Firm’s Dark Clouds Return : Toxic waste: Agoura Hills-based American Ecology now finds itself in a growing dispute over its planned dump for radioactive items.

Just when things were looking up for American Ecology Corp., the company faces a new hurdle.

The operator of toxic-waste dumps enjoyed sharply rising profits last year, and its stock price has nearly quadrupled since early 1991. The Agoura Hills-based company also wrapped up most of the litigation stemming from leaks at two of its dumps in Illinois and Kentucky, litigation that had kept clouds of financial uncertainty lingering over the company for a decade.

Now the clouds are back. American Ecology’s newest project--to build a dump for low-level radioactive wastes in Ward Valley in the Mojave Desert, 22 miles west of Needles near the intersection of the California, Nevada and Arizona borders--faces continued opposition because of fears that the dump’s waste will leak into the environment.

Once expected to be licensed by the state Department of Health Services in 1991, the dump remains on hold as the dispute drags on, a dispute that now involves Gov. Pete Wilson, Lt. Gov. Leo McCarthy, and state Controller and U. S. Senate candidate Gray Davis. The dump would be used for storing such items as clothing, gloves and tools used in the nuclear-power industry and radioactive medicines used by hospitals.

Complaints about the dump site are not new. But opposition is being stepped up by some critics, such as Physicians for Social Responsibility, a doctors group that recently ran full-page newspaper ads asking Wilson to block the project.

One of the group’s board members, Encino orthopedic surgeon Dr. Richard Saxon, said: that the group is opposed to a radioactive-waste “dump anywhere in the state. To us, it’s a failed technology because they have never learned how to deal with the waste.”

While they and others argue the dump’s environmental merits, the delay provides Harry J. Phillips Jr. with his first big test as American Ecology’s new chief executive.

Phillips, a Houston investor and former executive of the waste-management giant Browning-Ferris Industries Inc., assumed the post after his investor group bought 52% of American Ecology for $16.6 million from Browning-Ferris.

“I’m not quite sure why there is a delay,” Phillips said. He said the Department of Health Services told the company in late-December that “we met all the technical requirements” set by the state, but that the agency’s review continues.

California proposed the Ward Valley dump because, under a 1980 congressional order, each state or group of states (known as compacts) is responsible after 1993 to dispose its own low-level radioactive wastes. California is part of the Southwest Compact, which also includes Arizona and the Dakotas.

The state selected American Ecology, through its US Ecology subsidiary, to operate the facility, which would be the first low-level radioactive-waste dump built in the United States in two decades.

First, however, the dump would have to be licensed by the Department of Health Services and then the state Lands Commission would have to transfer title of the land to California from its present owner, the U. S. government. But the Lands Commission’s members include McCarthy and Davis, both of whom are still concerned that the dump could leak and pose a major financial liability for state taxpayers.

“It’s particularly of concern because of US Ecology’s poor record as an operator of radioactive storage sites,” McCarthy spokesman Ron Gray said in reference to the company’s troubles in Illinois and Kentucky.

Because California faced the federal deadline of Jan. 1, 1993, to open the dump, and because it takes about a year after a dump is licensed to get it up and running, many people believed that the dump would be licensed by now.

But McCarthy and other state officials want more assurances that the dump will be safe. In an October letter to Russell Gould, secretary of the state Health and Welfare Agency, which oversees the Department of Health Services, McCarthy wrote that despite the terrain’s apparently favorable traits in Ward Valley, he still wants a thorough review of how the wastes would be packaged, stored and monitored.

Phillips, meanwhile, said he has received no reports from his staff that the recent storms in Southern California changed American Ecology’s assumptions about the safety of the dump site. The site was chosen because of the area’s low average rainfall and because the water table is about 700 feet below the surface.

But Kassy Perry, spokeswoman for the state’s Health and Welfare Agency, said the state won’t be rushed into approving the dump. “We’re trying to move ahead responsibly,” she said. “We don’t want to license a facility until we’re comfortable doing that.”

Neither American Ecology nor the Department of Health Services will estimate when the license might be granted, but Phillips said he is “hopeful that it will be licensed this year.”

If it’s not, would American Ecology--which already has invested nearly $30 million in the program--consider pulling out? Phillips said no. “We’re committed to the project,” he said.

Nonetheless, the delay costs American Ecology roughly $750,000 a month in wages and other expenses that are not yet being recouped from the dump’s operation, Phillips said. But the costs haven’t yet hurt American Ecology’s growing earnings.

The company’s profit last year nearly doubled, to $7.41 million, on a 15% increase in revenue to $55.8 million. American Ecology operates hazardous-waste landfills in Beatty, Nev.; Richland, Wash., and Robstown, Tex.

The Ward Valley site would hike American Ecology’s annual revenue and profit by $18.5 million and $5.5 million, respectively, according to estimates by Scott J. Wollins, an analyst with the Houston investment firm Sanders Morris Mundy Inc., whose principals and customers together own about 11% of American Ecology’s stock.

Phillips’ investment was one of the factors boosting the company’s earnings because the investment effectively eliminated American Ecology’s long-term debt--and the interest costs of that debt.

The profit gains are the main reason why Wall Street so far has not abandoned American Ecology’s stock, which has held steady in recent weeks even as the dump’s opposition has been building. The stock closed Monday at $25 a share in national over-the-counter trading, up from $6.75 at the start of 1991.

“What has boosted the stock has simply been outstanding earnings progress” by the company’s “in-place operations,” Wollins said, adding that the Ward Valley site “will become a greater issue 12 months from now.”