to 7% of total revenue (including transportation), or $8.0
million for the nine months ended September 30, 2007.




Rate-regulated
business at our Richland, Washington low-level radioactive waste facility
remained flat for the nine months ended September 30, 2008 compared to the same
period in 2007. Our Richland facility operates under a State of Washington
approved revenue requirement. The State approved a lower revenue requirement for
the 2008 rate year as compared with the 2007 rate year, which will reduce
revenue from our rate-regulate business in 2008.




Treatment
and disposal revenue from steel mill customers decreased 15% in the first nine
months of 2008 compared to the same period of 2007 due to completion of a
contract with a Midwestern steel mill in December 2007.




Treatment
and disposal revenue from refinery customers decreased 17% in the first nine
months of 2008 compared to the same period in 2007. This decline primarily
reflects decreased waste volumes in the third quarter of 2008 from one refinery
customer as a result of a refining process change. We expect revenue in this
category to increase in the future based on increased thermal desorption
recycling throughput at our Robstown, Texas facility.




17





Gross
Profit.Gross profit for the nine
months ended September 30, 2008 increased 11% to $37.0 million, up from $33.4
million for the same period of 2007. This increase reflects higher disposal
volumes in the first nine months of 2008 compared to the same period in
2007.  The increase also includes a favorable adjustment of
$857,000 recorded in the third quarter of 2008 based on written confirmation
from the State of Nevada that cash contributed by the Company and held in a
dedicated state account maintained to satisfy closure and post-closure
obligations at our Beatty, Nevada hazardous waste disposal facility can be used
to fund interim closure activities.. Additionally, the Company recognized
$163,000 in additional charges to close the remaining deep well at our
non-operating Winona, Texas facility during the nine months ended September 30,
2008. These adjustments to our closure and post-closure estimates were recorded
as an increase to or reduction in our closure and post-closure expenses included
in Other direct operating costs on the Consolidated Statement of
Operations.





Gross
margin was 28% for the nine months ended September 30, 2008 and 2007.Excluding
transportation revenue, disposal gross margins were 53% for the nine months
ended September 30, 2008 and 52% for the same period in 2007. This increase in the
disposal margin in the nine months ended September 30, 2008 is due to the net
favorable adjustments to our closure and post-closure expenses discussed above.





Selling,
General and Administrative.
As a percentage of total revenue, SG&A expense was 8% for the nine months
ended September 30, 2008, down from 9% for the same period in 2007. SG&A
expenses increased 1% to $10.9 million for the nine months ended September 30,
2008, up slightly from $10.7 million for the nine months ended September 30,
2007. The small increase was due to higher payroll and benefit expenses,
stock-based compensation expense and other administrative costs in support of
the increased waste volumes received.   The increase also
reflects $156,000 of business development expenses on an acquisition opportunity
we are no longer pursuing.





Interest
income.During the nine months
ended September 30, 2008, we earned $312,000 of interest
income  compared with $550,000 in the same period of 2007. This
decrease was due to a lower average rate of interest earned on
investments.





Other
expense/income. Other expense/income includes business activities not
included in current year ordinary and usual revenue and expenses. In the first
nine months of 2008, we recognized $231,000 in royalty income from a previously
sold municipal waste landfill in Texas. In the first nine months of 2007, we recognized $62,000 from
the sale of land at a non-operating facility, proceeds from an agricultural
lease, and the sale of property and equipment no longer required to operate our
business.





Income tax
expense.Our
effective income tax rate for the nine months ended September 30, 2008 was
39.2%, compared to 37.7% for the nine months ended September 30, 2007. The lower
effective income tax rate for the first nine months of 2007 was due primarily to
the realization of higher state investment tax credits on our filed income tax
returns in the amount of $325,000.  A reduction in our estimated
annual effective income tax rate from 39.3% to 39.1% also contributed to the
lower rate in 2007.





As of
September 30, 2008 and December 31, 2007, we had no unrecognized tax benefits.
We recognize interest assessed by taxing authorities as a component of interest
expense. We recognize any penalties assessed by taxing authorities as a
component of selling, general and administrative expenses.Interest and penalties for
the nine months ended September 30, 2008 and 2007 were not
material.





Critical
Accounting Policies





Financial
statement preparation requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenue and expenses and
disclosure of contingent assets and liabilities. The accompanying consolidated
financial statements are prepared using the same critical accounting policies
discussed in our Annual Report on Form 10-K for the fiscal year ended December
31, 2007.





Liquidity and Capital
Resources





Our
principal source of cash is from operations. The $19.2 million in cash at
September 30, 2008 was comprised of cash immediately available for
operations.





On June
30, 2008, we entered into a $15.0 million unsecured revolving line of credit
(the “Revolving Credit Agreement”) with Wells Fargo Bank, National Association
(“Wells Fargo”).  This Revolving Credit Agreement expires on June 15,
2010. The unsecured line-of-credit is available to supplement daily working
capital as needed. Monthly interest-only payments are required on outstanding
debt levels based on a pricing grid, under which the interest rate decreases or
increases based on our ratio of funded debt to earnings before interest, taxes,
depreciation and amortization. We can elect to borrow monies utilizing LIBOR
plus an applicable spread or the prime rate. The credit agreement contains
certain quarterly financial covenants, including a maximum leverage ratio, a
maximum funded debt ratio and a minimum required tangible net worth. Pursuant to
our credit agreement, we may only declare quarterly or annual dividends if on
the date of declaration, no event of default has occurred, or no other event or
condition has occurred that would constitute an event of default after giving
effect to the payment of the dividend. At September 30, 2008 we were in
compliance with all financial covenants in the credit agreement. We have a
standby letter of credit to support our closure and post-closure obligation of
$4.0 million that expires in September 2009. At September 30, 2008, we had a
borrowing capacity of $11.0 million after deducting the outstanding letter of
credit, with no borrowings outstanding.




18




On
October 28, 2008, our Board of Directors authorized management to repurchase up
to 600,000 shares, or approximately 3%, of our outstanding common stock. The
program will remain in effect until December 31, 2008, unless extended, canceled
or modified by our Board of Directors.  The authorization does not
obligate the Company to acquire any particular amount of common stock and will
be executed at management’s discretion within Board-established stock price
limits. We anticipate funding any repurchases with cash on hand.





We
believe that cash on hand and cash flow from operations will be sufficient to
meet our operating cash needs, including expenditures for the Board-approved
stock repurchase plan, if any, during the next 12 months.





Operating
Activities - For the nine months ended September 30, 2008, net cash
provided by operating activities was $23.0 million. This reflects net income of
$16.2 million and depreciation, amortization and accretion of $8.2
million.  Partially offsetting these sources of cash were decreases in
accounts payable, and accrued liabilities of $2.1 million and decreases in
closure and post-closure obligations of $1.5 million. The increase in net income
is due to the factors discussed above under Results of
Operations.  The decrease in accounts payable and accrued liabilities
is primarily attributable to reimbursements related to our rate-regulated
business in Richland, Washington.  Days sales outstanding was 66 days
as of September 30, 2008, compared to 65 days at December 31, 2007 and 68 days
at September 30, 2007.





For the
nine months ended September 30, 2007, net cash provided by operating activities
was $22.2 million.  This reflects net income of $14.5 million,
depreciation, amortization and accretion of $7.0 million and changes in deferred
taxes of $1.4 million. Partially offsetting these sources of cash were increases
in other assets and receivables.





Investing
Activities- For
the nine months ended September 30, 2008, net cash used in investing activities
was $8.8 million. Significant transactions affecting cash used in investing
activities during the first nine months of 2008 include capital expenditures of
$11.1 million.  Construction of additional disposal capacity at our
Robstown, Texas and Beatty, Nevada facilities and infrastructure for the thermal
desorption recycling equipment installed at our Texas facility comprised a
significant portion of these expenditures. Partially offsetting cash outflows
for capital expenditures were net maturities of short-term investments totaling
$2.2 million.





For the
nine months ended September 30, 2007, net cash used in investing activities was
$9.3 million. This included capital expenditures of $13.3 million used primarily
for construction of a new treatment and storage building at our Beatty, Nevada
facility; a new storage building and waste testing laboratory at our Robstown,
Texas facility; construction of additional disposal space at our Texas and Idaho
facilities and equipment purchases at our three hazardous waste facilities.
Partially offsetting cash outflows for capital expenditures were net maturities
of short-term investments totaling $4.1 million.





Financing
Activities- For
the nine months ended September 30, 2008 and 2007, net cash used in financing
activities was $7.5 million and $7.7 million, respectively. This was primarily
attributable to payment of dividends, partially offset by proceeds from stock
option exercises and associated tax benefits related to those
exercises.




19


Contractual
Obligations and Guarantees





For
information on contractual obligations and guarantees, see our Annual Report on
Form 10-K for the fiscal year ended December 31, 2007. There have not been any
material changes in the amounts of our contractual obligations and guarantees
during the nine months ended September 30, 2008.





Item
3. Quantitative and
Qualitative Disclosures About Market Risk





We do not
maintain equities, commodities, derivatives or any other instruments for trading
or any other purposes, and do not enter into transactions denominated in
currencies other than the U.S. dollar.





We have
minimal interest rate risk on investments or other assets. At September 30,
2008, approximately $19.2 million was held in cash and cash equivalents
primarily invested in money market accounts. Interest earned on these
investments is approximately 2% per year.





We are
exposed to market risks primarily from changes in interest rates. We do not
engage in financial transactions for trading or speculative
purposes.





Item
4. Controls and
Procedures





Management
of the Company, including the Chief Executive Officer and the Chief Financial
Officer of the Company, have evaluated the effectiveness of the Company’s
disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Securities Exchange Act of 1934) as of September 30, 2008. Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that our disclosure controls and procedures, including the
accumulation and communication of disclosures to the Company’s Chief Executive
Officer and Chief Financial Officer as appropriate to allow timely decisions
regarding required disclosure, are effective to provide reasonable assurance
that information required to be disclosed by us in the reports that we file or
submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified by the rules and forms
of the SEC.





There
were no changes in our internal control over financial reporting that occurred
during the most recently completed fiscal quarter that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.




20


PART
II. OTHER INFORMATION





Cautionary Statement for
Purposes of “Safe Harbor Provisions” of the Private Securities Litigation Reform
Act of 1995


This
quarterly report on Form 10-Q contains forward-looking statements within the
meaning of the federal securities laws. Statements that are not historical
facts, including statements about the Company’s beliefs and expectations, are
forward-looking statements. Forward-looking statements include statements
preceded by, followed by or that include the words "may," "could," "would,"
"should," "believe," "expect," "anticipate," "plan," "estimate," "target,"
"project," "intend" and similar expressions. These statements include, among
others, statements regarding our financial and operating results, strategic
objectives and means to achieve those objectives, the amount and timing of
capital expenditures, repurchases of its stock under approved stock repurchase
plans, the amount and timing of interest expense, the likelihood of our success
in expanding our business, financing plans, budgets, working capital needs and
sources of liquidity.





Forward-looking
statements are only predictions and are not guarantees of performance. These
statements are based on management's beliefs and assumptions, which in turn are
based on currently available information. Important assumptions include, among
others, those regarding demand for Company services, expansion of service
offerings geographically or through new service lines, the timing and cost of
planned capital expenditures, competitive conditions and general economic
conditions. These assumptions could prove inaccurate. Forward-looking statements
also involve known and unknown risks and uncertainties, which could cause actual
results to differ materially from those contained in any forward-looking
statement. Many of these factors are beyond our ability to control or predict.
Such factors include, but are not limited to,a
loss of a major customer, compliance with and changes to applicable laws and
regulations, access to cost effective transportation services, access to
insurance and other financial assurances, loss of key personnel, lawsuits,
adverse economic conditions including a tightened credit market for customers,
government funding or competitive pressures, incidents that could limit or
suspend specific operations, implementation of new
technologies,  limitations on operation of newly installed thermal
desorption at our Texas facility, our ability to perform under required
contracts, our willingness or ability to pay dividends and our ability to
integrate any potential acquisitions.





Except
as required by applicable law, including the securities laws of the United
States and the rules and regulations of the SEC, we are under no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise. You should not place undue reliance
on our forward-looking statements. Although we believe that the expectations
reflected in forward-looking statements are reasonable, we cannot guarantee
future results or performance. Before you invest in our common stock, you
should be aware that the occurrence of the events described in the "Risk
Factors" section in  our 2007 Annual Report on Form 10-K filed with
the SEC on February 27, 2008 could harm our business, prospects, operating
results, and financial condition.





Investors
should also be aware that while we do, from time to time, communicate with
securities analysts, it is against our policy to disclose to them any material
non-public information or other confidential commercial information.
Accordingly, stockholders should not assume that we agree with any statement or
report issued by any analyst irrespective of the content of the statement or
report. Furthermore, we have a policy against issuing or confirming financial
forecasts or projections issued by others. Thus, to the extent that reports
issued by securities analysts contain any projections, forecasts or opinions,
such reports are not the responsibility of American Ecology
Corporation.





Item
1. Legal Proceedings





We are
not currently a party to any material pending legal proceedings and are not
aware of any claims that could have a materially adverse effect on our financial
position, results of operations or cash flows.





Item
1A. Risk Factors.





There
have been no material changes in our risk factors from those disclosed in Item
1A of Part I of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2007.





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





None.





Item
3. Defaults Upon Senior Securities





None.




21




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





None.





Item
5. Other Information





None.





Item 6. Exhibits





31.1
            Certification
      of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of
      200231.2
            Certification
      of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of
      200232
            Certification
      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002




22


SIGNATURE





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:  October
      31, 2008
            /s/
      Jeffrey R. FeelerJeffrey
      R. Feeler
              Vice
      President and Chief
      Financial Officer




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