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NIAGARA FALLS – Opponents of the Covanta Niagara plan to haul New York City garbage for burning in the company’s Niagara Falls incinerator will have another chance to speak out against it.

Mark J. Gabriele, counsel to the Niagara County Industrial Development Agency, said that the IDA has agreed to set up a public hearing on $125 million worth of tax-exempt bonds that Covanta’s parent company obtained to pay for its purchase of new rail cars and other equipment to haul Big Apple trash.

Covanta Energy spokesman James Regan said the bonding authority was granted to the company by the Build NYC Resource Corp., a New York City development agency.

According to Gabriele, that agency’s bond counsel decided that to comply with Internal Revenue Service rules and keep the interest on the bonds tax-exempt for the investors who are expected to buy them, public hearings and approval votes are needed from county governments in places where the rail cars would travel.

It’s a way for Covanta to comply with a 1982 federal law called the Tax Equity and Fiscal Responsibility Act, or TEFRA.

“Because it’s being used to purchase moving equipment, New York City asked that we go through a TEFRA process at the destination end,” said Kevin O’Neil, Covanta Niagara business manager.

Regan said lawmakers in Delaware County, Pa., which is also to receive Big Apple garbage for incineration at a Covanta facility, already have given the go-ahead for the tax-exempt bonds.

Gabriele said a hearing will be set up in Lockport, likely in early February, since the IRS requires a 15-day public notice period, and the IDA didn’t act on the request until last week.

Gabriele said the Niagara County Legislature will be asked to vote on the tax-exempt status of the Build NYC bond issue, probably next month.

“It’s a very narrow hearing,” Gabriele said. “I’m sure we’ll have everybody who’s against the project come out and say why they’re against it, but the TEFRA hearing really isn’t on the project.” Gabriele and O’Neil both said they didn’t know what would happen if the County Legislature were to vote no on the bonds. Regan said he thought it would be up to Build NYC to decide what the impact would be.

Regan said Covanta expects to haul about 800,000 tons of New York City garbage out of the city for burning each year. He said it will be split roughly 50-50 between Niagara Falls and Delaware County, near Philadelphia, although he said the amount brought to the Falls could range from 300,000 to 500,000 tons a year.

The state Department of Environmental Conservation blew the whistle on Covanta last year for not waiting for permits before starting construction on its new rail spur and underground steam pipes, which are to carry steam generated in a new natural gas-fired boiler at the 56th Street plant to nearby Niagara Falls industries.

Regan said that no construction is going on now and that Covanta and the DEC are still working out a consent order embodying the penalties the state will impose on the company.

Covanta needs to modify its air and solid waste permits, Regan said.

Gabriele said the bond question has no impact on the 15-year payment-in-lieu-of-taxes, or PILOT, arrangement the Niagara County IDA gave Covanta a year ago for its $30 million project. The tax incentives were estimated by IDA staffers to save the company $8 million over the 15 years.

email: tprohaska@buffnews.com