SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For fiscal year ended December 31, 2001 Commission File Number 0-11688

AMERICAN ECOLOGY CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 95-3889638
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

805 W. Idaho, Suite #200, Boise, Idaho 83702-8916
(Address of Principal Executive Offices) (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share
(Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X] No [ ]

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

At March 22, 2002, Registrant had outstanding 13,766,485 shares of its Common
Stock. The aggregate market value of the Registrant's voting stock held by
non-affiliates at this date was approximately $14,899,417 based on the closing
price of $1.83 per share as reported on the NASDAQ Stock Market, Inc.'s National
Market System. For purposes of the foregoing calculation, all directors and
executive officers of the Registrant have been deemed to be affiliates, but the
Registrant disclaims that any of such directors or executive officers is an
affiliate.

Documents Incorporated by Reference

Portions of the Proxy Statement for the Annual Meeting of Stockholders to be
held May 30, 2002. Part III

TABLE OF CONTENTS

PART I

Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . 16

PART II

Item 5. Market of Registrants Common Equity and Related Stockholders Matters . 16
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . 16
Item 7. Management's Discussion and Analysis . . . . . . . . . . . . . . . . . 17
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . 27
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . 28
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 51

PART III

Items 10, 11, 12 and 13 are incorporated by reference from the
definitive proxy statement . . . . . . . . . . . . . . . . . . . . . . 51

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . 51

PART I

ITEM 1. BUSINESS

American Ecology Corporation, through its subsidiaries (the "Company" or "AEC")
provides radioactive, hazardous and municipal solid waste management services to
commercial and government entities, such as nuclear power plants, medical and
academic institutions, steel mills and petro-chemical facilities. Headquartered
in Boise, Idaho, the Company is one of the nation's oldest providers of
radioactive and hazardous waste services, and a recent entrant to the municipal
solid waste marketplace. AEC and its predecessor companies have been in
business for 50 years since incorporating in 1952. AEC operates nationally and
currently employs 279 people.

The Company's principal wholly owned subsidiaries are US Ecology, Inc., a
California corporation ("US Ecology"), Texas Ecologists, Inc., a Texas
corporation wholly owned by US Ecology ("Texas Ecologists"); American Ecology
Recycle Center, Inc., a Delaware corporation ("AERC"), American Ecology
Environmental Services Corporation, a Texas corporation ("AEESC"), and US
Ecology Idaho, Inc., a Delaware corporation ("USEI") wholly owned by AEESC.

AEC was incorporated in California in October 1983. In May 1987, AEC was
reincorporated as a Delaware corporation by merger into a new, wholly owned
subsidiary formed for that purpose.

The Company operates within three segments: Operating Disposal Facilities,
Non-Operating Disposal Facilities, and Processing and Field Services. These
segments reflect AEC's internal reporting structure and nature of services
offered. The Operating Disposal Facilities segment includes operations currently
accepting hazardous waste, solid waste and low-level radioactive waste. The
Non-Operating Disposal Facilities segment includes non-operating disposal
facilities, a closed hazardous waste processing and deep-well injection
facility, and two proposed new disposal facilities. The Processing and Field
Services segment aggregates, volume-reduces, and performs remediation and
contamination removal services for radioactive and hazardous materials but
excludes processing performed at the Company's disposal sites.

Prior to a major reorganization in October 2001, the Company was structured and
reported based on waste type, i.e. a Chemical Services division and a Low-Level
Radioactive Waste Services division. New management changed its structure and
related reporting reflects the increased use of hazardous waste facilities to
dispose of certain radioactive materials, a growth area for the Company. All
prior segment information has been restated to reflect the new segment reporting
structure. Income taxes are assigned to Corporate, but all other items are
included in the segment where they originated. Inter-company transactions have
been eliminated from the segment information and are not significant between
segments.

The Operating Disposal Facilities segment includes the Company's hazardous waste
treatment and disposal facilities in Beatty, Nevada; Grand View, Idaho, and
Robstown, Texas, the Company's municipal solid waste disposal facility in
Robstown, Texas and its Low-Level Radioactive Waste ("LLRW") and naturally
occurring and accelerator produced radioactive material ("NORM/NARM") disposal
facility in Richland, Washington.

The hazardous waste disposal facilities are regulated for health and safety
purposes and under the Resource Conservation and Recovery Act of 1976 ("RCRA").
Hazardous substances are regulated under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA" or "Superfund"), as
amended. Polychlorinated biphenyls ("PCBs") are regulated under the Toxic
Substance Control Act of 1976 ("TSCA").

RCRA hazardous waste facilities may also be permitted by states to treat and
dispose certain radioactive materials that are exempted from regulation by the
U.S. Nuclear Regulatory Commission ("NRC"). Examples included limited
concentrations of naturally occurring radioactive materials, accelerator
produced radioactive materials NORM/NARM and discarded consumer products such as
smoke detectors and luminous watch dials. So-called "mixed wastes" exhibiting
both hazardous and radioactive properties are subject to regulation addressing
both of these waste properties.

The Richland radioactive waste disposal facility is regulated for health and
safety purposes under the Atomic Energy Act of 1954, as amended. Commercial
LLRW is also subject to interstate commerce restrictions under the LLRW Policy
Amendments Act of 1985 and the Northwest Interstate Compact. The latter law
places geographic restrictions on the origin of LLRW that may be accepted at the
Richland facility.

The Processing and Field Services business segment includes processing of LLRW
by volume reduction and decontamination at fixed facilities at the Company's Oak
Ridge, Tennessee facility. Examples of processed LLRW include contaminated
debris and equipment, discarded pipe and other metals, glassware, tools, gloves
and protective clothing. Field Services includes radioactive and hazardous
contamination studies, environmental remediation and waste removal, and shipping
from multiple clean-up sites. Processing and Field Services activities are
primarily regulated under the Atomic Energy Act and CERCLA.

The following table summarizes each operating segment:

SUBSIDIARY LOCATION SERVICES
- ---------------- --------------------------------- -----------------------------------------------------

OPERATING DISPOSAL FACILITIES
---------------------------------

US Ecology Idaho Grand View, Idaho Hazardous, PCB and NRC-exempt radioactive and mixed
waste treatment and disposal, rail transfer station
Texas Ecologists Robstown, Texas Hazardous, non-hazardous industrial and NRC-exempt
radioactive and mixed waste treatment and disposal
Texas Ecologists Robstown, Texas Municipal and industrial solid waste disposal
US Ecology Beatty, Nevada Hazardous and PCB waste treatment and disposal
US Ecology Richland, Washington Low-Level Radioactive and NORM/NARM waste
disposal

PROCESSING AND FIELD SERVICES
---------------------------------

AERC Oak Ridge, Tennessee Radioactive waste volume reduction, processing and
shipment
US Ecology Multiple Field Locations Environmental remediation, waste removal and shipment

NON-OPERATING DISPOSAL FACILITIES
---------------------------------

US Ecology Beatty, Nevada Closed LLRW disposal facility: State of Nevada is
licensee
US Ecology Sheffield, Illinois Closed LLRW disposal facility: State of Illinois is
licensee
US Ecology Sheffield, Illinois Non-operating hazardous waste disposal facility: US
Ecology is permittee
AEESC Winona, Texas Non-operating hazardous waste treatment and deep well
facility: AEESC is permittee
US Ecology Idaho Bruneau, Idaho Closed hazardous waste disposal facility: US Ecology
Idaho is permittee
US Ecology Ward Valley, California Proposed LLRW disposal facility: in litigation
US Ecology Butte, Nebraska Proposed LLRW disposal facility: in litigation

OPERATING DISPOSAL FACILITIES

Grand View, Idaho Facility. Located on 1,760 acres of Company-owned land about
60 miles southeast of Boise, Idaho in the Owyhee Desert, this operation was
acquired in February 2001. During 2001, the new subsidiary's name was changed
from Envirosafe Services of Idaho to US Ecology Idaho. The acquired assets
include a rail transfer station located approximately 30 miles from the disposal
site. As part of the acquisition, the Company also obtained rights to a
patented, U.S. Environmental Protection Agency ("US EPA") approved technology to
stabilize and delist certain steel mill hazardous wastes, allowing more
economical disposal as non-hazardous waste. The facility is also permitted to

accept certain naturally occurring and accelerator produced radioactive material
from commercial and government customers, including materials received under a
contract with the U.S. Army Corps of Engineers. This includes certain mixed
wastes. The facility is regulated under a joint permit issued by the Idaho
Department of Environmental Quality and the US EPA, and state law and
regulations governing NRC-exempt radioactive materials.

Robstown, Texas Hazardous Facility. Texas Ecologists operates on 240 acres of
land near Robstown, Texas about 10 miles west of Corpus Christi. The facility,
opened to accept waste in 1973, is regulated under a permit issued by the Texas
Natural Resource Conservation Commission ("TNRCC") and has been in operation for
almost 30 years. The site is also subject to US EPA regulations, and is
permitted to accept certain radioactive materials and mixed wastes pursuant to
state requirements.

Beatty, Nevada Facility. US Ecology leases approximately 80 acres from the
State of Nevada on which operations are conducted. The Company's lease was
renewed for ten years in 1997. Opened to receive hazardous waste in 1970, the
site is located in the Amargosa Desert approximately 100 miles northwest of Las
Vegas, Nevada and 30 miles east of Death Valley, California. The facility is
regulated under permits issued by the Nevada Department of Conservation and
Natural Resources and the US EPA.

Robstown, Texas Municipal Landfill. In 1999, the Company opened a new
"greenfield" municipal and industrial waste recycling and disposal landfill on
200 acres of land adjacent to its hazardous waste facility. The solid waste
facility, doing business as El Centro, began accepting waste in July 2000. The
site is regulated under permits issued by the TNRCC.

Richland, Washington Facility. In operation since 1965, this US Ecology
facility is located on 100 acres of State leased land on the U.S. Department of
Energy Hanford Reservation approximately 35 miles west of Richland, Washington.
The lease between the State and the Federal government expires in 2061. The
Company intends to renew its sublease with the State, which expires in 2005.
The facility is licensed by the Washington Department of Health and is also
regulated by the Washington Utilities and Transportation Commission ("WUTC"),
which sets disposal rates for low-level radioactive wastes. Rates are set at an
amount sufficient to cover the costs of operations and provide the Company with
a reasonable profit. A new rate agreement was established in 2001 and expires
January 1, 2008. The state also assesses facility user fees for local economic
development, state regulatory agency expenses, and for a dedicated trust account
to pay for long-term care and maintenance after the facility closes.

PROCESSING AND FIELD SERVICES

Oak Ridge, Tennessee Facility. The American Ecology Recycle Center ("AERC"),
acquired from Quadrex Corp. in 1994, processes low-level radioactive waste to
reduce the volume of waste requiring disposal at other facilities. The plant,
situated on 16 acres of Company property in Oak Ridge, Tennessee, primarily
serves the commercial nuclear power industry, but also accepts brokered waste
from biomedical, academic and non-utility industry customers.

Field Services: The US Ecology Field Services group offers land and building
contamination studies, decontamination, waste removal and off-site shipment
services, involving radiological and hazardous materials contamination. The
Company has provided remediation services for more than 20 years.

NON-OPERATING DISPOSAL FACILITIES

Beatty, Nevada Facility. Operated by the Company from 1962 to 1993, the Beatty
site was the nation's first commercial facility licensed to dispose of LLRW. In
1997, it became the first LLRW disposal facility to successfully complete
closure and post-closure stabilization and transfer its license to the State for
long-term institutional control. Since that time, the Company has performed
maintenance and surveillance under a contract with the State, drawing on a
State-controlled fund contributed to during facility operations.

Bruneau, Idaho Facility. This remote 88 acre desert site, acquired along with
the Grand View, Idaho disposal operation in February 2001, was closed under an
approved RCRA plan. Post closure monitoring will continue for approximately 26
years in accordance with permit and regulatory requirements.

Sheffield, Illinois Facility. The Company previously operated this LLRW disposal
facility on a 5-acre, state-owned site from 1968 to 1978. After performing
closure work under a 1988 Settlement Agreement with the State of Illinois, the
Company monitored and maintained the site until mid-2001, when the LLRW license
was transferred to the State. Like at Beatty, the Company has a contract with
the State to perform long-term monitoring and maintenance.

Sheffield, Illinois Facility. The Company previously operated two hazardous
waste disposal facilities adjacent to the Sheffield low-level radioactive waste
disposal area. One hazardous waste site was opened in 1974 and ceased accepting
waste in 1983; the second accepted hazardous waste from 1968 through 1974. In
1999, the Company renegotiated its corrective measures agreement for groundwater
remediation and monitoring, allowing the Company to reduce its financial
assurance requirement to $1,500,000. The Company continues to perform
remediation activities at the facility under regulation by the US EPA.

Winona, Texas Facility. From 1980 to 1994, Gibraltar Chemical Resources
operated the Winona hazardous waste processing and deep well facility, at which
time AEC purchased the facility. Solvent recovery, deep well injection and
waste brokerage operations were conducted on an eight acre site until March
1997, when the Company ceased operations. The Company has complied with an
Agreed Order entered with the State of Texas for closure, including posting a
$1,300,000 financial assurance. State action is pending on a Closure
Certification Report submitted in 1999. The Company owns an additional 597 acres
contiguous to the permitted site.

Ward Valley, California Proposed Facility. In 1993, the Company received a
State of California license to construct and operate a LLRW facility in a
remote, Mojave Desert location to serve the Southwestern LLRW Compact. The
license remains valid, however, the State of California has abandoned its duty
to obtain the project property from the U.S. Department of the Interior. The
Company filed suit against the state to recover monetary damages in excess of
$162 million. The matter is tentatively scheduled for trial in January 2003.
Additional discussion of this litigation is presented in Item 3 of this Form
10-K.

Butte, Nebraska, Proposed Facility. The Company submitted an application to the
State of Nebraska to construct and operate this facility, developed under
contract to the Central Interstate LLRW Compact Commission ("CIC"). Following
proposed license denial by the State of Nebraska, the CIC, the Company, and a
number of nuclear power utilities funding the project sued Nebraska alleging
improper political influence over the license decision. A federal court order
was issued enjoining the state license review process. The case is scheduled
for trial in June 2002. Additional discussion of this litigation is presented in
Item 3 of this Form 10-K.

INDUSTRY

2001 continued the trend toward consolidation and restructuring in the
environmental services and hazardous waste industry that has been underway since
the mid-1990s. This consolidation and industry restructuring followed rapid
expansion in the 1970s and 1980s driven by new environmental laws and related
actions by federal and state agencies to regulate existing waste management
facilities and clean up contaminated sites under the federal Superfund law.

By the early 1990s, excess hazardous wastes management capacity had been
permitted by the waste services industry. To better manage risk and reduce
expenses, many waste generators also instituted industrial process changes and
other methods to minimize waste production. The volume of waste shipped for
disposal from Superfund and other properties also diminished as the most
contaminated sites were cleaned up. Improved waste management by generators
coupled with excess commercial disposal capacity and a maturing federal
Superfund program created highly competitive market conditions that still apply
today.

Management believes that the hazardous waste business will continue to
consolidate, but that a baseline demand for services will remain. Management
further believes that the ability to deliver specialized services while
aggressively competing for non-specialized, commodity business will set apart
successful from unsuccessful companies going forward. The Company's acquisition
of Envirosafe Services of Idaho and its patented hazardous steel mill waste
treatment technology, expanded handling of certain radioactive and mixed waste
materials at its Idaho and Texas hazardous waste facilities, and installation of
patented thermal desorption treatment units at its Beatty, Nevada hazardous

waste facility reflect active measures by the Company to increase profitability
under present market conditions.

The commercial LLRW business is also experiencing significant changes, due
largely to the failure of the LLRW Policy Act of 1980 ("Policy Act") and
interstate Compacts encouraged by the Policy Act to provide any new disposal
sites and market responses to that failure. The Company's efforts to site new
disposal facilities in Ward Valley, California and Butte, Nebraska are delayed
by litigation. Management believes that both of these proposed facilities are
safe and environmentally sound, and that impediments to successful development
reflect unwillingness on the part of California and Nebraska to fulfill their
duties under existing law. No other Compact-driven new site development efforts
have advanced to the stage of these two sites. Management believes the Company
will be entitled to substantial compensation for its past investments in these
statutorily-required siting processes if the facilities are not developed.

The Company's Richland, Washington disposal facility, serving the Northwest and
Rocky Mountain Compacts, is one of only two operating Compact disposal
facilities in the nation. Significantly, both were in full operation for many
years before passage of the LLRW Policy Act. While the Richland site has
substantial unused capacity, it can only accept LLRW from the eleven western
states comprising the Northwest Interstate and Rocky Mountain Compacts. The
Barnwell, South Carolina site, located in the recently formed Atlantic Compact,
is open to the entire nation but has limited remaining service capacity (in
terms of both space and years of availability) and imposes much higher state
fees.

Restricted access to the Company's Richland, Washington facility, Barnwell's
high state fees and the failure of the Compacts to establish new disposal
facilities has created a market opportunity for a privately held Utah disposal
company currently licensed to accept a subset of the LLRW Congress assigned as a
state responsibility under the Policy Act. Changing market conditions also
expanded opportunities to provide economical volume reduction services. The
Company purchased its Oak Ridge facility in 1994 to participate in the volume
reduction market, along with other new market entrants. The LLRW volume
reduction business has experienced heavy price competition and a number of
service providers have ceased operations and/or declared bankruptcy. This
competition has had an adverse impact on the economics of the processing
facility in Oak Ridge.

The significant increase in low-level radioactive waste disposal prices has also
encouraged a search for more cost-effective disposal methods for soil, debris,
consumer products, industrial wastes containing very low levels of radioactive
contamination, and mixed wastes exhibiting both hazardous and radioactive
properties. Management believes the expanded use of permitted hazardous waste
disposal facilities to dispose of these materials is a safe, environmentally
sound market response, and that the Company's recently acquired Grand View,
Idaho facility is very well positioned to meet growing demand. The Company's
Texas Ecologists disposal facility is also positioned to serve a portion of this
demand.

PERMITS, LICENSES, AND REGULATORY REQUIREMENTS

The Company's hazardous, non-hazardous, and radioactive materials business is
subject to extensive environmental, health, safety, and transportation laws,
regulations, permits and licenses. These regulations are administered by various
federal, state, and local agencies. The responsible agencies regularly inspect
the Company's operations to monitor compliance and have authority to enforce
compliance through the suspension of operating licenses and permits and the
imposition of civil or criminal penalties in case of violations. This body of
law and regulations contribute to demand for Company services and represents a
significant obstacle to new market entrants.

The Resource Conservation and Recovery Act ("RCRA") provides a comprehensive
framework for regulating hazardous waste handling, transportation, treatment,
storage, and disposal. RCRA regulation and permitting is the responsibility of
the US EPA and state agencies delegated such authority. Listed chemical
compounds and residues derived from listed industrial processes are subject to
RCRA standards unless they are delisted through a formal rulemaking process such
as the patented steel mill treatment employed at the Company's Grand View, Idaho
facility. RCRA liability may be imposed for improper waste management or for
failure to take corrective action to address releases of hazardous substances.
To the extent waste can be recycled or beneficially reused, regulatory controls
under RCRA diminish.

The Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") and its amendments ("Superfund") impose strict, joint and several
liability on owners or operators of facilities where a release of hazardous
substances has occurred, on parties who generated hazardous substances released
at such facilities, and on parties who arrange for the transportation of
hazardous substances. Liability under Superfund may be imposed if releases of
hazardous substances occur at treatment, storage, or disposal sites used or
operated by the Company. Since customers of the Company face the same
liabilities, Superfund incents potential AEC customers to minimize the number of
commercial disposal sites utilized and to manage their own wastes when feasible.
Commercial disposal facilities require authorization from the US EPA to receive
Superfund clean-up wastes.

The Toxic Substances Control Act ("TSCA") establishes a comprehensive regulatory
program for treatment, storage and disposal of PCBs. Regulation and licensing of
PCB wastes is the responsibility of the US EPA.

The Atomic Energy Act of 1954 ("AEA") and the Energy Reorganization Act of 1974
assign the NRC regulatory authority for the receipt, possession, use and
transfer of specified radioactive materials including disposal. The NRC has
adopted regulations for licensing commercial LLRW processing and disposal sites,
and may delegate regulatory and licensing authority to individual states. The
U.S. Department of Transportation regulates transport of radioactive materials.
Shippers and carriers of radioactive materials must comply with both the general
requirements for hazardous materials transportation and with specific
requirements for radioactive materials.

The Atomic Energy Act does not authorize the NRC to regulate NORM/NARM, however,
individual states may assume regulatory jurisdiction. Many states have chosen
to do so.

The process of applying for and obtaining licenses and permits to construct and
operate a radioactive, hazardous, or municipal and industrial solid waste
facility is lengthy and complex. Management believes it has significant
knowledge and expertise regarding environmental laws and regulations. The
Company also believes it possesses all applicable permits, licenses, and
regulatory approvals necessary to safely operate its facilities and maintains
the specialized expertise required to secure additional approvals to grow its
business in the future.

INSURANCE, FINANCIAL ASSURANCE, AND RISK MANAGEMENT

The Company carries a broad range of insurance coverage, including general
liability, automobile liability, real and personal property, workers'
compensation, directors' and officers' liability, environmental impairment
liability, and other coverage customary to the industry. Except as discussed in
the Item 3. "Legal Proceedings" section of this report, the Company does not
expect the impact of any known casualty, property, environmental insurance or
other contingency to be material to it's financial condition, results of
operations or cash flows.

Through December 31, 2001, the Company did not experience any difficulty
obtaining insurance. However, the Company's principal insurance provider has
notified the Company to expect increased premiums and more restrictive
underwriting standards. In addition, the market for closure and post-closure
insurance, along with other forms of environmental insurance, has materially
changed, with higher premiums and collateral requirements. If the Company were
unable to obtain adequate closure, post-closure or environmental insurance in
the future, any partially or completely uninsured claim against the Company, if
successful and of sufficient magnitude, could have a material adverse effect on
the Company's financial condition, results of operations and cash flows.
Additionally, continued access to casualty and pollution legal liability
insurance with sufficient limits at acceptable terms is an important aspect of
obtaining revenue-producing waste service contracts.

Existing regulations require financial assurance to cover the cost of final
closure and/or post-closure obligations at the Company's processing and disposal
facilities. Acceptable forms of financial assurance include escrow-type
accounts funded by revenue during the operational life of a facility, letters of
credit from third parties, surety bonds, and traditional insurance. States may
also require facilities to fund escrow type or trust accounts during the
operating life of the facility.

As of December 31, 2001, the Company provided letters of credit of $1,150,000,
as collateral for insurance policies of approximately $50,907,000 for
performance of disposal facility final closure and post-closure requirements.

While the Company has not experienced difficulty in obtaining financial
assurance for it's current operations, the cost of maintaining surety bonds,
letters of credit and insurance policies in sufficient amounts will be more
expensive in the future than it has been in the recent past.

Failure to maintain adequate financial assurance could result in regulatory
action being taken against the Company that could include the unplanned closing
of certain facilities. Management believes the Company will be able to maintain
the requisite financial assurance policies, though at an increased cost.
Management further believes that tightened availability of financial assurance
instruments under present market conditions creates a significant impediment to
new market entrants, and an added challenge for financially struggling
competitors.

Primary casualty insurance programs do not generally cover accidental
environmental contamination losses. To provide insurance protection for such
environmental claims, the Company has obtained environmental impairment
liability insurance and professional environmental consultants liability
insurance for non-nuclear occurrences. For nuclear liability coverage, the
Company maintains so-called Facility Form nuclear liability insurance covering
the operations of its facilities, suppliers, and transporters. The Company has
also purchased primary property, casualty and excess liability policies through
traditional third party insurance.

CUSTOMERS

In 2001, the Company managed the disposal of CERCLA waste under a contract with
the U.S. Army Corps of Engineers Formerly Utilized Site Remedial Action Program
("FUSRAP") for $5,900,000. This constituted 11% of the Company's consolidated
revenue. In 2000, steel mill waste services were provided to Tamco Steel of
Rancho Cucamonga, California at a price of $5,500,000. This constituted 13 % of
the Company's consolidated revenue. No other single customer accounted for 10%
or more of consolidated revenue in 2001, 2000, or 1999.

MARKETS

Disposal Services. The hazardous waste treatment and disposal business is
generally highly competitive and sensitive to transportation costs. Specialized
niche service offerings are less sensitive to competition or transportation
cost.

The Company's Robstown, Texas hazardous waste facility is geographically well
positioned to serve petro-chemical companies and other industries concentrated
along the Texas Gulf coast. The facility is also permitted to accept limited
concentrations of certain NRC-exempt radioactive materials and mixed wastes, and
can compete over a much larger area for these wastes.

The Beatty, Nevada facility primarily competes for business in the California,
Arizona and Nevada markets. Due to the site's superior geologic and climate
conditions in the Amargosa Desert, the Nevada facility can compete for wastes
shipped from more distant locations. The Nevada facility also competes over a
broader geographic area for PCB waste due to the more limited number of TSCA
disposal facilities nationwide. The Beatty facility also offers thermal
desorption treatment services to customers in its western service region.

The Grand View, Idaho facility accepts wastes from across the United States and
operates a Company-owned rail transfer station located adjacent to a main
east-west rail line, generally allowing much lower cost transportation than by
truck. The Idaho facility's two primary markets are for steel mill air
pollution control dust and NRC-exempt radioactive materials and mixed wastes in
concentrations specified by permit. Substantial waste volumes are received under
a five-year, renewable contract with the U.S. Army Corps of Engineers that may
also be utilized by other federal agencies. Recent permit modifications have
expanded disposal capabilities at the Idaho facility.

Waste stabilization, encapsulation, chemical oxidation and other treatment
technologies are available at the Company's Idaho, Nevada and Texas facilities
to meet US EPA land disposal restrictions. This capability allows all three
sites to manage a significantly broader spectrum of wastes than if pre-disposal
treatment was not offered.

The Company's El Centro municipal and industrial disposal facility competes in a
regional south Texas market in the vicinity of Corpus Christi. Management
believes marketing efforts for the El Centro disposal facility will deliver
sufficient market share to sustain profitable operations.

The Richland, Washington disposal facility serves LLRW producers in the eight
states that are members of the Northwest Compact. The three Rocky Mountain
Compact members are also eligible to use the facility subject to annual volume
limits. As a monopoly LLRW service provider, Washington State approves the
facility's disposal rates. The site competes for NORM/NARM from customers across
the country. NORM/NARM rates are not regulated, since a monopoly does not exist.

Processing. The Oak Ridge LLRW volume reduction facility primarily competes for
business in the eastern United States from nuclear power plants. The Company
also processes brokered waste from biomedical and academic institutions and
other non-utility customers at the Oak Ridge facility.

Field Services: US Ecology's Field Services group competes for environmental
remediation projects across the nation. Projects were recently completed in New
York, Tennessee and Texas. Current projects are underway in Tennessee, Texas and
Florida.

COMPETITION

The Company competes with large and small companies in each of the markets in
which it operates. The radioactive, hazardous and non-hazardous industrial waste
management industry is highly competitive. Management believes that its
principal disposal competitors are Chemical Waste Management, The EQ Company,
Heritage, Safety-Kleen, Clean Harbors, Envirocare of Utah, and Waste Control
Specialists. Its principal processing business competitors are Duratek, ATG, and
Permafix. A large number of companies compete for business in the Field Services
marketplace. The City of Corpus Christi landfill is the primary competitor to
the Company's El Centro solid waste disposal facility.

Management believes that the principal competitive factors applicable to its
radioactive and hazardous waste management business are:

- - Price
- - Specialized "niche" service offerings
- - Customer service reputation
- - Experience and technical proficiency
- - Compliance and positive working relations with regulatory agencies

Management believes the Company is, and will continue to be, competitive based
on these factors. The Company further believes that it offers a nationally
unique mix of services, including specialized "niche" services, which
distinguish it from competitors. American Ecology's understanding of the
industry, strong "brand" name recognition, excellent customer service
reputation, and long established relationships with customers, federal and state
regulators, and the local communities bolster these advantages where its
facilities operate.

The Company's solid waste landfill business competes primarily on the basis of
price within its regional South Texas service area. Regulatory compliance and
customer service are also important factors in securing business.

PERSONNEL

In October 2001, Jack K. Lemley resigned as President and Chief Executive
Officer of American Ecology Corporation and its subsidiaries. In November 2001,
the Company's Board of Directors accepted Mr. Lemley's resignation as a Director
and Chairman of the Board.

In October 2001, the Board of Directors appointed Stephen A. Romano as President
and Chief Operating Officer and assigned James R. Baumgardner, Senior Vice
President and Chief Financial Officer, the additional responsibilities of
Secretary and Treasurer of the Company.

On November 6, 2001, the Company's Board of Directors appointed Thomas A. Volini
as a new Director.

On February 4, 2002, the Company's Board of Directors appointed Michael J.
Gilberg as Vice President and Controller.

On March 15, 2002, the Company's Board of Directors appointed Stephen A. Romano
as Chief Executive Officer.

Since October 4, 2001, the Company has implemented fundamental changes to
streamline its organizational structure and management, including but not
limited to, elimination of a number of senior officer positions.

On March 11, 2002, the Company had 279 employees, of which 61 were members of
the Paper, Allied-Industrial, Chemical and Energy Workers International Union
AFL-CIO-CLC ("PACE").

In 1998, the Company ended discussions with PACE on a new labor agreement at its
Oak Ridge facility and implemented its final offer. PACE charged the Company
with unfair labor practices and the National Labor Relations Board ("NLRB")
ruled against the Company. In December 2001, the U.S. Court of Appeals for the
Sixth Circuit ruled in favor of the union. Prior to the ruling, new management
unilaterally granted raises to its Oak Ridge PACE union employees The Company
recently provided the union its calculation of back wages and benefits owed and
initiated negotiations for a new collective bargaining agreement. Management
believes union relations at its Oak Ridge facility have improved.

ITEM 2. PROPERTIES

The Company believes that its property and equipment are well maintained, in
good operating condition and suitable for the Company's current and projected
needs. Company headquarters are located in Boise, Idaho in leased office
space. AEC also leases sales and administrative offices in Washington, Nevada,
Texas, California, Nebraska, and Kentucky. The following table describes the
principal properties and facilities owned or leased by the Company.

CORPORATE FUNCTION ACREAGE OWN/LEASE UTILIZATION
- --------------------- -------------------------------- -------------- --------- ------------

Boise, Idaho Corporate office 7,711 sq. ft. Lease 100%

OPERATING DISPOSAL
- ---------------------
FACILITIES
- ---------------------

Beatty, Nevada Treatment and disposal facility 80 acre(s) Lease 100%

Grand View, Idaho Treatment and disposal facility, 1,760 acre(s) Own 100%
and approved expansion area

Elmore County, Idaho Rail transfer station 110 acre(s) Own 100%

Robstown, Texas Treatment and disposal facility 240 acre(s) Own 100%

Robstown, Texas Municipal landfill 200 acre(s) Own 100%

Richland, Washington Disposal facility 100 acre(s) Lease 100%

NON-OPERATING
- ---------------------
DISPOSAL FACILITIES
- ---------------------

Bruneau, Idaho Closed disposal facility 88 acre(s) Own 100%

Sheffield, Illinois Closed disposal facility 204 acre(s) Own 100%

Sheffield, Illinois Closed disposal facility 170 acre(s) Own 100%

Winona, Texas Non-operating treatment and deep 620 acre(s) Own 10%
well facility

PROCESSING FACILITIES
- ---------------------

Oak Ridge, Tennessee Processing facility 16 acre(s) Own 100%

The principal properties of the Company make up less than 10% of the total
assets. The properties utilized are sufficient and suitable for the Company's
needs.

The Company's current office lease expires in September 2002. Under the terms
of the lease the Company must provide six-month notice of intent to vacate the
premises. The Company informed the landlord of its' intention to vacate the
premises at the end of the current lease in September 2002 unless material and
favorable changes are made to the lease. The Company is evaluating competing
bids for office space for its corporate office in Boise, Idaho.

ITEM 3. LEGAL PROCEEDINGS.
- -----------------------------

MANCHAK V. US ECOLOGY, INC., U.S. DISTRICT COURT FOR THE DISTRICT OF NEVADA,
- --------------------------------
CIVIL ACTION NO. 96-494.

In a case filed in April 1996, the Plaintiffs allege patent infringement based
on use of a general process to stabilize hazardous waste prior to disposal at
the Company's Beatty site. Plaintiffs seek unspecified damages for infringement,
treble damages, interest, costs and attorneys' fees. The Company does not
believe it's processes violated plaintiff's patent. Mediation was unsuccessfully
conducted in August 2000. On August 30, 2001, the trial court disqualified the
Company's original counsel based on a failure to identify a conflict. New
outside counsel, Merchant & Gould of Minneapolis, Minnesota, has been engaged by
the Company, which the court approved on November 21, 2001. The Company is
seeking disgorgement of all fees paid to previous counsel, plus interest and the
incremental costs associated with transferring the case to new legal counsel.
The Company continues to vigorously defend the case and expects to spend several
hundred thousand dollars defending the case in 2002.

IN RE RAMP INDUSTRIES, INC. SITE (COLORADO), U.S. ENVIRONMENTAL PROTECTION
- --------------------------------------------------
AGENCY, DENVER, REGION 8.
- -----

The Company responded to a CERCLA 104(e) Information Request in March 1996 sent
by US EPA to numerous Potentially Responsible Parties ("PRP") regarding a LLRW
storage and transfer facility. To date, the Company has not been formally named
as a responsible party at the CERCLA site; however, the EPA issued a preliminary
finding of liability of $29,000 in 1997. The Company may have sent waste to the
Ramp site from it's former brokerage operation in Pleasanton, California. No
determination of ultimate liability can be made at this time and no formal
action has been initiated beyond the above information requests and preliminary
liability determination.

DAVID DUPUY AND RICHARD HAMMOND V. AMERICAN ECOLOGY ENVIRONMENTAL SERVICES
- --------------------------------------------------------------------------------
CORPORATION, ET AL., CAUSE NO. 98-1304-C, 241ST JUDICIAL DISTRICT COURT, SMITH
- ---------------------
COUNTY, TEXAS

Plaintiffs allege negligence on the part of the Company for failure to warn and
protect plaintiffs from alleged hazardous conditions while plaintiffs were
performing work at the Winona, Texas facility. Plaintiffs allege that the
Company's negligence resulted in personal injury to plaintiffs and seek
unspecified damages. The Company's insurance carrier has assumed the cost of
defense in this case subject to the Company's $250,000 deductible. In June 2000,
the Company's attorneys filed a motion for costs due to the lack of diligence of
plaintiffs' attorneys in pursuing the case and their non-responsiveness to
attempts to settle. The court awarded costs in accordance with the motion and
plaintiffs paid $4,000. The Company's motion for summary judgment against
plaintiffs was granted in favor of the Company on January 31, 2001, dismissing
the case with prejudice. Plaintiffs filed a notice of appeal on April 27, 2001,
which the Company will defend vigorously. The appellate court recently informed
all parties that it would decide the appeal without oral argument.

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

Company's subsidiary, US Ecology, to serve the CIC. After the State of Nebraska
denied US Ecology a license in December 1998, the utilities filed suit against
Nebraska. The suit alleges bad faith by the state. The CIC, originally named as
a defendant, was later realigned as a plaintiff. US Ecology intervened on the
side of the plaintiffs seeking damages for its $6,500,000 investment in the
project, interest, and the recovery of its expected profit from the operation of
the facility. In addition, plaintiffs seek to remove the State of Nebraska from
the licensing process because of the alleged bad faith.

In 1999, the federal trial court granted the CIC a preliminary injunction
restraining the State from proceeding with a contested case on US Ecology's
license application, and from collecting any further funds from US Ecology. The
United States Eighth Circuit Court of Appeals upheld the injunction.

The State subsequently moved to dismiss the case on sovereign immunity grounds,
among others. The trial court overruled the motion with respect to the CIC, but
partially sustained the motion for the other plaintiffs, including US Ecology,
for the claims of money damages on immunity grounds. The court overruled the
State's motion contesting claims for injunctive and declaratory relief by the
plaintiff utilities and US Ecology, but reserved ruling on whether the
plaintiffs could be awarded money damages as part of their claim for injunctive
relief. The CIC is seeking to recover all amounts expended by plaintiffs
including US Ecology. The Company believes it is entitled to any money the CIC
may recover on its behalf. The trial court's denial of the State's motion to
dismiss is still on appeal at the 8th Circuit.

Nebraska also appealed the District Court ruling denying it's motion to dismiss
and took the position that all discovery was stayed pending the final outcome of
all matters on appeal. The magistrate ruled that the State was required to
respond to discovery requests, as did the Eighth Circuit Court of Appeals. The
State sought an emergency stay of discovery with the U.S. Supreme Court that was
denied. Discovery is proceeding. On October 1, 2001, the State's petition to
the US Supreme Court for a writ of certiorari to review the sovereign immunity
issue was denied. In October 2001, the state filed a motion asking the Court to
dismiss the Company's claim of equitable subrogation against the State. In early
November the Company and generators filed a motion to amend their complaints to
dismiss the equitable subrogation claims and strengthen their cross claims
against the CIC. The Court has not ruled on these motions. On January 17,
2002, the Court denied the State's request for a jury trial, reaffirming its
previous decision. The case is set for trial in June 2002.

FEDERAL RCRA INVESTIGATION AT THE OAK RIDGE, TENNESSEE FACILITY
- ---------------------------------------------------------------

On September 29, 1999, investigators associated with the FBI, US EPA, and TVA,
arrived at the Oak Ridge facility to commence an investigation in connection
with a search warrant issued by the U.S. District Court, Eastern District of
Tennessee. The Company fully cooperated with the inquiry and has provided all
requested information. The Company has also conducted an internal investigation.
On October 3, 2001 the Company received a subpoena for additional records
covering the time period September 1, 1999 through September 30, 2001, to which
the Company responded. On November 27, 2001 and January 28, 2002, the Company's
outside legal counsel, Ritchie, Fels & Dillard, met with attorneys from the U.S.
Attorney's Office and US EPA. Further discussions have transpired between the
Company's counsel and the U.S. Attorney's office. While no charges have been
brought against the Company, the Company views this as a serious matter and is
seeking timely resolution. The Company cannot predict the final outcome of this
investigation.

ZURICH AMERICAN INSURANCE COMPANY V. NATIONAL UNION FIRE INSURANCE COMPANY OF
- --------------------------------------------------------------------------------
PITTSBURGH, ET AL INCL. AEC, AEESC, AEMC AND AESC; SUPREME COURT OF STATE OF NEW
- -------------------------------------------------
YORK, COUNTY OF NEW YORK; CASE NO. 604662/99

In this action filed in October 1999, Plaintiff Zurich American Insurance Co.
("Zurich") sought declaratory and other relief against National Union Fire
Insurance Company of Pittsburgh ("National Union"), the Company and subsidiaries
AEESC, AESC and AEMC ("AEC Defendants") and Doe Insurers 1-50 ("Doe Defendants")
with respect to Zurich's defense coverage in the Virgie Adams action under its
claims made policy PLC 6820850.

relinquished its possible future rights to seek defense and indemnity from
Zurich for the following cases: Adams, Cuba, Dupuy, and GM. The Company also
----- ---- ----- --
agreed to assume defense costs for the above noted cases effective April 1, 2001
(the "Cutoff Date").

Settlement with the Mobley entities, which resolves the matter with Zurich and
National Union, was reached on February 12, 2002. On March 15, 2002 the Company
received a $250,000 payment by the Mobley Entities to the Company based on
dismissal of all claims by the Company against National Union and Mobley, and
vice versa. Accordingly, all matters are resolved.

GENERAL MOTORS CORPORATION V. AMERICAN ECOLOGY ENVIRONMENTAL SERVICES CORP., ET
- --------------------------------------------------------------------------------
AL., CASE NO. 3-99CV2626-L, U.S. DISTRICT COURT, NORTHERN DISTRICT OF TEXAS.
- ---

The Complaint names the Company and it's subsidiaries, as well as the former
owner of the Winona Facility and its associated business entities. General
Motors ("GM") seeks contribution and indemnity, including reimbursement of
defense costs and attorneys' fees, incurred by GM in the Adams case and this
case. The underlying claims, based on the terms and conditions of a waste
disposal contract between GM and the Winona Facility dating from 1989 to 1997,
are brought on breach of contract, contribution, and common law indemnity
grounds. Included within the indemnity claims is a claim for payment by GM of a
$1,500,000 settlement, plus legal fees. After an unsuccessful mediation, the
trial court, on August 20, 2001, granted a partial summary judgment in favor of
GM, finding that Company owed GM a defense and indemnity for claims based on the
Company's negligence under a contract entered into between GM and Gibraltar (the
Company's predecessor). The Company assumed this contract in 1995 after
purchasing Gibraltar. The trial on the liability and damages issues are
scheduled for May 2002. The Company previously offered to settle this case with
GM for $300,000 plus a payment plan totaling an additional $700,000, which GM
did not accept. On March 13, 2002, after reaching settlement with the Mobley
entities, GM made a settlement demand to the Company for $1,400,000 based in
part on plaintiff's receipt of $960,000 from Mobley. On March 18, 2002, the
Company authorized its outside counsel to offer to settle with GM for $600,000.

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

In May 2000, subsidiary US Ecology, Inc., sued the State of California, its
Governor, Gray Davis, and the Director of the State Department of Health
Services, for monetary damages exceeding $162 million. The suit stems from the
state's abandonment of the Ward Valley low-level radioactive waste ("LLRW")
disposal project for which US Ecology is the licensee and the license designee.
Laws on the books since the 1980s require the state to build a disposal site for
LLRW produced in California, Arizona, North Dakota and South Dakota, members of
the Southwestern Compact. In keeping with these laws, US Ecology was selected
in 1985 to locate and license the site using its own funds on a reimbursable
basis. In 1993, US Ecology obtained a license from the California Department of
Health Services, which it continues to hold. The state successfully defended
the license against challenges in court and, until Governor Davis took office,
actively pursued conveyance of the site from the federal government as required
by law and its contractual obligations to US Ecology. In September 2000, the
superior court granted California's motion to dismiss all causes of action. In
October 2000, the court confirmed its ruling. The Company appealed in November
2000. On September 5, 2001, the California appellate court upheld the trial
court's decision in part and denied it in part, remanding the case for further
proceedings based on the Company's promissory estoppel claim. On October 15,
2001, both the Company and the State filed petitions for review with the
California Supreme Court. On December 5, 2001 the California Supreme Court
denied both requests and the case was remanded back to Superior Court in San
Diego, California for trial. Counsel for the Company subsequently filed a
peremptory writ seeking appointment of a new trial court judge to hear the case.
This was granted, followed by a scheduling conference in February, 2002. Trial
has been tentatively set for January 2003, and discovery is underway. The
Company intends to vigorously prosecute the case.

U.S. ECOLOGY CORPORATION [SIC] AND OIL, CHEMICAL & ATOMIC WORKERS INTERNATIONAL
- --------------------------------------------------------------------------------
UNION, AFL-CIO,CASES 10-CA-30847 AND 10-CA-31149
- ----------------

2000, a three-member panel of the NLRB materially affirmed the ALJ's decision.
The Company filed an appeal with the U.S. Sixth Circuit Court of Appeals in May
2000. The Sixth Circuit Court of Appeals heard oral arguments on October 31,
2001 and affirmed the NLRB's ruling on December 14, 2001, requiring the Company
to pay back wages and benefits provided under the previous collective bargaining
agreement. The Company calculated the back wages and benefits and provided this
information to the Union on March 15, 2002. The Company believes it owes back
wages and benefits of approximately $888,000 and fully accrued for this
liability as of December 31, 2001. The Company has informed the Union of its
desire to initiate negotiations on a new collective bargaining agreement.

MATTIE CUBA, ET AL. V. AMERICAN ECOLOGY ENVIRONMENTAL SERVICES CORPORATION, ET
- --------------------------------------------------------------------------------
AL.,CAUSE NO. 2000-092, 4TH JUDICIAL DISTRICT COURT, RUSK COUNTY, TEXAS
- ---

The original complaint in this case was served on the Company and various
subsidiaries on November 20, 2000. The lawsuit is a toxic tort lawsuit brought
by 28 named plaintiffs against the Company and the named subsidiaries, as well
as the former facility owners and approximately 60 former customers of the
Winona, Texas facility. The plaintiffs seek damages based generally on
intentional and negligence tort claims, as well as punitive damages. The
company believes it has conducted its operations in accordance with applicable
laws and regulations that the lawsuit is without merit and intends to vigorously
defend the action. The Company's current insurance carrier has agreed to pay for
the defense of this matter, subject to the Company's $250,000 deductible, which
has been fully accrued. To date, the insurance company has expended less than
$100,000 to defend this case.

US ECOLOGY, INC. V. DAMES & MOORE, INC.,CASE NO. CV OC 0101396D, FOURTH JUDICIAL
- ----------------------------------------
DISTRICT COURT, ADA COUNTY, IDAHO

DAMES & MOORE, INC. V. US ECOLOGY, INC., ET AL.,INDEX NO. 602567-01, SUPREME
- ----------------------------------------------------
COURT OF NEW YORK, NEW YORK COUNTY, NEW YORK

BAY CRANE V. AMERICAN ECOLOGY CORPORATION AND U.S. ECOLOGY, INC., CASE NO.
- ----------------------------------------------------------------------
25502-01, SUPREME COURT OF NEW YORK, QUEENS COUNTY, NEW YORK

All of the above listed cases relate to a 2000-2001 Field Services project for
work performed and failure to be paid under a subcontract to Dames & Moore (a
wholly-owned subsidiary of URS Corporation and prime contractor to Brookhaven
Science Associates, LLC). The project involved removal, decontamination and
disposal of above-ground cement ducts at Brookhaven National Laboratory in
Upton, New York. On February 23, 2001, subsidiary US Ecology filed a breach of
contract suit in Idaho state court seeking (1) damages and reformation of the
contract between US Ecology and Dames & Moore; (2) indemnification from Dames &
Moore for negligence; and (3) a declaratory judgment declaring the "pay-if-paid"
clause in the contract void and unenforceable as against public policy. In
addition to filing a motion to dismiss in the action initiated by US Ecology in
Idaho, Dames & Moore filed a separate action ("Counter-Claim") in the New York
state trial court. The Dames & Moore New York action alleges, among other
things, negligence on the part of US Ecology and certain crane companies
providing services at the Brookhaven job site. The Company vigorously denies
the Counter Claim and believes these claims have no merit.

The Bay Crane case was filed in the Supreme Court of New York, Queens County, on
October 5, 2001. Bay Crane alleges that the Company is liable for damage to a
heavy trailer damaged during a failed lift. The Company's defense is that the
responsible party for the loss is Dames and Moore, who engineered and supervised
the lift. The Company tendered this lawsuit to its insurance carrier. The
carrier has agreed to defend the case. There is a $2,500 deductible for the
insurance on this case.

All parties except Bay Crane initially agreed to submit the matters related to
the Brookhaven job to mediation. The US Ecology and Dames & Moore matters were
submitted to mediation at the end of October. The mediation, while resolving
certain technical issues, did not resolve the pending claims. The Company has
declined a request for additional mediation. Legal action between the parties
has been stayed, pending global settlement negotiations. The parties met on
March 26, 2002 to discuss a global settlement for all claims involving URS. As
of the Date of this report, no settlement has been agreed to. If timely
settlement cannot be reached, the Company intends to vigorously pursue relief
from an Idaho court.

OTHER MATERIAL LITIGATION

The Company filed an amended federal income tax refund claim in 1996 for
approximately $740,000. On September 29, 1999, the Internal Revenue Service
("IRS") proposed to deny this claim, sought to recover portions of tentative
refunds previously received by the Company and proposed to reduce the Company's
net operating loss carryforwards. On November 29, 1999, the Company protested
this denial which is currently pending with the IRS. The Company has tentatively
settled this claim in 2000 but this settlement was rejected by the Congressional
Joint Committee on Taxation because the main issue was then pending before the
United States Supreme Court in a case involving another taxpayer. This issue was
subsequently resolved in a favor of the Company's position by the Supreme Court.
As a result, the IRS Appellate Office has conceded this issue. The forwarding of
this claim to the Joint Committee for approval is currently being held up while
the Appellate Office re-examines two issues it previously conceded. These issues
effect only loss carryforwards, not the amount of the refund which should be
$605,000 plus statutory interest at rates varying from 4.5% to 6.5% from 1995 to
the date the refund is paid.

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

No matters were submitted to the Company's security holders during the fourth
quarter of 2001.

PART II

ITEM 5. MARKET FOR AMERICAN ECOLOGY CORPORATION COMMON STOCK AND RELATED
STOCKHOLDER MATTERS

American Ecology Corporation common stock is currently listed on the NASDAQ
National Market System under the symbol ECOL. As of March 22, 2002, there were
approximately 6,000 record holders of common stock. The high and low sales
prices for the common stock on the NASDAQ and the dividends paid per common
share for each quarter in the last two years are shown below:

2001 2000 Dividends Per Share
---- ---- -------------------
PERIOD High Low High Low 2001 2000
----- ----- ----- ----- -------- ---------
1st Quarter $3.00 $2.06 $3.00 $1.27 $ -- $ --
2nd Quarter 2.70 2.20 4.00 2.06 -- --
3rd Quarter 2.95 1.84 3.94 2.31 -- --
4th Quarter 2.25 1.50 3.38 1.75 -- --

In the first quarter of 1999 the Company borrowed approximately $1.3 million
from two large shareholders. The terms of the $1.3 million notes payable from
shareholders, among other terms and conditions, prohibited the payment of any
cash dividends until the notes were retired. On December 8, 2000, the Company
repaid the notes payable in full. In August of 2000, the Company established a
credit facility with a local bank that also prohibits the payment of dividends.
This credit facility provides the Company with $8 million of borrowing capacity,
but prohibits cash dividends on any of the Company's outstanding stock while the
credit facility is in place. The credit facility matures on October 15, 2002.

ITEM 6. SELECTED FINANCIAL DATA

AMERICAN ECOLOGY CORPORATION

This summary should be read in conjunction with the consolidated financial statements and related notes.

(Dollars in thousands, except per share amounts)

YEARS ENDED DECEMBER 31, 2001 2000 1999 1998 1997
- ------------------------ --------- -------- -------- -------- ---------

Revenue $ 56,016 $41,958 $34,352 $38,960 $ 41,522
% Increase (decrease) in revenues from prior year 33.5% 22.1% (11.8)% (6.2)% (16.9)%

Net income (loss) $ 802 $ 4,697 $ 4,409 $ 762 $ (676)
Basic earnings per share (1) $ .03 $ .31 $ .30 $ .03 $ (.17)

Shares used to compute income (loss) per share (000's) 13,738 13,711 13,585 12,772 8,163

Working capital (deficit) $(10,568) $ 2,279 $(2,309) $(7,567) $(16,930)

Total assets $ 86,824 $65,750 $58,459 $61,800 $ 98,431

Long-term debt, net of current portion $ 4,436 $10,775 $ 3,569 $ 2,223 $ 39,872

Shareholders' equity $ 26,416 $25,984 $21,582 $17,460 $ 13,380

Long-term debt to total capitalization as a percentage 16.8% 29.3% 14.2% 11.3% 74.9%
Current ratio (current assets divided by current
liabilities) 0.65:1 1.17:1 0.9:1 0.7:1 0.4:1

Return on average equity 3.1% 18.9% 22.6% 4.9% (5.0)%

Dividends declared per common share $ -- $ -- $ -- $ -- $ --
Capital spending, including capital expenditures and site
development costs $ 3,456 $ 6,442 $ 3,740 $ 2,128 $ 3,442
Depletion, depreciation and amortization expense $ 5,030 $ 2,028 $ 2,054 $ 3,152 $ 3,106

(1) No dividends have been declared.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

This document contains forward-looking statements that involve known and unknown
risks and uncertainties which may cause actual results in future periods to
differ materially from those indicated herein. These risks include, but are not
limited to, compliance and changes with applicable laws and regulations,
exposure to litigation, access to capital, access to insurance and financial
assurances, new technologies, competitive environment, and loss of major
contracts. When the Company uses words like "may," "believes," "expects,"
"anticipates," "should," "estimate," "project," "plan," their opposites and
similar expressions, the Company is making forward-looking statements. These
expressions are most often used in statements relating to business plans,
strategies, anticipated benefits or projections about the anticipated revenues,
earnings or other aspects of our operating results. The Company makes these
statements in an effort to keep stockholders and the public informed about our
business based on our current expectations about future events. Such statements
should be viewed with caution and are not guarantees of future performance or
events. As noted elsewhere in this report, our business is subject to
uncertainties, risks and other influences, many of which the Company has no
control over. Additionally, these factors, either alone or taken together, could
have a material adverse effect on the Company and could change whether any
forward-looking statement ultimately turns out to be true. The Company
undertakes no obligation to publicly release updates or revisions to these
statements. The following discussion should be read in conjunction with audited
consolidated financial statements and the notes thereto for the year ending
December 31, 2001, included elsewhere in this Form 10-K.

The Company is a hazardous, non-hazardous, and radioactive waste management
company that offers comprehensive treatment and disposal solutions for hazardous
and low-level radioactive waste to commercial and government entities including,
but not limited to nuclear power plants, petro-chemical plants, steel mills, the
U.S. Department of Defense, biomedical facilities, universities and research
institutions. The Company principally derives its revenue from fees charged for
access to the Company's five fixed waste disposal facilities and one processing
facility. Fees are charged for removal, transportation, processing, and
disposal of waste subject to law, regulation and applicable licenses and
permits. The Company and its predecessors have been in business for 50 years.

MANAGEMENT CHANGES

On October 4, 2001, Jack K. Lemley resigned as President and Chief Executive
Officer of American Ecology Corporation and its subsidiaries. In October 2001
the Board of Directors appointed Stephen A. Romano as Chief Operating Officer
and President of the Company. On March 15, 2002 Mr. Romano was also appointed
Chief Executive Officer. Also in October 2001, James R. Baumgardner, Senior
Vice President and Chief Financial Officer, was appointed Secretary and
Treasurer of the Company.

On November 6, 2001 the Company's Board of Directors accepted the resignation of
Jack K. Lemley as a Director and Chairman of the Board. Also on November 6,
2001, the Company's Board of Directors appointed Thomas A. Volini as a new
Director.

Since October 4, 2001, the Company has implemented fundamental changes to
streamline the organization, cost structure and management of the Company,
including but not limited to, the elimination of senior positions including the
Executive Vice President and Operations Manager (Division President), a position
previously held by Zaki K. Naser, a Vice President position previously held by
Robert S. Thorn, a Vice President (Division President), a position previously
held by Barbara A. Trenary and General Counsel, a position previously held by
Robert M. Trimble.

On February 4, 2002, the Company's Board of Directors appointed Michael J.
Gilberg as Vice President and Controller, replacing L. Gary Davis, who resigned
from the position on November 6, 2001.

STRATEGY

Concurrent with the fourth quarter 2001 management changes, the new executive
team promptly implemented a revised business plan that initially focused on
cutting overhead costs, increasing sales and improving operational efficiency.
These changes included the creation of the new National Sales and Marketing
position, and adoption of new pricing strategies to optimize niche business
margins while materially increasing waste throughput at the Company's disposal
facilities. This turn around plan is based on the following strategic
principles:

1. Aggressively cut unnecessary overhead costs without compromising health,
---------------------------------------------------------------------------
safety, compliance or production New management has eliminated or
-----------------------------------
terminated over 25 full time positions and a significant number of
consultants and administrative expenses that are expected to result in over
$2.4 million in annualized savings. These savings are almost exclusively in
selling, general and administrative expense. These cuts have been made
without reducing the Company's commitment to Health, Safety, and
Compliance. To this end, new management created a corporate health and
safety officer position.

2. FOCUS on what we do best: Waste Treatment and Disposal
---------------------------------------------------------------
New management promptly divested certain non-core business assets including
the Nuclear Equipment Service Center and Mid West Brokerage operation, both
formerly based at the Company's Oak Ridge facility. Management will
continue to evaluate potential disposition of non-core business assets in
the coming periods. Additionally, management is committed to building its
core treatment and disposal business by increasing throughput at existing
facilities and evaluating other treatment and disposal facilities for
acquisition.

3. Implement an integrated national sales organization for disposal facility
-------------------------------------------------------------------------
services
--------
The manner in which the Company markets its services was fundamentally
changed through the creation of a national sales structure and the
appointment of a National Sales and Marketing Director. In addition, the
Company implemented a new sales commission plan and made new sales
territory assignments for its disposal business. These changes
significantly increase individual salesperson incentives to obtain new
business while expanding opportunities to sell the Company's unique
combination of specialized services at multiple sites. The previous sales
organization was based on individual sales teams reporting to each disposal
operation rather than through a single sales organization reporting to the
Chief Executive Officer.

4. Optimize "niche" services and leverage existing investments
-----------------------------------------------------------------
New management seeks to expand its customer base in those markets where the
Company has a distinct competitive advantage based on superior technology,
unique permit capabilities, or cost advantages. A primary focus is
increasing market share for disposal of radioactive materials exempt from
regulation under the Atomic Energy Act, including mixed wastes exhibiting
both hazardous chemical and radioactive properties. Another primary focus
is treatment of organic chemical wastes using the Company's proven chemical
oxidation and thermal desorption processes and technologies.

5. Aggressively price heavily competed "commodity" disposal services
-----------------------------------------------------------------------
Disposal facility operational expenses are largely fixed. Management
believes the Company's ability to realize substantial margins for niche
service offerings positions it to aggressively price its more heavily
competed "commodity" disposal services. As fixed costs are met the costs
required to handle additional waste throughput are reduced on a per unit
basis and margins rise. This is particularly true for direct disposal,
where variable costs are minimal. Aggressive pricing for this competed,
commodity business leverages the existing investment in personnel and
infrastructure to increase fall through to the bottom line.

6. Restore profitability at the Oak Ridge LLRW processing facility
-----------------------------------------------------------------------
Appointment of a new General Manager and a new Sales Manager accompanied
new management direction to link pricing to an improved understanding of
production costs. This signals a shift from the "reactive" pricing which
new management believes have harmed the Oak Ridge subsidiary's financial
performance. Improved material handling and management procedures have also
been adopted to speed waste throughput.

7. Improve sharing of scientific and engineering expertise among multiple
------------------------------------------------------------------------
disposal sites
--------------
Through technology transfer between sister treatment and disposal sites,
the Company is expanding delivery of niche services to an expanded customer
base. Chemical oxidation, a specialized process perfected at the Company's

Robstown, Texas facility to treat oil refinery waste, is now being provided
to west coast refineries served by the Beatty, Nevada facility. Efforts are
underway to introduce the patented steel mill waste treatment technology
used at the Grand View, Idaho facility at both the Texas and Nevada sites.

FACTORS THAT MAY AFFECT FUTURE RESULTS

COMPLIANCE AND CHANGES WITH APPLICABLE LAWS AND REGULATIONS
- -----------------------------------------------------------
The changing regulatory framework governing the Company's business creates
significant risks, including potential liabilities from violations of
environmental statutes and regulations. Failure to timely obtain, or to comply
with the conditions of applicable federal, state and local governmental
licenses, permits or approvals for our waste treatment and disposal facilities
could prevent or inhibit the Company from operating our facilities and providing
services, resulting in a significant loss of revenue and earnings. Changes in
laws or regulations may require the Company to modify existing operating
licenses or permits, or obtain additional approvals if new environmental
legislation or regulations are enacted or existing legislation or regulations
are amended, reinterpreted or enforced differently than in the past. Any new
governmental requirements that raise compliance standards may impose significant
cost upon the Company. The Company's failure to comply with applicable statutes
and regulations may result in the imposition of substantial fines and penalties
and could adversely affect the Company's ability to carry on its business as
presently constituted.

While management believes the nation's basic framework of environmental laws and
regulations are broadly accepted as a matter of public policy, a substantial
relaxation of these requirements or a substantial reduction of enforcement
activities by governmental agencies could materially reduce the demand for the
Company's services. Large portions of the Company's revenues are generated as a
result of requirements arising under federal and state laws, regulations and
programs related to protection of the environment. If the requirements of
compliance with environmental laws and regulations were substantially relaxed in
the future or were less vigorously enforced, particularly those relating to the
transportation, treatment, storage or disposal of hazardous and low-level
radioactive waste, the demand for the Company's services could decrease and
revenues could be significantly reduced.

EXPOSURE TO LITIGATION
- ------------------------
Since Company personnel routinely handle radioactive and hazardous materials,
the Company may be subject to liability claims by employees, customers and third
parties. There can be no assurance that the Company's existing liability
insurance is adequate to cover claims asserted against the Company or that the
Company will be able to maintain such insurance in the future. Management
believes the Company has adopted prudent risk management programs to reduce
these risks and potential liabilities, however, there can be no assurance that
such programs will fully protect the Company. Adverse rulings in ongoing legal
matters, including but not limited to, Ward Valley, Nebraska, General Motors,
the Oak Ridge FBI investigation or Dames & Moore/URS matters could have a
material adverse effect on the Company.

ACCESS TO CAPITAL
- -------------------
The Company requires cost effective access to capital to implement its strategic
and financial plan. If the Company cannot maintain access to capital or raise
additional capital, the Company may need to curtail or scale back planned
expansions. The Company's $8.0 million line of credit with a commercial bank and
$8.5 million industrial revenue bond (IRB) come due in the fourth quarter of
2002. No assurance can be given that the bank will extend or the IRB can be
refinanced. Additionally the general economic conditions have weakened during
the last half of 2001, which has created tightening in the commercial bank
market.

ACCESS TO INSURANCE AND FINANCIAL ASSURANCES
- --------------------------------------------
The Company is required by license, permit and prudence to maintain a variety of
insurance and financial assurances. Since early 2001, there has been a
tightening in the insurance markets, decreasing cost-effective availability.
This market tightness was exacerbated by the terrorist attacks against the
United States on September 11, 2001 and the related claims from those attacks.
Without cost effective access to insurance and/or financial assurance markets,
the Company's ability to operate its facilities would be materially and
adversely affected. No assurance can be given that the Company will continue to
have the favorable access to the insurance markets that it has enjoyed in recent
years.

NEW TECHNOLOGIES
- -----------------
The Company expects to increase its utilization of thermal treatment and other
advanced technologies. The Company has experienced difficulties implementing new
technologies in the past. The Company' s future growth is tied to its ability to
discern emerging industry service niches and deliver cost-effective solutions to
customer needs. If the Company cannot successfully implement commercially
viable technologies in a manner that is responsive to the clients' requirements,
the business could be adversely affected.

COMPETITIVE ENVIRONMENT
- ------------------------
The Company faces competition from companies with greater resources and
potentially more cost-effective waste treatment and disposal solutions. An
increase in the number of commercial treatment or disposal facilities for
hazardous or radioactive waste in the United States, or a decrease in the
treatment or disposal fees charged by competitors could reduce or eliminate the
competitive advantage of the Company's facilities and services.

LOSS OF MAJOR CONTRACTS
- --------------------------
A loss on one or more of the Company's larger contracts could significantly
reduce the Company's revenues and negatively impact earnings. Discontinuation of
the Grand View, Idaho site's contract with the Army Corps of Engineers, for
example, could have a material adverse impact given the significant revenue from
that contract.

RESULTS OF OPERATIONS

The Company, while profitable since 1998, had a disappointing 2001 primarily due
to increased overhead spending and the poor performance at the Oak Ridge,
Tennessee LLRW processing facility. In February 2001 the Company acquired all of
the capital stock of Envirosafe Services of Idaho, Inc., renamed US Ecology
Idaho, Inc., which owns and operates a disposal facility located in Grand View,
Idaho. The positive Grand View Idaho acquisition and the poor performance at the
Oak Ridge processing site drove the major financial changes from 2000 to 2001
operations.

The following table summarizes the operational performance of the operating
segments, Operating Disposal Facilities, Non-operating Disposal Facilities,
Processing and Field Services, and Corporate. Only the Operating Disposal
Facility and Processing and Field Services segments generate revenue and
profits. The Non-operating Disposal Facility segment generates minimal revenues
and does not generate profits. The Corporate segment generates no revenue and
provides administrative, managerial, and support services for the other
segments.

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

Reported in $(000) OPERATING NON-OPERATING
DISPOSAL DISPOSAL
FACILITIES FACILITIES PROCESSING CORPORATE TOTAL
2001
- ------------------------------------------------------------------------------------------------------

Revenue $ 42,538 $ 87 $ 13,391 $ -- $56,016
Direct Cost 20,546 1,141 11,815 -- 33,502
------------ --------------- ------------ ----------- --------
Gross Profit 21,992 (1,054) 1,576 -- 22,514
S,G&A 11,557 556 4,736 5,431 22,280
------------ --------------- ------------ ----------- --------
Income (loss) from operations 10,435 (1,610) (3,160) (5,431) 234
Investment income 188 -- 23 58 269
Gain on sale of assets 167 -- 612 -- 779
Interest expense (814) -- (43) (265) (1,122)
Other income (expense) 450 (286) 1 663 828
------------ --------------- ------------ ----------- --------
Income before extraordinary items
and taxes 10,426 (1,896) (2,567) (4,975) 988
Extraordinary item and taxes -- -- -- (186) (186)
------------ --------------- ------------ ----------- --------
Net Income $ 10,426 $ (1,896) $ (2,567) $ (5,161) $ 802
Depreciation Expense $ 4,287 $ -- $ 684 $ 59 $ 5,030
Total Assets $ 43,371 $ 27,482 $ 9,892 $ 6,079 $86,824

2000
- ------------------------------------------------------------------------------------------------------
Revenue $ 27,411 $ 41 $ 14,506 $ -- $41,958
Direct Cost 11,214 916 9,702 -- 21,832
------------ --------------- ------------ ----------- --------
Gross Profit 16,197 (875) 4,804 -- 20,126
S,G&A 6,047 (119) 4,925 5,812 16,665
------------ --------------- ------------ ----------- --------
Income (loss) from operations 10,150 (756) (121) (5,812) 3,461
Investment income 52 293 1 89 435
Gain on sale of assets 78 -- 14 -- 92
Interest expense (118) -- (49) (183) (350)
Other income 471 -- (17) 387 841
------------ --------------- ------------ ----------- --------
Income before extraordinary items
and taxes 10,633 (463) (172) (5,519) 4,479
Extraordinary item and taxes -- -- -- 218 218
------------ --------------- ------------ ----------- --------
Net Income $ 10,633 $ (463) $ (172) $ (5,301) $ 4,697
Depreciation Expense $ 1,399 $ -- $ 571 $ 58 $ 2,028
Total Assets $ 23,119 $ 27,442 $ 9,034 $ 6,155 $65,750

1999
- ------------------------------------------------------------------------------------------------------
Revenue $ 18,795 $ 2,035 $ 13,522 $ -- $34,352
Direct Cost 7,632 63 8,914 -- 16,609
------------ --------------- ------------ ----------- --------
Gross Profit 11,163 1,972 4,608 -- 17,743
S,G&A 3,942 1,058 4,271 5,491 14,762
------------ --------------- ------------ ----------- --------
Income (loss) from operations 7,221 914 337 (5,491) 2,981
Investment income 28 313 -- 439 780
Gain on sale of assets 39 858 (1) (70) 826
Interest expense (30) -- (49) (129) (208)
Other income 62 13 8 142 225
------------ --------------- ------------ ----------- --------
Income before extraordinary items
and taxes 7,320 2,098 295 (5,109) 4,604
Extraordinary item and taxes -- -- -- (195) (195)
------------ --------------- ------------ ----------- --------
Net Income $ 7,320 $ 2,098 $ 295 $ (5,304) $ 4,409
Depreciation Expense $ 1,308 $ -- $ 682 $ 64 $ 2,054
Total Assets $ 14,780 $ 29,305 $ 9,003 $ 5,371 $58,459

The following table sets forth items in the Statements of Operations for the
three years ended December 31, 2001, as a percentage of revenue:

Percentage of Revenues for the
Year Ended December 31,
----------------------
2001 2000 1999
------ ------ ------

Revenue 100.0% 100.0% 100.0%
Operating costs 59.8 52.0 48.3
------ ------ ------

Gross profit 40.2 48.0 51.7
Selling, general and administrative expenses 39.8 39.7 43.0
------ ------ ------

Income (loss) from operations 0.4 8.3 8.7
Other (income) expense, net 1.3 2.4 4.7
------ ------ ------

Income (loss) before income taxes and extraordinary item 1.7 10.7 13.4
Extraordinary item -- 0.4 --
Income tax expense (benefit) 0.3 -- 0.6
Preferred stock dividends 0.7 0.9 1.2
------ ------ ------

Net income to common shareholders 0.7% 10.2% 11.7%
====== ====== ======

REVENUE
- -------
Consolidated revenue for 2001 increased $14,058,000 or 33.5% over 2000 revenue.
The February 2001 acquisition of the Grand View, Idaho disposal facility
contributed $17,362,000, accounting for 123% of the increase in revenue. Without
the acquisition of the Grand View disposal facility, consolidated revenue would
have decreased 7.9% from 2000. The decrease in non-acquisition related revenue
was principally the result of a $2,087,000 decrease in revenue at the Oak Ridge,
Tennessee processing facility. The lower revenue at the Oak Ridge facility was
primarily caused by continued deterioration in average selling price ("ASP") for
services and an unfavorable services mix, with more volume being handled at a
lower ASP. With the sale of the brokerage business and newly implemented price
increases, further decreases in revenue at Oak Ridge in 2002 are possible.
Excluding the Idaho acquisition-related revenue, operating disposal facilities
experienced a net $1,217,000 decrease in revenue primarily due to the 2000
completion of two large, single event clean-up contracts at the Beatty, Nevada
hazardous waste disposal facility and a large NORM/NARM contract at the
Richland, Washington radioactive waste disposal facility that were not replaced
in 2001. The Company's Texas hazardous and solid waste disposal facilities
posted impressive revenue growth, increasing 50% and 386%, respectively. The
growth at the Texas facility related to several large contracts and the
implementation of new services, including enhanced drum handling capabilities
and chemical oxidation. The revenue growth at the Company's Texas solid waste
disposal facility was the result of the first full year of operations, compared
to only 6 months of operation in 2000.

Consolidated revenue for 2000 increased $7,606,000 or 22.1% over 1999 revenue.
The increase in revenue was mainly due to the addition of several new customers
and contracts at the Beatty, Nevada facility that was responsible for a
$7,077,000 increase in revenue. The Texas solid waste disposal facility opened
in June 2000 and was responsible for $555,000 of revenue and revenue growth in
2000.

Management expects operating disposal facility and consolidated revenue to
continue to increase in 2002, based on the Company's restructured national sales
organization and the contribution from a full twelve months of operations at the
Grand View disposal facility compared to 11 months in 2001. Field Services, a
project oriented service, is also expected to increase in revenue due to several
large contracts awarded in early 2002. The Richland, Washington disposal
facility completed work on a $3,850,000 contract for disposal of waste in the
first quarter of 2002. The $3,850,000 contract is over half of total 2001
revenue for the Richland disposal facility, and is unlikely to recur.

DIRECT OPERATING COSTS
- ------------------------
Direct operating costs for 2001 increased 54% or $11,670,000 over 2000. The
February 2001 acquisition of the Grand View, Idaho disposal facility accounted
for $9,148,000 or 78% of the increase in direct costs. Waste throughput and
handling problems, combined with an unfavorable materials mix (i.e. high metals
mix; metals are more labor and machine intensive than other materials), resulted
in a $1,731,000 increase in direct operating costs at the Oak Ridge, Tennessee
processing facility where direct costs reached 97% of revenue for 2001. The
Company also experienced a material price increase from its primary disposal
provider that will result in disposal cost increases of at least 30%. The
Company has and continues to negotiate with its customers to pass on this higher
disposal cost. New management installed at the Oak Ridge facility in October
2001 is charged with improving materials handling procedures, reducing material
inventory and improving facility throughput, thereby reducing direct costs
relative to revenue. In addition to a new focus on efficient operations, the Oak
Ridge sales force has been directed to discontinue accepting wastes that cannot
be profitably handled, and increase prices, which could result in lower waste
volume, but higher revenue and profitability.

Direct operating costs for 2000 increased 31% or $5,223,000 over 1999. The
increase in direct operating costs was the result of a similar increase in
revenue for 2000 over 1999.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
- --------------------------------------------
In 2001, Selling, general and administrative expenses ("SG&A") increased
$5,615,000 or 34% from 2000. The increase in SG&A in 2001 continued a trend of
increasing SG&A that was evident in 2000, when SG&A increased $1,903,000 in 2000
from 1999. Much of the 2001 increase was due to the previously discussed
acquisition of the Grand View, Idaho disposal facility, which accounted for
$4,228,000 or 75% of the increase in SG&A in 2001. Without the acquisition
related SG&A expenses, SG&A would have reached $18,052,000 or 8% higher than the

previous year. The increased SG&A in 2001 and 2000 was partially due to
increases in sales and management personnel, travel & entertainment, quality
assurance, consulting, and other expenses incurred as a result of previous
management's policies.

Legal expenses also accounted for a meaningful portion of the increase,
specifically for non-operating facilities where legal expense increased $705,000
in 2001 from 2000. Higher legal expenses were necessary to defend lawsuits
related to the Winona, Texas facility.

SG&A, as a percent of revenue, remained relatively constant at 40%, which was
disappointing in light of the significant increase in revenue. Management has
targeted SG&A to be less than 35% of revenue. With the sweeping changes in the
organization and new cost controls and business strategy implemented in the
fourth quarter of 2001, Corporate as well as other segment SG&A expenses are
expected to decrease in 2002. New management continues to focus on
discretionary spending controls as a means to improve profitability.

INVESTMENT INCOME
- ------------------
Investment income of $269,000, $435,000, and $225,000 in 2001, 2000, and 1999,
respectively, is mainly comprised of interest and dividend income on investments
used as collateral for various insurance policies. The Company has secured
insurance policies that do not require the collateral and converted the
investments to cash. Significant investment income is not expected in the
future unless collateral requirements are increased.

GAIN ON SALE OF FIXED ASSETS
- ---------------------------------
The Company sold certain non-performing and non-core businesses resulting in
gains on sale of fixed assets.

During 2001, the Company sold the under-performing assets of its Nuclear
Equipment Service Center and Midwest Brokerage businesses, both based in Oak
Ridge, and recognized a $482,000 gain on sale related to these assets. An
additional $200,000 gain was recognized related to the fiscal 2000
sale-leaseback transaction.

As a result of the August 2000 sale-leaseback, the Company recognizes a portion
of the deferred gain each month. Monthly payments are made to the bank for
approximately $30,000 and a gain is recognized for $14,000. In 2000, an $83,000
gain was realized on the sale of the fixed assets for the sale-leaseback. Other
miscellaneous assets were sold during 2000 for a gain of approximately $9,000.

In May 1999, the Company sold its Houston-based hazardous and non hazardous
waste transportation service provider (formerly WPI) and Surecycle; (a business
division that operated a containerized hazardous waste collection service in the
gulf coast market) to Clean Harbors Environmental Services, Inc. The sale of
the two operations and related facilities produced working capital of $1,900,000
and a gain on the sale over remaining book value of $843,000 before sales
commissions.

INTEREST EXPENSE
- -----------------
Interest Expense increased substantially in 2001 due to the assumption of an
$8,500,000, 8.25% Industrial Revenue Bond ("IRB") included with the February
2001 acquisition of the Grand View, Idaho disposal facility. The Company incurs
approximately $58,000 of interest expense monthly related to the IRB. Interest
payable on the $8,000,000 bank line of credit and long-term capital leases on
heavy equipment made up the remaining interest expense for 2001 and the previous
years.

OTHER INCOME
- -------------
Other income was $828,000, $841,000 and $225,000 for 2001, 2000, and 1999,
respectively. Other income is the account used to record various business
activities that are not a part of the Company's current year ordinary and usual
business line of revenue and expense. Other income includes the results of
adjustments, the reversal of expenses charged to reserves for contingent
liabilities from prior periods, and miscellaneous cash receipts.

The following table summarizes the business transactions from outside the
Company's current year general business scope.

($ in thousands)
AS OF DECEMBER 31,
OTHER INCOME 2001 2000 1999
- ------------ ------ ----- -----

State tax adjustments $ 106 $ 7 --
Correction of expensed debt payments 177 112 --
Insurance claim refunds 172 24 $ 38
Payment on sales invoices previously written off -- 98 59
Adjust prior years accrued burial fee based on actual payments 500 372 --
Adjust bad debt expense reserve (21) 76 8
Correction of prior years expenses that were allowable
as capitalized costs for El Centro project -- 132 9
Litigation accrual related to GM Lawsuit (300) -- --
Reversal of previous professional fee accrual 160 -- --
Other Misc Income, net 29 3 21
Cash receipts for property rents 5 10 39
Data services sold -- -- 27
Customer refunds and rebates -- 7 24
------ ----- -----
TOTAL OTHER INCOME $ 828 $ 841 $ 225
====== ===== =====

The accrued burial fee adjustment is the result of correcting the prior year's
accrual of burial fees based on actual burial fees paid. The Company makes a
monthly accrual for burial fees based on actual waste receipts, however, the
actual amount paid may be different, especially given that each operating
facility generally pays in excess of $1,000,000 in burial fees each year with
rates changing periodically.

INCOME TAXES
- -------------
The Company's effective income tax rates were 18.8%, .2%, and 4.2% for the
fiscal years 2001, 2000, and 1999 respectively. Management expects to pay little
in income taxes due to the approximate $30,000,000 net operating loss
carry-forward available as of December 31, 2001. Income tax expense reflects
estimated payments on different federal, state and local taxes, including
franchise taxes when paid in lieu of income taxes. Fiscal 2001 income taxes
primarily relates to the Robstown, Texas disposal facility where the vertical
stacking of new disposal cells resulted, for tax purposes, in the reversal of
$2,900,000 of expenses previously allowed.

EXTRAORDINARY GAIN - EARLY EXTINGUISHMENTS OF DEBT
- --------------------------------------------------------
In December 2000, the Company entered into an agreement with Chase Bank of Texas
for settlement of debt associated with the Company's 1994 Federal Income Tax
Claim. The Company had pledged the income tax receivable and a deed of trust on
the Company's Winona, Texas site to Chase Bank in 1998. The settlement, which
was paid in December 2000, allowed the Company to pay $350,000 to Chase Bank and
receive in return release and discharge from all obligations of the $556,000
loan. The result is an extraordinary gain on early extinguishment of debt of
$206,000, and the release by the bank of its security interest in the Winona
property and the income tax refund claim.

CAPITAL RESOURCES AND LIQUIDITY

As of December 31, 2001, the Company had negative working capital of $10,568,000
compared to a positive working capital of $2,279,000 in 2000. The deterioration
in working capital is primarily the result of the $8,000,000 line of credit
expiring in October 2002 (which was long term in 2000), and the assumption of
the $8,500,000 IRB due November 2002 as part of the Grand View, Idaho
acquisition. The $8,000,000 line of credit is expected to be extended prior to
its expiration. The $8,500,000 IRB is also expected to be refinanced prior to
maturity with a newly issued IRB large enough to provide for additional capital
improvements at the Grand View, Idaho disposal facility.

While no assurance can be made that the Company will be able to replace and/or
enlarge the IRB and/or extend the line of credit, the Company has had
preliminary discussions on the loans, has started the process, and currently
knows of no reason why it will not be successful in doing so.

As part of the Grand View, Idaho acquisition, the Company received $2,576,000 in
cash after providing closure/post-closure financial assurance to the State of
Idaho through an insurance policy rather than the pledged investments used by
the previous owner.

During 1999, the Company also met certain obligations allowing cash secured for
a $2,500,000 letter of credit to be replaced with a $1,500,000 performance bond.
Also, certain cash assets previously pledged were released allowing for
reclassification of assets from long term to short term. The $1,500,000 bond was
replaced by an insurance policy in 2000.

The Company's current ratio deteriorated to 0.7:1.0 in 2001 compared with
1.2:1.0 and 0.9:1.0 for the years ending December 31, 2000, and 1999.
Liquidity, as measured by day's receivables outstanding ("DRO"), decreased to 83
days during 2001 and was constant at 69 days for 2000 and 1999. Management
believes the increase in DRO is the result of the slowing economy and has
refocused its attempts to collects its accounts receivable.

The Company's leverage has increased since 1999, as evidenced by a 2.3:1.0 debt
to equity ratio at December 31, 2001, compared to 1.5:1.0 and 1.7:1.0 for the
2000 and 1999 years, respectively. This debt to equity ratio is total debt
divided by shareholder's equity as of year-end, where debt includes, but is not
limited to, the bank line of credit, the IRB, accounts payable, accruals, long
and short-term borrowings through notes, commercial paper, and lease agreements,
all of which are included in either current or total liabilities. Equity is the
shareholder's equity excluding any deferred tax assets or liabilities. The
year-end 2001 ratio increasing to 2.3:1.0 reflects an $8,500,000 IRB assumed as
part of the acquisition of the Grand View Idaho disposal facility.

As of March 22, 2002, the Company continues to maintain a business banking
relationship with the Boise, Idaho office of Wells Fargo Bank that provides an
$8,000,000 line of credit. On that date the Company had $1,500,000 borrowed.

OTHER MATTERS

ENVIRONMENTAL MATTERS
- ----------------------
The Company maintains reserves and insurance policies for costs associated with
future closure and post-closure obligations for both current and formerly
operated disposal facilities. These reserves and insurance policies are based on
professional engineering studies and interpretations of current regulatory
requirements and potential regulatory changes performed at least annually.
Accounting for closure and post-closure costs includes final disposal unit
capping for the site, gas emission control, soil and groundwater monitoring, and
other monitoring and routine maintenance costs expected after a site stops
accepting waste. The Company believes it has made adequate provisions through
reserves and the insurance policy for its obligations.

The Company estimates that the aggregate closure and post-closure costs for all
insured facilities owned or operated was approximately $26,333,000 as of
December 31, 2001. This compares to recorded closure and post-closure
liabilities of $15,953,000 and $17,285,000 for 2000 and 1999 respectively. As
described in Item 1, Insurance, the Company has a prepaid insurance policy
expiring September 2003 for closure and post closure of these facilities.

Management believes that disposition of these environmental matters will not
have a material adverse effect on the financial condition of the Company. The
Company's operation of disposal facilities creates operational, monitoring, site
maintenance, closure and post-closure obligations that could result in
unforeseen costs for monitoring and corrective action. The Company cannot
predict the likelihood or effect of such costs, regulations or legislation
enacted, or other future events affecting these facilities.

SEASONAL EFFECTS
- -----------------
The Company's operating revenue is generally lower in the winter months, and
increases in the warmer summer months when shorter duration cleanup projects are
scheduled and completed. The volume of both hazardous waste and ability to
perform processing tends to decrease during winter months, however, market
conditions have a larger effect on revenue than seasonality.

NEW ACCOUNTING PRONOUNCEMENTS
- -------------------------------
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards 143 Accounting for Asset Retirement Obligations.
FAS 143 requires a liability to be recognized for the fair value of future asset
retirement obligations and an associated asset to be recognized as part of the
carrying amount of the asset. FAS 143 is effective for fiscal years beginning
after June 12, 2002 although earlier implementation has been encouraged.

While management is still evaluating FAS 143, its implementation, which is
expected to occur in 2002, will have a material, positive effect on the
Company's reported financial condition. In the year of implementation,
liabilities will materially decrease, owners equity will materially increase,
and the Company will book a previously unrecognized asset. The closure
post-closure obligation that is presently recognized at current cost will be
increased by a cost of living adjustment and then discounted back at an imputed
interest rate to a present value. The income statement impact of this new
accounting pronouncement will be recognized as a cumulative effect of accounting
change. After implementation of this new accounting pronouncement, the asset
will be amortized and the liability accreted, resulting in increased expenses.

In June, 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards 141 Business Combinations. FAS 141 requires all
business combinations to utilize the purchase method. FAS 141 is effective for
business combinations initiated after June 30, 2001. FAS 141 is not expected to
have a material effect upon the Company.

In June, 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards 142 Goodwill and Other Intangible Assets. FAS 142
requires intangible assets to be amortized over their useful lives if
determinable. Intangible assets with indeterminable lives (such as goodwill) are
no longer subject to amortization, rather they are subject to impairment by
applying a fair-value-based test. FAS 142 is effective for fiscal years
beginning after March 15, 2001. FAS 142 is not expected to have a material
effect upon the Company.

In August, 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards 144 Accounting for the Impairment or Disposal of
Long-Lived Assets. FAS 144 modifies previous guidance regarding the impairment
or disposal for long-lived assets. FAS 144 is effective for fiscal years
beginning after December 15, 2001. FAS 144 is not expected to have a material
effect upon the Company.

CRITICAL ACCOUNTING POLICIES

In preparing the financial statements, management makes many estimates and
assumptions that affect the Company's financial position and results of
operations. While the likelihood that changes in most estimates and assumptions
would materially change the Company's financial position and results of
operations is not probable, the Company has two issues, litigation and disposal
facility accounting, requiring subjective judgment, estimates, and assumptions
which would likely produce a materially different financial position and result
of operation if different judgments, estimates, or assumptions were used.

The Company has been involved in litigation requiring management to estimate the
timing and potential for losses whose timing and ultimate disposition is
controlled by various judges and courts across the U.S. Approximately $1,200,000
was accrued in 2001 for disposition of litigation where the Company was the
defendant. The Company also has $27,430,000 of facility development costs, which
may not be realizable if the Company does not recover monetary damages from the
State of California and the State of Nebraska or disposal projects in these
states do not become operational. The decision to accrue costs or write off
assets is based upon the specific facts and circumstances related to each case
and management's evaluation continually changes as more information becomes
available.

Accounting for disposal facilities requires numerous judgments, estimates, and
assumptions that materially affect financial position and results of operations.
In general terms, a cell development asset exists for the cost of building the
disposal cells and a closure liability exists for capping and monitoring the
landfill subsequent to use. Major assumptions and judgments used in determining
the amount of the cell development asset and closure liability are as follows:

Personnel and equipment costs incurred in construction of a disposal cell are
identified by management and capitalized as the cell development asset.

The cell development asset is depreciated as each available cubic yard of
disposal space is filled. Periodic independent engineering reports are used to
determine the remaining volume available, and include estimates of volume,
compaction, and space reserved for capping the disposal cells.

The closure liability is a current cost estimate prepared by an independent
engineering firm of the costs to close and monitor disposal cells until returned
to the state where it is located. Management does not discount the liability,
which may not be due for decades, but records a pro-rata amount equal to the
percentage of filled disposal cell space to original available disposal cell
space. Available disposal cell space includes permitted but un-constructed
space.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

The Company has minimal interest rate risk on investments or other assets as the
amount held is the minimum requirement imposed by insurance or government
agencies. At December 31, 2001, $243,000 is held in short term pledged
investment accounts and $740,000 in tax refunds is due from the Federal
Government. Together these items earn interest at approximately 5% and comprise
1.1% of assets.

The Company has minimal interest rate risk on debt instruments, as management
has preferred fixed rate instruments to the risk incurred by variable rate
instruments. At December 31, 2001, $5,000,000 of variable rate debt is owed
under the line of credit and is accruing interest at the rate of 5.5%. The
$5,000,000 line of credit balance comprises 5.8% of the Company's capital.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.

INDEPENDENT AUDITORS' REPORT

To the Shareholders and Board of Directors
American Ecology Corporation

We have audited the accompanying consolidated balance sheets of American Ecology
Corporation and subsidiaries as of December 31, 2001 and 2000, and the related
consolidated statements of operations, shareholders' equity and cash flows for
the years ended December 31, 2001, 2000, and 1999. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of American Ecology
Corporation and subsidiaries as of December 31, 2001 and 2000, and the results
of their operations and their cash flows for the years ended December 31, 2001,
2000, and 1999, in conformity with U.S. generally accepted accounting
principles.

Balukoff, Lindstrom & Co., P.A.

Boise, Idaho
February 15, 2002

AMERICAN ECOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
($ IN 000'S EXCEPT PER SHARE AMOUNTS)
As of December 31,
--------------------
2001 2000
--------- ---------
ASSETS

Current Assets:
Cash and cash equivalents $ 4,476 $ 4,122
Receivables, net of allowance for doubtful
accounts of $1,176 and $568 respectively 12,674 9,839
Income taxes receivable 740 740
Prepayments and other 1,881 1,316
--------- ---------
Total current assets 19,771 16,017

Cash and investment securities, pledged 243 235
Property and equipment, net 34,265 18,488
Facility development costs 27,430 27,430
Other assets 5,115 3,580
--------- ---------
Total Assets $ 86,824 $ 65,750
========= =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long term debt $ 9,860 $ 1,094
Short term line of credit 5,000 --
Accounts payable 2,408 2,680
Accrued liabilities 12,121 9,149
Accrued closure and post closure obligation, current portion 700 700
Income taxes payable 250 115
--------- ---------
Total current liabilities 30,339 13,738

Long term debt 4,436 6,682
Long term line of credit -- 4,093
Accrued closure and post closure obligation, excluding current portion 25,633 15,253
Commitments and contingencies
Shareholders' equity:
Convertible preferred stock, $.01 par value,
1,000,000 shares authorized, none issued -- --
Series D cumulative convertible preferred stock, $.01 par value,
100,001 authorized, issued and outstanding; 5,263 converted and retired 1 1
Series E redeemable convertible preferred stock, $10.00 par value,
300,000 authorized, 300,000 shares converted and retired -- --
Common stock, $.01 par value, 50,000,000 authorized, 13,766,485
and 13,729,632 shares issued and outstanding, respectively 138 137
Additional paid-in capital 54,637 54,610
Retained earnings (deficit) (28,360) (28,764)
--------- ---------
Total shareholders' equity 26,416 25,984
--------- ---------

Total Liabilities and Shareholders' Equity
$ 86,824 $ 65,750
========= =========

The accompanying notes are an integral part of these financial statements.

AMERICAN ECOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN 000'S EXCEPT PER SHARE AMOUNTS)

For the Year Ended December 31,
----------------------------------
2001 2000 1999
---------- ---------- ----------

Revenue $ 56,016 $ 41,958 $ 34,352
Direct operating costs 33,502 21,832 16,609
---------- ---------- ----------

Gross profit 22,514 20,126 17,743
Selling, general and administrative expenses 22,280 16,665 14,762
---------- ---------- ----------

Income from operations 234 3,461 2,981
Investment income 269 435 780
Gain on sale of assets 779 92 826
Interest expense (1,122) (350) (208)
Other income 828 841 225
---------- ---------- ----------

Income before income tax and extraordinary item 988 4,479 4,604
Income tax expense (benefit) 186 (12) 195
---------- ---------- ----------

Income before extraordinary item 802 4,491 4,409

Extraordinary gain - early extinguishments of debt -- 206 --

Net income 802 4,697 4,409

Preferred stock dividends 398 398 397
---------- ---------- ----------

Net income available to common shareholders $ 404 $ 4,299 $ 4,012
========== ========== ==========

Basic earnings per share $ .03 $ .31 $ .30
========== ========== ==========

Diluted earnings per share $ .03 $ .26 $ .27
========== ========== ==========

Dividends paid per common share $ -- $ -- $ --
========== ========== ==========

The accompanying notes are an integral part of these financial statements.

AMERICAN ECOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ 000'S)

For the Year Ended December 31,
--------------------------------
2001 2000 1999
--------- ---------- ---------

Cash flows from operating activities:
Net income $ 802 $ 4,697 $ 4,409
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depletion, depreciation and amortization 5,030 2,028 2,054
(Gain) loss on sale of assets (779) (92) (826)
Gain on sale of investments -- -- (14)
Stock compensation 82 79 129
Changes in assets and liabilities:
Receivables (647) (2,143) 1,810
Investment securities classified as trading -- (9) 820
Other assets (1,694) (507) (1,415)
Closure and post closure obligation 267 (1,332) (2,254)
Income taxes payable 135 (87) 111
Accounts payable and accrued liabilities 231 (1,410) (7,328)
--------- ---------- ---------
Net cash provided (used) by operating activities 3,427 1,224 (2,504)

Cash flows from investing activities:
Capital expenditures, excluding site development costs (3,456) (6,442) (3,219)
Facility development costs, including capitalized interest -- -- (521)
Proceeds from sales of assets 860 2,000 1,840
Acquisition of Envirosafe Services of Idaho, Inc. 2,575 -- --
Net proceeds from sales of investment securities -- -- 2,497
Transfersfrom cash and investment securities, pledged 434 -- 1,876
--------- ---------- ---------
Net cash provided by (used in) investing activities 413 (4,442) 2,473

Cash flows from financing activities:
Proceeds from issuances and indebtedness 1,173 4,912 558
Payments of indebtedness (4,605) (2,361) (198)
Stock purchased and canceled in forward split (149) -- --
Stock options exercised 95 18 --
--------- ---------- ---------
Net cash provided by (used in) financing activities (3,486) 2,569 360
--------- ---------- ---------

Increase (decrease) in cash and cash equivalents 354 (649) 329
Cash and cash equivalents at beginning of year 4,122 4,771 4,442
--------- ---------- ---------
Cash and cash equivalents at end of year $ 4,476 $ 4,122 $ 4,771
========= ========== =========

Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized $ 1,122 $ 350 $ 208
Income taxes paid 45 74 156
Non-cash investing and financing activities:
Purchase of Envirosafe Services of Idaho, Inc. 18,541 -- --
Stock issuance-Director's compensation 82 79 129
Preferred Stock Dividends 398 398 397
Acquisition of equipment with notes/capital leases 1,928 1,769 1,235

The accompanying notes are an integral part of these financial statements.

AMERICAN ECOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
($ IN 000'S)

ADDITIONAL RETAINED
PREFERRED COMMON PAID-IN EARNINGS
STOCK STOCK CAPITAL (DEFICIT)
---------- -------- ------------ ----------

Balance, January 1, 1999 $ 1 $ 136 $ 54,385 $ (37,062)

Net income -- -- -- 4,409
Common stock issuance -- 1 109 --
Dividends on preferred stock -- -- -- (397)
Preferred stock-retired -- -- 19 (19)
---------- -------- ------------ ----------
Balance, December 31, 1999 $ 1 $ 137 $ 54,513 $ (33,069)

Net income -- -- -- 4,697
Common stock issuance -- -- 97 --
Dividends on preferred stock -- -- -- (398)
Other -- -- -- 6
---------- -------- ------------ ----------
Balance, December 31, 2000 $ 1 $ 137 $ 54,610 $ (28,764)

Net income -- -- -- 802
Common stock issuance -- 2 175 --
Dividends on preferred stock -- -- -- (398)
Common stock cancelled -- (1) (148) --
---------- -------- ------------ ----------
BALANCE, DECEMBER 31, 2001 $ 1 $ 138 $ 54,637 $ (28,360)
========== ======== ============ ==========

The accompanying notes are an integral part of these financial statements

AMERICAN ECOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business. American Ecology Corporation (a Delaware Corporation)
- -------------------------
and its subsidiaries (the "Company") provide waste processing and disposal
services to hazardous waste generators through its disposal facilities in Grand
View, Idaho; Robstown, Texas; Beatty, Nevada and at a low-level radioactive
waste ("LLRW") disposal facility near Richland, Washington. The Company also
provides a variety of processing, recycling, packaging and other waste services
for generators of LLRW through its Oak Ridge, Tennessee facility. The Company's
primary customers are industrial companies, government agencies, steel mills,
petro-chemical refineries, and power companies.

Principles of Consolidation. The accompanying financial statements are prepared
- ----------------------------
on a consolidated basis. Seven reporting subsidiaries and the parent company
were active in 2001. The consolidated financial statements include the accounts
of the Company and its subsidiaries after the elimination of all significant
inter-company balances and transactions. The Company's fiscal year-end is
December 31.

Reclassification. Reclassifications have been made to prior year financial
- -----------------
statements to conform to the current year presentation.

Cash and Investment Securities Pledged. Pledged cash and investment securities
- ---------------------------------------
consist of short-term investments such as money market accounts. The Company
maintains these investments to cover insurance policy commitments and the escrow
account for the closed facility in Sheffield, Illinois.

Revenue Recognition. Generally, revenues are recognized as services are
- --------------------
performed, and as waste materials are buried or processed. The Company has both
unbilled and deferred revenue.

Property and Equipment. Property and equipment are recorded at cost and
- -------------------------
depreciated on straight-line and declining balance methods over estimated useful
lives. Lease obligations for which the Company assumes or retains substantially
all the property rights and risks of ownership are capitalized. Replacements and
major repairs of property and equipment are capitalized and retirements are made
when the useful life has been exhausted. Minor components and parts are charged
to expense as incurred. During 2001, 2000, and 1999 maintenance and repair
expenses were $99,000, $176,000, and $241,000 respectively.

Land is comprised of property owned at the processing and disposal sites. Cell
development costs represent capitalized costs associated with the construction
of new disposal facility capacity and charged to operating expense as the
disposal space is utilized. The Company engages certified engineers and
surveyors to make independent surveys and measure cell volume.

Permitting Costs. Permitting costs, included under the caption Other Assets in
- -----------------
the Consolidated Balance Sheets, are primarily comprised of outside engineering
and legal expenses and are capitalized and amortized over the life of the
applicable permits. At December 31, 2001, and 2000 there were $4,034,000, and
$3,009,000, respectively, of net capitalized permitting costs included in other
assets in the accompanying consolidated balance sheets.

Insurance. The Company has insurance policies that cover any annual losses
- ---------
exceeding $50,000 per employee for employee health care. The Oak Ridge union
employees are not covered under the self-insured healthcare program, but are
covered by a traditional insurance plan as negotiated under their collective
bargaining agreement. The Company also maintains a Pollution and Remediation
Legal Liability Policy pursuant to RCRA regulations subject to a $250,000
self-insured retention. In addition, the Company is insured for consultant's
environmental liability subject to a $100,000 self-insured retention.

The Company restructured its closure and post-closure insurance with Indian
Harbor Insurance Company on an extended prepaid policy term for June 2000 to
September 2003.

Accrued Closure and Post-Closure. Accrued closure and post-closure liability
- -----------------------------------
represents the expected future costs, including corrective actions and
remediation, associated with closure and post-closure of the Company's operating

and closed disposal sites. The Company generally accrues for the estimated costs
of closures and post-closure monitoring and maintenance as permitted disposal
space is utilized. Liabilities are recorded when environmental assessments
and/or remedial efforts are probable, and the costs can be reasonably estimated,
consistent with Statement of Financial Accounting Standards No. 5. The Company
performs periodic reviews of both closed and operating sites and revises
accruals for estimated post-closure, remediation or other costs as necessary.
The Company's recorded liabilities are based on best estimates of current costs
and are updated periodically to include the effects of existing technology,
presently enacted laws and regulations, inflation and other economic factors.

The Company estimates its future cost requirements for closure and post-closure
monitoring and maintenance for operating hazardous waste disposal sites based on
Resource Conservation and Recovery Act ("RCRA") requirements and the respective
site permits. RCRA requires that companies provide the applicable regulatory
agency an acceptable financial assurance for the closure and post-closure
obligations of their hazardous waste sites for thirty years following closure.

Income Per Share. Basic earnings per share are computed based on net income
- -------------------
and the weighted average number of common shares outstanding. Diluted earnings
per share reflect the assumed issuance of common shares for outstanding options
and conversion of warrants. The computation of diluted earnings per share does
not assume exercise or conversion of securities that would have an anti-dilutive
effect on earnings per share.

(000's except per share amounts)
Year Ended December 31,
-------------------------------
2001 2000 1999
--------- --------- ---------
Income before extraordinary item $ 802 $ 4,491 $ 4,409
Net Income $ 802 $ 4,697 $ 4,409
Preferred stock dividends 398 398 397
--------- --------- ---------
Net income available to
common shareholders $ 404 $ 4,299 $ 4,012

Weighted average shares outstanding-
Common shares 13,738 13,711 13,585
Effect of dilutive shares 1,844 3,157 1,475
--------- --------- ---------

Adjusted shares 15,582 16,868 15,060

Basic earnings per share $ .03 $ .31 $ .30
========= ========= =========
Diluted earnings per share $ .03 $ .26 $ .27
========= ========= =========

Use of Estimates. The preparation of financial statements in conformity with
- ------------------
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenue and expenses during the
reporting period. The Company used significant estimates in the accompanying
consolidated financial statements primarily related to the valuation of closure
and post closure obligation costs and facility development assets, waste
processing and burial costs, deferred site maintenance, and legal liabilities.
It is reasonably possible that these estimates may change from time to time.

Major Customers. In 2001, the disposal of hazardous and naturally occurring
- ----------------
radioactive waste for the U.S. Army Corps of Engineers represented $5,900,000 or
11% of consolidated revenue. In 2000, the Company managed the disposal of
hazardous waste for Tamco Steel of Rancho Cucamonga, California, for $5,500,000
or 13% of 2000 consolidated revenue. No other single customer accounted for 10%
or more of the Company's consolidated revenues.

Credit Risk Concentration. The Company maintains most of its cash with Wells
- ---------------------------
Fargo Bank in Boise, Idaho. Substantially all of the cash balances are
uninsured and are not collateral for other obligations. Concentrations of
credit risk with respect to accounts receivable are believed to be limited due
to the number, diversification and character of the obligors and the Company's
credit evaluation process. Typically, the Company has not required customers to
provide collateral for such obligations.

Commitments. The Company has various long term lease commitments, payments on a
- ------------
sale lease back, a bank credit facility, customer and vendor obligations and
certain state and federal regulatory commitments all of which the Company
believes it has properly accounted for or has made proper accruals to meet these
obligations in the future.

Labor Concentrations. The Paper, Allied-Industrial Chemical & Energy Workers
- ----------------------
International Union, AFL-CIO, CLC (PACE), represent 61 employees at two of the
Company's facilities. 218 other employees did not belong to a union.

New Accounting Pronouncements.
- --------------------------------

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards 143 Accounting for Asset Retirement Obligations.
FAS 143 requires a liability to be recognized for the fair value of future asset
retirement obligations and an associated asset to be recognized as part of the
carrying amount of the asset. FAS 143 is effective for fiscal years beginning
after June 12, 2002 although earlier implementation has been encouraged.

NOTE 2. OPERATING SEGMENTS.

The Company operates with three segments, Operating Disposal Facilities,
Non-Operating Disposal Facilities, and Processing and Field Services. These
segments have been determined by evaluating the Company's internal reporting
structure and nature of services offered. The Operating Disposal Facility
segment represents Disposal Facilities accepting hazardous and radioactive
waste. The Non-Operating Disposal Facility segment represent Facilities which
are not accepting hazardous and/or radioactive waste or are awaiting approval to
open. The Processing and Field Services segment aggregates, volume-reduces, and
performs remediation and other services on radioactive material, but excludes
processing performed at the disposal facilities.

Prior to 2001, the Company structured internal reporting according to type of
waste, resulting in a Chemical Services division and a Low-level Radioactive
Waste Services division. All prior segment information has been restated along
the current segment reporting structure.

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

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

Revenue $ 42,538 $ 87 $ 13,391 $ -- $56,016
Direct Cost 20,546 1,141 11,815 -- 33,502
------------ --------------- ------------ ----------- --------
Gross Profit 21,992 (1,054) 1,576 -- 22,514
S,G&A 11,557 556 4,736 5,431 22,280
------------ --------------- ------------ ----------- --------
Income (loss) from operations 10,435 (1,610) (3,160) (5,431) 234
Investment income 188 -- 23 58 269
Gain on sale of assets 167 -- 612 -- 779
Interest expense (814) -- (43) (265) (1,122)
Other income (expense) 450 (286) 1 663 828
------------ --------------- ------------ ----------- --------
Income before extraordinary items and taxes 10,426 (1,896) (2,567) (4,975) 988
Extraordinary item and taxes -- -- -- (186) (186)
------------ --------------- ------------ ----------- --------
Net Income $ 10,426 $ (1,896) $ (2,567) $ (5,161) $ 802
Depreciation Expense $ 4,287 $ -- $ 684 $ 59 $ 5,030
Total Assets $ 43,371 $ 27,482 $ 9,892 $ 6,079 $86,824

2000
- ----------------------------------------------------------------------------------------------------------------
Revenue $ 27,411 $ 41 $ 14,506 $ -- $41,958
Direct Cost 11,214 916 9,702 -- 21,832
------------ --------------- ------------ ----------- --------
Gross Profit 16,197 (875) 4,804 -- 20,126
S,G&A 6,047 (119) 4,925 5,812 16,665
------------ --------------- ------------ ----------- --------
Income (loss) from operations 10,150 (756) (121) (5,812) 3,461
Investment income 52 293 1 89 435
Gain on sale of assets 78 -- 14 -- 92
Interest expense (118) -- (49) (183) (350)
Other income 471 -- (17) 387 841
------------ --------------- ------------ ----------- --------
Income before extraordinary items
and taxes 10,633 (463) (172) (5,519) 4,479
Extraordinary item and taxes -- -- -- 218 218
------------ --------------- ------------ ----------- --------
Net Income $ 10,633 $ (463) $ (172) $ (5,301) $ 4,697
Depreciation Expense $ 1,399 $ -- $ 571 $ 58 $ 2,028
Total Assets $ 23,119 $ 27,442 $ 9,034 $ 6,155 $65,750

1999
- ----------------------------------------------------------------------------------------------------------------
Revenue $ 18,795 $ 2,035 $ 13,522 $ -- $34,352
Direct Cost 7,632 63 8,914 -- 16,609
------------ --------------- ------------ ----------- --------
Gross Profit 11,163 1,972 4,608 -- 17,743
S,G&A 3,942 1,058 4,271 5,491 14,762
------------ --------------- ------------ ----------- --------
Income (loss) from operations 7,221 914 337 (5,491) 2,981
Investment income 28 313 -- 439 780
Gain on sale of assets 39 858 (1) (70) 826
Interest expense (30) -- (49) (129) (208)
Other income 62 13 8 142 225
------------ --------------- ------------ ----------- --------
Income before extraordinary items
and taxes 7,320 2,098 295 (5,109) 4,604
Extraordinary item and taxes -- -- -- (195) (195)
------------ --------------- ------------ ----------- --------
Net Income $ 7,320 $ 2,098 $ 295 $ (5,304) $ 4,409

Depreciation Expense $ 1,308 $ -- $ 682 $ 64 $ 2,054
Total Assets $ 14,780 $ 29,305 $ 9,003 $ 5,371 $58,459

NOTE 3. UNAUDITED SELECTED QUARTERLY FINANCIAL DATA.

The unaudited consolidated quarterly results of operations for 2001 and 2000 ($
in thousands, except per share amounts) were:

FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER

2001 2000 2001 2000 2001 2000 2001 2000
------ ----- ------ ------ ------- ------ ------ ------

Revenue
12,866 9,319 13,731 10,485 13,896 11,796 15,523 10,358
Gross profit
6,133 4,444 5,390 4,587 5,398 5,241 5,593 5,854
Income (loss) before
extraordinary items 1,528 1,483 364 723 (1,183) 1,108 279 1,165
Net Income (loss) 1,482 1,381 326 764 (1,213) 1,100 207 1,452
- --------------------------------------------------------------------------------------
Basic earnings (loss)
per share .10 .09 .02 .05 (.10) .07 .01 .10

Diluted earning (loss)
per share .08 .08 .01 .04 (.10) .06 .01 .08
- --------------------------------------------------------------------------------------

Basic and diluted earnings per common share for each of the quarters presented
above is based on the respective weighted average number of common shares for
the quarters. The dilutive potential common shares outstanding for each period
and the sum of the quarters may not necessarily be equal to the full year basic
and diluted earnings per common share amounts.

NOTE 4. PROPERTY AND EQUIPMENT.

Property and equipment at December 31, 2001, and 2000, were as follows (in
thousands):
2001 2000
--------- ---------

Construction in progress $ 861 $ 1,754
Land 3,452 1,547
Cell development costs 21,060 17,667
Buildings and improvements 14,424 6,411
Disposal facility equipment 9,424 6,295
Vehicles and other equipment 11,882 8,211
--------- ---------
61,103 41,885
Less: Accumulated depletion, depreciation and amortization (26,838) (23,397)
--------- ---------
$ 34,265 $ 18,488
========= =========

Depreciation expense was $5,030,000, $2,028,000, and $2,054,000 for 2001, 2000,
and 1999 respectively.

The Company leases equipment under various non-cancelable capital leases. The
cost and accumulated depreciation are as follows at December 31, 2001:

Accumulated
-------------
Cost Depreciation
---------- -------------
Capitalized Cost $1,736,000 $ 259,000
========== =============

NOTE 5. FACILITY DEVELOPMENT COSTS.

The Company has been licensed to construct and operate the low-level radioactive
waste ("LLRW") facility for the Southwestern Compact ("Ward Valley facility"),
and been selected to obtain a license to develop and operate the Central
Interstate Compact LLRW facility ("Butte facility").

The State of California, where the Ward Valley Site is located, has abandoned
efforts to obtain the project property from the U.S. Department of the Interior.
For the Company to realize its investment, the federal government will need to
transfer the land to the State of California, or the Company will need to
recover monetary damages from the State of California. The Company has taken
steps to recover its investment in Ward Valley and will continue to do so.

In early 1997, the Company filed two lawsuits against the United States. In the
first case, US Ecology sued to recover site development costs as well as lost
profits and lost opportunity costs. US Ecology lost this case at the trial
court level and in the Federal Circuit Court of Appeals and such rulings are now
final. In the second case US Ecology sought an order from a federal court to
compel the transfer of the Ward Valley site. Both the trial court and the D.C.
Circuit Court of Appeals ruled against US Ecology in this second case and such
rulings are also now final.

The Company filed a lawsuit against the State of California on May 2, 2000,
seeking to compel California to acquire the property to build the Ward Valley
project and monetary damages in excess of $162 million. In October 2000, the
California trial court dismissed the case, and the Company appealed. On
September 5, 2001, the California appellate court upheld the trial court's
decision in part and denied it in part, remanding the case for further
proceedings on the Company's promissory estoppel claim. On October 15, 2001,
both the Company and the State filed petitions for review with the California
Supreme Court. On December 5, 2001 the California Supreme Court denied both
requests and the case was remanded back to Superior Court in San Diego,
California. Counsel for the Company subsequently filed a peremptory writ
seeking appointment of a new trial court judge to hear the case. This was
granted, followed by a scheduling conference in February, 2002. Trial has been
tentatively set for January 2003. The Company intends to vigorously prosecute
the case.

All costs through July 31, 1999 related to the development of the Ward Valley
facility had been capitalized, and since then have been expensed as incurred.
After adjusting for the bank settlement in November 1998, and as of December 31,
2001, the Company had deferred $20,952,000 (24% of total assets) of
pre-operational facility development costs of which $895,000 represents
capitalized interest. These deferred costs were intended to be recovered during
the facility's first 20 years of operation from disposal fees approved by the
Department of Health Services ("DHS").

In November 1998 the Company finalized a settlement with the bank that provided
the financing for the Ward Valley facility. As part of the settlement the
Company issued the bank warrants to purchase 1,349,843 shares of common stock at
$1.50 a share expiring June 30, 2010. The Company also committed the first
$29,600,000 of any settlement with the State of California to the bank. In
return for the warrants and portion of any settlement, the Company received a
reduction in the amount owed to the bank of $37,700,000.

The Company has incurred reimbursable costs and received revenues for the
development of the Butte, Nebraska facility under a contract with the Central
Interstate LLRW Compact Commission ("CIC"). While US Ecology has a minor equity
position in the Butte, Nebraska project, it has acted principally as a
contractor to the Central Interstate Low-Level Radioactive Waste Commission.
Major generators of waste within the CIC's five-state region have provided the
majority of the funding to develop the Butte facility. As of December 31, 2001,
the Company has contributed and capitalized approximately $6,478,000 of costs
(7% of total assets), $386,000 of which is capitalized interest toward
development of the Butte facility. In December 1998, the State of Nebraska
denied US Ecology's license application to build and operate the facility. The
CIC directed US Ecology to pursue a Petition for a contested case challenging
the State's denial. US Ecology filed its Petition pursuant to Nebraska law on
January 15, 1999.

The Major Generators funding the development project filed suit in the Federal
District Court for Nebraska on December 30, 1998, seeking to recover certain
costs expended on the Nebraska licensing process and prevent the State of
Nebraska from proceeding with the contested case. US Ecology intervened as a
plaintiff to protect the Company's interest and is seeking relief. The Contested
Case is stayed by a preliminary injunction issued by the presiding federal
judge. Discovery is underway and the case is scheduled to go to trial in June of
2002. The major generators are providing the majority of funding in the
litigation, and have provided funding to support the minimal level of work

required to maintain the project pending the outcome of the litigation.
Consequently, the Company has realized only minor revenue from this project
since April 1999.

The timing and outcome of the above matters are unknown. The Company has alleged
that that the State of California has abandoned the project. No litigation is
currently pending to compel the state to continue development of the Ward Valley
project. The Company believes that its damages claim is strong, however, and
that a substantial recovery will ultimately be obtained through its litigation.
The Company also continues to participate in the CIC legal action. The Company
believes that the deferred site development costs for both facilities will be
realized. In the event the Butte facility license is not granted, operation of
that facility does not commence or the Company is unable to recoup its
investments in either or both projects through legal recourse, it may have a
material adverse effect on its financial position.

THE FOLLOWING TABLE SHOWS THE ENDING CAPITALIZED BALANCES FOR FACILITY
DEVELOPMENT COSTS FOR THE PERIODS ENDED DECEMBER 31, 2001 AND DECEMBER 31, 2000
(IN THOUSANDS):

December 31, Capitalized Capitalized
2001 and 2000 Costs Interest Total
- ----------------------- ------------ ------------ -------

Ward Valley, CA Project $ 20,057 $ 895 $20,952
Butte, Nebraska Project 6,092 386 6,478
------------ ------------ -------
Total $ 26,149 $ 1,281 $27,430
============ ============ =======

NOTE 6. ACCRUED CLOSURE AND POST CLOSURE OBLIGATION.

Closure and post closure obligation accruals at December 31, 2001 and 2000 were
as follows (in thousands):

2001 2000
-------- --------

Accrued costs associated with operating facilities $19,884 $8, 993
Accrued costs associated with non-operating facilities 6,449 6,960
-------- --------
Sub-total 26,333 15,953
Less: current portion (700) (700)
-------- --------
Closure and post closure obligation, excluding current portion $25,633 $15,253
======== ========

Accrued closure and post-closure liability represents the expected future costs,
including corrective actions and remediation, associated with closure and
post-closure of the Company's Operating and Non-Operating disposal facilities.
The Company generally accrues for the estimated costs of closures and
post-closure monitoring and maintenance as permitted disposal space is utilized.
Liabilities are recorded when environmental assessments and/or remedial efforts
are probable, and the costs can be reasonably estimated, consistent with
Statement of Financial Accounting Standards No. 5. The Company performs
periodic reviews of both non-operating and operating sites and revises accruals
for estimated post-closure, remediation or other costs as necessary. The
Company's recorded liabilities are based on best estimates of current costs and
are updated periodically to include the effects of existing technology,
presently enacted laws and regulations, inflation and other economic factors.

The Company does not bear responsibility for closure and post-closure of the
disposal facilities located on State owned land at Beatty, Nevada and Richland,
Washington. Nevada and Washington collect fees from a portion of the disposal
charges on a quarterly basis from the Company. Such fees are deposited in
dedicated, State controlled funds to cover the future costs of closure and
post-closure care and maintenance. Such fees are periodically reviewed by the
States and are based upon engineering cost estimates provided by the Company and
approved by the States.

NOTE 7. LONG TERM DEBT.

Long-term debt at December 31, 2001 and 2000 consisted of the following (in
thousands):

INTEREST RATE AT DEC. 31, 2001 2001 2000
------------------------------- -------- --------

Industrial revenue bond FIXED 8.25% $ 8,500 --
Notes payable and other FIXED 7.12% AVERAGE 3,835 $ 6,670
Other debt NON-INTEREST BEARING 1,961 1,106
-------- --------
14,296 7,776
Less: Current maturities (9,860) (1,094)
-------- --------
Long term debt $ 4,436 $ 6,682
======== ========

Aggregate maturity of future minimum payments on long-term debt is as follows
(in thousands):

Year Ended
December 31,
------------
2002 $ 9,860
2003 3,114
2004 1,036
2005 204
2006 82
-------
TOTAL $14,296
=======

In December 2000, the Company repaid $1,431,000 including $131,000 of interest
for two notes payable to two of the Company's shareholders and board members.
These notes were issued in March 1999 with an eighteen-month term, 9% interest,
and $1,300,000 principal, and prohibited the Company from paying dividends on
common or preferred shares.

As part of the February 2001 Envirosafe acquisition, the Company assumed
liability for an $8,500,000 industrial revenue bond that matures November 1,
2002, and bears an interest rate of 8.25%.

The Company has non-interest bearing debt that does not have an imputed interest
rate due to the uncertainty with respect to the timing of payment. At December
31, 2001 the primary non-interest bearing debt was the $1,193,000 of dividends
on the Series D Preferred Stock whose payment is prohibited by the line of
credit. $117,000 in non-interest debt is listed as current as it is expected to
be paid during 2002, while the remaining $1,844,000 is listed as payable during
2003.

NOTE 8. LINE OF CREDIT

On August 17, 2000, the Company entered into a 2-year, revolving line of credit
with a local bank. The line of credit is secured by the Company's accounts
receivable and is governed by a Credit Agreement. Under the terms of the Credit
Agreement, borrowings cannot exceed 80% of eligible accounts receivable or $8.0
million, whichever is less. Interest on bank borrowings are based on a 'pricing
grid,' whereby the interest rate decreases or increases based on the Company's
ratio of funded debt to earnings before interest, taxes, depreciation and
amortization. The Company can elect to borrow monies utilizing the Prime Rate
or the offshore London Inter-Bank Offering Rate ("LIBOR") plus an applicable
spread. The Credit Agreement contains certain financial covenants that the
Company must adhere to quarterly, including a maximum leverage ratio, a minimum
current ratio and a debt service coverage ratio. At December 31, 2001, the
Company was in compliance with all applicable bank financial covenants.

At December 31, 2001 and 2000, the outstanding balance on principal loan and
revolving line of credit was $5,000,000 and $4,093,000, respectively, due
October 15, 2002. At December 31, 2001 and 2000, the availability under the
line of credit was $3,000,000 and $907,000, respectively. The Company has
continued to borrow and repay according to business demands and availability of
cash.

NOTE 9. OPERATING LEASES.

On August 3, 2000, the Company entered into a $2 million equipment sale and
leaseback transaction. The Company sold various Company-owned equipment and
rolling stock to a third party lessor. The Company received $2,000,000 in
proceeds from the asset sale and entered into an operating lease for the use of
the equipment beginning August 8, 2000 with monthly payments through September
8, 2006, with no security deposit. The lease allows for the early buyout of the
equipment at a fixed price at the 60th month. The lease requires the Company to
pay customary operating and repair expenses and to observe certain operating
restrictions and covenants.

The Company realized a $1,098,000 gain on the sale of the equipment that will be
amortized over the life of the lease. The gain will be recognized proportionate
to the gross rental charged over the 66-month lease life. Proceeds from this
sale of assets were used to fund expansion of the El Centro facility and other
general business obligations. In November 2001, with the sale of the principal
assets of the Company's Nuclear Equipment Service Center, the company repaid a
pro-rata portion of the lease.

Other lease agreements primarily cover office equipment and office space.
Future minimum lease payments as of December 31, 2001 are as follows (in
thousands):

At December 31, 2001: Minimum Lease Payment
2002 $ 600
2003 481
2004 470
2005 434
2006 296
--------
Total Minimum Payments $ 2,281
========

$805,000, $617,000 and $303,000 of rental expense was recognized during 2001,
2000, and 1999, respectively.

NOTE 10. PREFERRED STOCK.

In November 1996, the Company issued 300,000 shares of Series E Redeemable
Convertible Preferred Stock ("Series E") in a private offering to four of its
directors for $3,000,000 in cash. The Series E bore an 11.25% annual dividend,
paid quarterly in shares of the Company's common stock. The Series E was issued
to fulfill a prior banking requirement. There were no voting rights or powers
attached to this 11.25% Series E Preferred Stock.

There was a partial redemption and mandatory conversion of the remaining Series
E at the conclusion of the rights offering on February 10, 1998, as a term of
the Series E Designation Certificate. The Series E stock is now retired but
carries 3,000,000 warrants with no assigned value and a $1.50 per share exercise
price, which expire June 2008.

In September 1995, the Board of Directors authorized 105,264 shares of preferred
stock designated as 8 3/8% Series D Cumulative Convertible Preferred Stock ("8
3/8% Preferred Stock") and authorized the issuance of 105,264 of such shares and
warrants to purchase 1,052,640 shares of the Company's common stock. The
Company sold 105,264 of 8 3/8% Preferred Stock with warrants in a private
offering to a group of members or past members of the Board of Directors for
$4,759,000. At December 31, 2001, each 8 3/8% Preferred Stock share is
convertible at any time at the option of the holder into 15.56 shares of the
Company's common stock, equivalent to a conversion price of $5.50 on the $47.50
total per share offering price plus accrued dividends times 1.44 due to dilution
by later securities sales.

Dividends on the 8 3/8% Preferred Stock are cumulative from the date of issuance
and payable quarterly commencing on October 15, 1995. Current bank credit
facility covenants prohibit the payment of dividends. Accrued dividends at
December 31, 2001 totaled $1,193,000.

On September 12, 1999, the warrants on the 8 3/8% Preferred Stock expired except
for those belonging to one Series D holder. The Company extended an offer to
all Series D holders that if they converted their Series D to common stock the
warrants would be extended until September 13, 2002. One holder converted
5,263.2 preferred shares for 69,264 common shares and extended 64,211 warrants.
Each warrant has an exercise price of $4.75. No value was assigned to the
warrants in the accompanying consolidated financial statements, as the value was
insignificant. The remaining Series D preferred stock outstanding is 100,001
shares.

NOTE 11. STOCK OPTION PLANS.

The Company presently maintains two stock option plans. The exercise price,
term and other conditions applicable to each option granted under the Company's
plans are generally determined by the Compensation Committee of the Board of
Directors at the time of the grant of each option and may vary with each option
granted. No options may have a term longer than ten years.

In 1992, the Company adopted the two plans as the 1992 Stock Option Plan for
Employees and the 1992 Stock Option Plan for Directors. On May 13, 1999, 500,000
options were added to the Employee's Plan of 1992 for a total of 1,300,000
options available. Options under the employee plan are designated as incentive
or non-qualified in nature at the discretion of the Compensation Committee, and
only employees will receive options under the 1992 Stock Option Plan for
Employees. On May 24, 2001, 350,000 options were added to the Directors Plan of
1992 for a total of 1,000,000 options available. Both plans provide for
cancelled options to be returned to the plan for re-issue.

As of December 31, 2001, the 1992 Stock Option Plan for Employees had issued
254,150 options with 1,045,850 remaining available and under the 1992 Stock
Option Plan for Directors, 592,500 options had been issued with 407,500
available.

The Company accounts for these plans under APB Opinion No. 25, "Accounting for
Stock Issued to Employees". Under this opinion, the Company recorded
compensation cost for 2000, and none for 2001, and 1999. Had compensation cost
for the plans been determined consistent with FASB Statement No. 123,
"Accounting for Stock-Based Compensation", the Company's 2001, 2000, and 1999
net income would have been decreased by $111,000, $354,000, and $316,000
respectively. Basic earnings per share would have decreased $.01, $.03, and
$.02 for 2001, 2000, and 1999 respectively. The pro forma compensation cost may
not be representative of that to be expected in future years.

The fair value of each option grant is estimated using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
grants in 2001, 2000, and 1999:

2001 2000 1999
----------- ----------- -----------

Expected volatility 51% 116% 136%
Risk-free interest rates 5.7% 5.01% 6.3%
Expected lives 10 YEARS 3 years 3 years
Dividend yield 0% 0% 0%
Weighted-average fair value of options granted
during the year (Black-Scholes) $ 1.11 $ 2.23 $ 1.94

Under option:
Options outstanding, beginning of year 1,448,898 1,326,572 1,186,572
Granted 100,000 135,926 147,500
Exercised (59,000) (13,600) 7,500
Canceled (361,248) -- --
----------- ----------- -----------
Options outstanding, end of year 1,128,650 1,448,898 1,326,572
=========== =========== ===========

Price range per share of outstanding options $ 1.00 $ 1.00 $ 1.00
$ 14.75 $ 14.75 $ 14.75
=========== =========== ===========

Price range per share of options exercised $ 1.25 $ 1.25 $ 1.25
$ 2.00 $ 2.00 $ 1.25
=========== =========== ===========

Price range per share of options canceled $ 1.25 $ -- $ --
$ 5.00 $ -- $ --
=========== =========== ===========

Options exercisable at end of year 1,020,700 1,448,898 1,121,872
=========== =========== ===========

Options available for future grant at end of year 1,453,350 630,002 852,728
=========== =========== ===========

NOTE 12. EMPLOYEE'S BENEFIT PLANS.

401(k) Plan. The Company maintains a 401(k) plan for employees who voluntarily
- -----------
contribute a portion of their compensation, thereby deferring income for federal
income tax purposes. The plan is called The American Ecology Corporation 401(k)
Savings Plan ("the Plan").

The Plan covers substantially all of the Company's employees after one full year
of employment. Participants may contribute a percentage of salary up to the IRS
limits. The Company's contribution matches 55% of participant contributions up
to 6% of deferred compensation.

The Company contributions for the 401(k) plan in 2001, 2000 and 1999 were
$209,000, $176,000 and $181,000 respectively.

NOTE 13. INCOME TAXES.

The components of the income tax provision (benefit) were as follows (in
thousands):

Year Ended December 31,

2001 2000 1999
----- ------ -----
Current - Federal $ -- $ -- $ --
- State 186 (12) 195
----- ------ -----

186 (12) 195
----- ------ -----

Deferred - Federal -- -- --
----- ------ -----

$ 186 $ (12) $ 195
===== ====== =====

The following reconciles between the effective income tax (benefit) rate and the
applicable statutory federal and state income tax (benefit) rate:

Year Ended December 31,

2001 2000 1999
------ ------ ------
Income tax (benefit) - statutory rate 34.0% 34.0% 34.0%
Valuation allowance for deferred tax assets (34.0) (20.7) (33.1)
State income tax and loss carry forward 18.8 (11.8) 8.4
Other, net -- (1.3) (5.1)
------ ------ ------
Total effective tax rate 18.8% 0.2% 4.2%
------ ------ ------

The tax effects of temporary differences between income for financial reporting
and taxes that gave rise to significant portions of the deferred tax assets and
liabilities and their changes during the year were as follows (in thousands):

Deferred
-----------
DEFERRED TAX ASSETS DECEMBER 31, 2001 Provision December 31, 2000
- ------------------- ------------------- ----------- -------------------

Environmental compliance and other site related
costs, principally due to accruals for financial
reporting purposes $ 4,376 $ (29) $ 4,405
Depreciation and amortization 2,948 (620) 3,568
Site development costs 752 752 --
State operating loss carry forward -- (952) 952
Net operating loss carry forward 11,137 (456) 11,593
Other 477 (403) 880
------------------- ----------- -------------------

Total gross deferred tax assets 19,690 (1,708) 21,398

Less valuation allowance (19,321) 478 (19,799)
------------------- ----------- -------------------
Deferred tax assets 369 (1,230) 1,599

DEFERRED TAX LIABILITY
- ----------------------
Site development costs -- 1,230 (1,230)
Capitalized interest (369) -- (369)
------------------- ----------- -------------------

Total gross deferred tax liabilities (369) 1,230 (1,599)
------------------- ----------- -------------------

Net deferred tax assets $ -- $ -- $ --
=================== =========== ===================

The Company has established a valuation allowance for certain deferred tax
assets due to realization uncertainties inherent with the long-term nature of
deferred site maintenance costs, uncertainties regarding future operating
results and for limitations on utilization of acquired net operating loss carry
forwards for tax purposes. The realization of a significant portion of net
deferred tax assets is based in part on the Company's estimates of the timing of
reversals of certain temporary differences and on the generation of taxable
income before such reversals. The net operating loss carry forward of
approximately $30,000,000 at December 31, 2001, begins to expire in the year
2006. Of this carry forward, $2,745,000 is limited pursuant to the net operating
loss limitation rules of Internal Revenue Code Section 382. The portion of the
carry forward limited under Internal Revenue Code Section 382 expires $793,000
in 2006, $1,079,000 in 2007, and $872,000 in 2008. The remaining unrestricted
net operating loss carry forward expires $4,280,000 in 2010, $8,657,000 in 2011,
$7,828,000 in 2012, $6,927,000 in 2018, $3,208,000 in 2019, and $498,000 in
2020. The amount of the Company's net operating loss carry forwards could be
reduced if the Company is ultimately unsuccessful in pursuing the refund claim
discussed below.

The Company filed an amended federal income tax refund claim in 1996 for
approximately $740,000. On September 29, 1999, the Internal Revenue Service
("IRS") proposed to deny this claim, sought to recover portions of tentative
refunds previously received by the Company and proposed to reduce the Company's
net operating loss carryforwards. On November 29, 1999, the Company protested
this denial which is currently pending with the IRS. The Company has
tentatively settled this claim in 2000 but this settlement was rejected by the
Congressional Joint Committee on Taxation because the main issue was then
pending before the United States Supreme Court in a case involving another
taxpayer. This issue was subsequently resolved in a favor of the Company's
position by the Supreme Court. As a result, the IRS Appellate Office has
conceded this issue. The forwarding of this claim to the Joint Committee for
approval is currently being held up while the Appellate Office re-examines two
issues it previously conceded. These issues effect only loss carryforwards, not
the amount of the refund which should be $605,000 plus statutory interest at
rates varying from 4.5% to 6.5% from 1995 to the date the refund is paid.

NOTE 14. COMMITMENTS AND CONTINGENCIES.

In the ordinary course of conducting business, the Company becomes involved in
judicial and administrative proceedings involving federal, state, and local
governmental authorities. There may also be actions brought by individuals or
groups in connection with permitting of planned facilities, alleging violations
of existing permits, or alleging damages suffered from exposure to hazardous
substances purportedly released from Company operated sites, and other
litigation. The Company maintains insurance intended to cover property and
damage claims asserted as a result of its operations.
Periodically management reviews and may establish reserves for legal and
administrative matters, or fees expected to be incurred in connection therewith.
At this time, management believes that resolution of these matters will not have
a material adverse effect on the Company's financial position, results of
operations or cash flows.
LITIGATION

MANCHAK V. US ECOLOGY, INC., U.S. DISTRICT COURT FOR THE DISTRICT OF NEVADA,
- --------------------------------
CIVIL ACTION NO. 96-494.

Company's original counsel based on a failure to identify a conflict. New
outside counsel, Merchant & Gould of Minneapolis, Minnesota, has been engaged by
the Company, which the court approved on November 21, 2001. The Company is
seeking disgorgement of all fees paid to previous counsel, plus interest and the
incremental costs associated with transferring the case to new legal counsel.
The Company continues to vigorously defend the case and expects to spend several
hundred thousand dollars defending the case in 2002.

IN RE RAMP INDUSTRIES, INC. SITE (COLORADO), U.S. ENVIRONMENTAL PROTECTION
- --------------------------------------------------
AGENCY, DENVER, REGION 8.

This action seeks declaratory and injunctive relief and damages brought by five
utility companies that operate nuclear power plants and generate low-level
radioactive waste within the member states of the Central Interstate Low-Level
Radioactive Waste Compact ("CIC"). The plaintiff utilities are the primary
financial contributors to the disposal site licensing effort conducted by the
Company's subsidiary, US Ecology, to serve the CIC. After the State of Nebraska
denied US Ecology a license in December 1998, the utilities filed suit against
Nebraska. The suit alleges bad faith by the state. The CIC, originally named as
a defendant, was later realigned as a plaintiff. US Ecology intervened on the
side of the plaintiffs seeking damages for its $6,500,000 investment in the
project, interest, and the recovery of its expected profit from the operation of
the facility. In addition, plaintiffs seek to remove the State of Nebraska from
the licensing process because of the alleged bad faith.

denied. Discovery is proceeding. On October 1, 2001, the State's petition to
the US Supreme Court for a writ of certiorari to review the sovereign immunity
issue was denied. In October 2001, the state filed a motion asking the Court to
dismiss the Company's claim of equitable subrogation against the State. In early
November the Company and generators filed a motion to amend their complaints to
dismiss the equitable subrogation claims and strengthen their cross claims
against the CIC. The Court has not ruled on these motions. On January 17,
2002, the Court denied the State's request for a jury trial, reaffirming its
previous decision. The case is set for trial in June 2002.

FEDERAL RCRA INVESTIGATION AT THE OAK RIDGE, TENNESSEE FACILITY
- -----------------------------------------------------------------------

On October 23, 2001 the Company received a payment of $250,000 from Zurich,
which finalized settlement of Zurich's claims. A joint motion to dismiss the
case has been filed by the Company and Zurich consistent with the settlement
agreement. Once the court enters the dismissal, the case will be closed and will
not require additional expenditures. As part of the settlement, the Company
relinquished its possible future rights to seek defense and indemnity from
Zurich for the following cases: Adams, Cuba, Dupuy, and GM. The Company also
----- ---- ----- --
agreed to assume defense costs for the above noted cases effective April 1, 2001
(the "Cutoff Date").

part on plaintiff's receipt of $960,000 from Mobley. On March 18, 2002, the
Company authorized its outside counsel to offer to settle with GM for $600,000.

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

The original charge was filed by Oil, Chemical & Atomic Workers International
Union, AFL-CIO (the "Union") in March 1998, and amended in May 1998 alleging
that US Ecology engaged in unfair labor practices.In May 1999, the
administrative law judge ("ALJ") issued a decision against the Company. In May
2000, a three-member panel of the NLRB materially affirmed the ALJ's decision.
The Company filed an appeal with the U.S. Sixth Circuit Court of Appeals in May
2000. The Sixth Circuit Court of Appeals heard oral arguments on October 31,
2001 and affirmed the NLRB's ruling on December 14, 2001, requiring the Company
to pay back wages and benefits provided under the previous collective bargaining
agreement. The Company calculated the back wages and benefits and provided this
information to the Union on March 15, 2002. The Company believes it owes back
wages and benefits of approximately $888,000 and fully accrued for this
liability as of December 31, 2001. The Company has informed the Union of its
desire to initiate negotiations on a new collective bargaining agreement.

US ECOLOGY, INC. V. DAMES & MOORE, INC.,CASE NO. CV OC 0101396D, FOURTH JUDICIAL
- ----------------------------------------
DISTRICT COURT, ADA COUNTY, IDAHO

DAMES & MOORE, INC. V. US ECOLOGY, INC., ET AL.,INDEX NO. 602567-01, SUPREME
- ----------------------------------------------------
COURT OF NEW YORK, NEW YORK COUNTY, NEW YORK

NOTE 15. ALLOWANCE FOR DOUBTFUL ACCOUNTS.

The allowance for doubtful accounts is a provision for un-collectible accounts
receivable. The allowance, as a general company policy, is increased by a
monthly accrual equal to approximately 1 % of sales. The allowance is decreased
by accounts receivable as they are written off. The allowance is adjusted
periodically to reflect actual experience.

(in thousands)
Allowance for
Description doubtful accounts
- ----------- -------------------

Balance January 1, 1999 $ 1,047
Plus 1999 provision 763
Less accounts written off 1999 (1,191)
-------------------
Balance December 31, 1999 619

Plus 2000 provision 966
Less accounts written off 2000 (1,017)
-------------------
Balance December 31, 2000 568

Plus 2001 provision 338
Plus allowance acquired in Envirosafe Services of Idaho acquisition 530
Less accounts written off 2001 (260)
-------------------
Balance December 31, 2001 $ 1,176
===================

NOTE 16. ACQUISITION OF ENVIROSAFE SERVICES OF IDAHO, INC

On February 1, 2001, the Company, by its wholly-owned subsidiary American
Ecology Environmental Services Corporation, a Texas corporation, acquired
Envirosafe Services of Idaho, Inc. a Delaware corporation ("ESII"), pursuant to
a Stock Purchase Agreement from Envirosource Technologies Inc., a Delaware
corporation and Envirosource, Inc., a Delaware corporation, and parent company
of Envirosource Technologies Inc. This acquisition was accounted for as a
purchase and approved by the respective board of directors of each company.

Under the terms of the Agreement, the Company paid $1,000 in cash for all of the
outstanding shares of ESII, a subsidiary of Envirosource Technologies Inc. The
Company acquired all of the authorized and issued stock of ESII, thereby
obtaining ownership of all ESII assets and liabilities. The principal ESII
assets are a RCRA and TSCA permitted hazardous and PCB waste treatment and
disposal facility located in southwestern Idaho, and exclusive rights to use a
patented hazardous waste treatment process for steel mill electric arc furnace
dust within a defined service territory in the western United States.

With the acquisition of ESII the Company acquired $2,576,000 in cash, $2,188,000
in accounts receivable, $12,417,000 in property and equipment, and $3,935,000 in
other assets. The Company assumed $1,660,000 of accounts payable, an $8,500,000
industrial revenue bond, $10,038,000 of closure/post-closure liabilities, and
$917,000 of other accrued liabilities. No goodwill was recorded with this
acquisition.

The following pro forma results of operations have been prepared as though the
ESII acquisition had been acquired on January 1, 1999. Pro forma results are
not necessarily indicative of the results that may be reported in the future.

Year ended December 31, ($in thousands except per share) 2001 2000 1999
------- ------- --------

Revenue $57,506 $56,190 $45,965
Net income (loss) 1,079 6,193 (1,947)
Basic earnings (loss) per share .05 .42 (.17)

NOTE 17 REVERSE AND FORWARD STOCK SPLIT.

On June 29, 2001 the Company completed a reverse 1 for 100 stock split with
fractional shareholders receiving cash for their fractional interest. The
Company purchased and cancelled 60,801 common shares for $148,000 and incurred
$28,000 in transaction costs. Later on June 29, 2001 the Company completed a
100 for 1 forward stock split.

The effect of these transactions was to remove approximately 3,000 shareholders
who held, on average, 20 shares each and for whom it was prohibitively expensive
to trade their shares. The Company, in return, is able to lower reporting costs
by removing the 33 percent of shareholders who in total owned less than .5% of
the outstanding common shares.

NOTE 18 DISPOSAL CONTRACT

On August 26, 2001 the Company was awarded a $3,850,000 contract to process and
dispose of low-level radioactive waste at the Richland, Washington facility by
the U.S. Army Corps of Engineers. Prior to December 31, 2001, the Company
received $3,465,000 in cash with final processing and disposal not completed
until March 6, 2002. $3,465,000 of deferred revenue is included in Accrued
Liabilities as of December 31, 2001 related to this contract. The remaining
$385,000 was billed in March 2002.

NOTE 19 SALE OF NUCLEAR EQUIPMENT SERVICE CENTER AND MID WEST BROKERAGE

On October 11, 2001 the Company sold the primary assets of the Nuclear Equipment
Service Center ("NESC") for $800,000. NESC assets with a book value of $418,000
were sold and a gain on sale of property and equipment was recognized for
$382,000. For the year ending December 31, 2001 the NESC had revenues of
$1,700,000 and an operating loss of $244,000 reported under the Company's
Processing and Field Services segment.

On November 11, 2001 the Company sold its brokerage business that collected and
transported small amounts of waste for processing and disposal in larger, more
economical batches (the "Mid West Brokerage"). Other than a fully depreciated
semi-truck and trailer, no tangible property was sold and a gain on sale was
recognized for $100,000. For the year ending December 31, 2001 Mid West
Brokerage had revenues of $1,900,000 and an operating loss of $480,000 and was
reported under the Company's Processing and Field Services segment.

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

None.
PART III

Items 10, 11, 12, and 13 of Part III have been omitted from this report because
the Company will file with the Securities and Exchange Commission, no later than
120 days after the close of its fiscal year, a definitive proxy statement. The
information required by Items 10, 11, 12, and 13 of this report, which will
appear in the definitive proxy statement, is incorporated by reference into Part
III of this report.

PART IV

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

(a) FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS

1. Financial statements and report of Balukoff, Lindstrom & Co.,
P.A.
Independent Auditors' Report
Consolidated Balance Sheets - December 31, 2001 and 2000
Consolidated Statements of Operations for the years ended
December 31, 2001, 2000 and 1999
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows for the years ended
December 31, 2001, 2000 and 1999
Notes to Consolidated Financial Statements

2. Financial statement schedules

Other schedules are omitted because they are not required or
because the information is included in the financial
statements or notes thereto

3. Exhibits

- -------------------------------------------------------------------------------------------------------------------------
Exhibit Description Incorporated by Reference from
No. Registrant's
- -------------------------------------------------------------------------------------------------------------------------
3.1 Restated Certificate of Incorporation, as amended 1989 Form 10-K
- -------------------------------------------------------------------------------------------------------------------------
3.2 Certificate of Amendment to Restated Certificate of Incorporation Form S-4 dated 12-24-92
dated June 4, 1992
- -------------------------------------------------------------------------------------------------------------------------
3.3 Amended and Restated Bylaws dated February 28, 1995 1994 Form 10-K
- -------------------------------------------------------------------------------------------------------------------------
10.1 Sublease dated February 26, 1976, between the State of Washington, Form 10 filed 3-8-84
the United States Dept. of Commerce and Economic Development, and
Nuclear Engineering Company with Amendments dated January 11,
1980, and January 14, 1982.
- -------------------------------------------------------------------------------------------------------------------------
10.2 Lease dated May 1, 1977 ("Nevada Lease"), between the state of Form 10 filed 3-8-84
Nevada, Dept. of Human Resources and Nuclear Engineering
Company, with Addendum thereto, dated December 7, 1982
- -------------------------------------------------------------------------------------------------------------------------
10.3 Addendum to Nevada Lease dated March 28, 1988 1989 Form 10-K
- -------------------------------------------------------------------------------------------------------------------------
10.4 Nevada State Health Division, Radioactive Material License issued to 1989 Form 10-K
US Ecology, Inc. dated December 29, 1989
- -------------------------------------------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------------------------------------------
10.5 Administrative Order by Consent between the United States 1985 Form 10-K
Environmental Protection Agency and US Ecology, Inc. ("USE") dated
September 30, 1985
- -------------------------------------------------------------------------------------------------------------------------
10.6 State of Washington Radioactive Materials License issued to US 1986 Form 10-K
Ecology, Inc. dated January 21, 1987
- -------------------------------------------------------------------------------------------------------------------------
10.11 Agreement between the Central Interstate Low-Level Radioactive 2nd Quarter 1988 10-Q
Waste Compact Commission and US Ecology, Inc. for the
development of a facility for the disposal of low-level radioactive
waste dated January 28, 1988 ("Central Interstate Compact
Agreement")
- -------------------------------------------------------------------------------------------------------------------------
10.12 Amendment to Central Interstate Compact Agreement May 1, 1990 1994 Form 10-K
- -------------------------------------------------------------------------------------------------------------------------
10.13 Second Amendment to Central Interstate Compact Agreement dated 1994 Form 10-K
June 24, 1991
- -------------------------------------------------------------------------------------------------------------------------
10.14 Third Amendment to Central Interstate Compact Agreement dated July 1994 Form 10-K
1, 1994
- -------------------------------------------------------------------------------------------------------------------------
10.15 Settlement agreement dated May 25, 1988, among the Illinois Form 8-K dated 6-7-88
Department of Nuclear Safety, US Ecology, Inc. and American
Ecology Corporation of a December 1978 action related to the closure,
care and maintenance of the Sheffield, Illinois LLRW disposal site
- -------------------------------------------------------------------------------------------------------------------------
10.16 Nevada Division of Environmental Protection Permit for Hazardous 1988 Form 10-K
Waste Treatment, Storage and Disposal (Part B) issued to US Ecology,
Inc. dated June 24, 1988
- -------------------------------------------------------------------------------------------------------------------------
10.17 Texas Water Commission Permit for Industrial Solid Waste 1988 Form 10-K
Management Site (Part B) issued to Texas Ecologists, Inc. dated
December 5, 1988
- -------------------------------------------------------------------------------------------------------------------------
10.18 Memorandum of Understanding between American Ecology 1989 Form 10-K
Corporation and the State of California dated August 15, 1988
- -------------------------------------------------------------------------------------------------------------------------
10.19 United States Environmental Protection Agency approval to dispose of 1989 Form 10-K
non-liquid polychlorinated biphenyl (PCB) wastes at the Beatty,
Nevada chemical waste disposal facility
- -------------------------------------------------------------------------------------------------------------------------
10.26 Amended and Restated American Ecology Corporation 1992 Stock Proxy Statement dated 4-26-94
Option Plan *
- -------------------------------------------------------------------------------------------------------------------------
10.27 Amended and Restated American Ecology Corporation 1992 Outside Proxy Statement dated 4-26-94
Director Stock Option Plan *
- -------------------------------------------------------------------------------------------------------------------------
10.28 American Ecology Corporation 401 (k) Savings Plan * 1994 Form 10-K
- -------------------------------------------------------------------------------------------------------------------------
10.29 American Ecology Corporation Retirement Plan * 1994 Form 10-K
- -------------------------------------------------------------------------------------------------------------------------
10.33 Lease Agreement between American Ecology Corporation and VPM Form S-4 filed 12-24-92
1988-1, Ltd. dated October 14, 1992
- -------------------------------------------------------------------------------------------------------------------------
10.34 Rights Agreement dated as of December 7, 1993, between American Form 8-K dated 12-7-93
Ecology Corporation and Chemical Shareholders Services Group, Inc.
as Rights Agent
- -------------------------------------------------------------------------------------------------------------------------
10.36 Settlement Agreement dated September 24, 1993, by US Ecology, Inc., 1993 Form 10-K
the State of Nevada, the Nevada State Environmental Commission, and
the Nevada Dept. of Human Resources
- -------------------------------------------------------------------------------------------------------------------------
10.37 Settlement Agreement dated as of January 19, 1994, by and among US 1993 Form 10-K
Ecology, Inc., Staff of the Washington Utilities and Transportation
Commission, Precision Castparts Corp., Teledyne Wah Chang,
Portland General Electric Company, the Washington Public Power
Supply System and Public Service Company of Colorado.
- -------------------------------------------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------------------------------------------
10.38 Agreement dated January 28, 1994, between American Ecology Form 8-K dated 2-3-94
Corporation, Edward F. Heil, Edward F. Heil as trustee for Edward F.
Heil, Jr., Sandra Heil, and Karen Heil Irrevocable Trust Agreement #2,
Thomas W. McNamara and Thomas W. McNamara as a trustee of
The Jenner & Block Profit Sharing Trust No. 082.
- -------------------------------------------------------------------------------------------------------------------------
10.49 First Security Bank Master Equipment Lease - Sale Leaseback 3rd Qtr 2000 Form 10-Q filed 11-13-00
- -------------------------------------------------------------------------------------------------------------------------
10.50a First Security Bank Credit Agreement 3rd Qtr 2000 Form 10-Q filed 11-13-00
- -------------------------------------------------------------------------------------------------------------------------
10.50 Increase Additional Number of Share Options to Directors Plan of Form S-8 dated 12-30-98
1992
- -------------------------------------------------------------------------------------------------------------------------
10.51 Increase Additional Number of Share Options of 1992 Employees Plan Form S-8 dated 12-20-99
- -------------------------------------------------------------------------------------------------------------------------
10.52 Amended and Restated American Ecology Corporation 1992 Outside Proxy Statement dated 4-8-98
Director Stock Option Plan
- -------------------------------------------------------------------------------------------------------------------------
10.53 Amended and Restated American Ecology Corporation 1992 Stock Option Plan Proxy Statement dated 4-12-99
- -------------------------------------------------------------------------------------------------------------------------
21 List of Subsidiaries 1994 Form 10-K
- -------------------------------------------------------------------------------------------------------------------------
23.2 Consent of Balukoff, Lindstrom & Co., P.A.
- -------------------------------------------------------------------------------------------------------------------------

* Management contract or compensatory plan.

(B) REPORTS ON FORM 8-K

- -------------------------------------------------------------------------------------------------------------------------
16.1 Change of Auditors Letter - November 25, 1996 Form 8-K
- -------------------------------------------------------------------------------------------------------------------------
10.44 Series E Redeemable Convertible Preferred Stock - November 27, 1996 Form 8-K
- -------------------------------------------------------------------------------------------------------------------------
10.45 Third Amended & Restated Credit Agreement - February 18, 1997 Form 8-K
- -------------------------------------------------------------------------------------------------------------------------
10.48 Court Judgement Houston 88-January 26, 1998 Form 8-K
- -------------------------------------------------------------------------------------------------------------------------
10.49 Bank Restructure-Chase Bank of Texas N.A. November 19, 1998 Form 8-K
- -------------------------------------------------------------------------------------------------------------------------
10.54 Acquisition of Envirosafe Services of Idaho - February 2,2001 Form 8-K
- -------------------------------------------------------------------------------------------------------------------------

SIGNATURES

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

AMERICAN ECOLOGY CORPORATION

SIGNATURE TITLE DATE
- ------------------------ -------------------------------------- -----------------

/s/ Stephen A.Romano President, Chief Executive Officer March 25, 2002
- ------------------------ Chief Operating Officer ----------------
STEPHEN A. ROMANO

/s/ James R. Baumgardner Senior Vice President, Chief Financial March 25, 2002
- ------------------------ Officer, Treasurer and Secretary -----------------
JAMERS R. BAUMGARDNER

/s/ Michael J. Gilberg Vice President and Controller March 25, 2002
- ------------------------ -----------------
MICHAEL J. GILBERG

/s/ Rotchford L. Barker Director March 25, 2002
- ------------------------ -----------------
ROTCHFORD L. BARKER

/s/ Paul Bergson Director March 25, 2002
- ------------------------ -----------------
PAUL BERGSON

/s/ Keith D. Bronstein Director March 25, 2002
- ------------------------ -----------------
KEITH D. BRONSTEIN

/s/ Edward F. Heil Director March 25, 2002
- ------------------------ -----------------
EDWARD F. HEIL

/s/ Dan Rostenkowski Director March 25, 2002
- ------------------------ -----------------
DAN ROSTENKOWSKI

/s/ Paul F. Schutt Director March 25, 2002
- ------------------------ -----------------
PAUL F. SCHUTT

/s/ Thomas A. Volini Director March 25, 2002
- ------------------------ -----------------
THOMAS A. VOLINI