In this highly regulated industry, waste-management companies must follow detailed Environmental Protection Agency guidelines for transporting, processing and disposing of various hazardous-waste products. For example, regulations spell out how far disposal sites must be located from groundwater.
Recycling -- and the sale of the recycled material -- is a growth area for trash-disposal companies, according to Lynn Brown, a spokesperson for industry giant Waste Management (WMI) in Houston.
"Our goal for 2020 is to triple the amount of materials we recycle," Brown says. As with most large waste-disposal companies, Waste Management handles very little hazardous material, creating an opening for smaller firms.
"We're very excited about it," Romano says. "We believe there is a substantial market for reclaimed oil -- and also for metals recycled from refineries."
The company also maximizes efficiencies by sometimes using one type of waste to treat another. For example, bleach sent for disposal can be used to break down some of the organic chemicals from gasoline spill-related waste.
"Treating waste with waste is efficient, and we're always looking for opportunities to do that," Romano says.
Over the past three years, the company has invested in a fleet of 450 railcars, some specially built, to move hazardous waste to Idaho from as far away as New Jersey. American Ecology is now transporting more than a million tons of chromite-contaminated material from Jersey City to Grand View, Idaho, where the company operates a 1,300-acre disposal site. The waste comes from a former chrome factory that dumped its industrial trash in its backyard before environmental regulations took effect. About half of American Ecology's business comes from such "legacy" sites.
Investing in infrastructure has paid off. American Ecology showed record growth last year, processing 1.2 million tons of waste in 2008, a 7% increase. Revenues were $176 million, with net income up 11%, to $1.18 a share.
"Our services are necessary in good times and bad," Romano says. He has his eye on President Obama's proposal to reinstate the oil-industry tax, which would create a billion-dollar annual fund for environmental cleanup. "Many of these sites will take years," he adds.In the meantime, it appears that American Ecology with continue to clean up.
Disclosure I am long a Both ECOL and WMI shares in my Industrial goods folio., currently up 2.9% ytd on these 2 stocks, plus dividends.