ABINGDON, Va. (AP) — A southwest Virginia recycling company that has been the source of odor complaints for years is considering relocating after state environmental officials proposed an expensive fix for the problem.

MXI Environmental Services in Abingdon recycles beverages, pharmaceuticals and cosmetics into ethanol fuel. The process produces an odor that, despite efforts by the company to curtail it two years ago, continues to draw complaints from neighbors.

The Virginia Department of Environmental Quality has proposed an amendment to MXI's air permit in an effort to better control the odor, but company vice president of operations Brian Potter tells the Bristol Herald Courier ( ) MXI would need government assistance to make the changes, which could cost millions.

Potter said the company has worked diligently to alleviate the problem, and he considers the possible permit changes unfair.

"We've made a lot of improvements in the water with the things we've currently done," he said, "and we feel like their action of opening the permit for cause is unjustified."

The department first addressed the odor issue in 2009, when it restricted the company air permit to require it to install an oil-water separator and an activated clay filtration bed to help filter out the odorous materials from the cooling water.

Since that didn't stop the problem, the department is considering changing the permit to require the company to dispose of the water used for cooling, either through use of the public sewer system or an on-site treatment method.

The agency held a public hearing on proposals on Tuesday and will take written public comment until June 20. A decision is expected in July.

Rob Feagins, air permit manager for DEQ's southwest regional office in Abingdon, said discharge of the wastewater into a public sewer system would largely resolve the odor issue.

"We can't say there's not going to be any odor because it's an industrial process and there's going to be some, but we believe the majority of the odor has been rising from the cooling tower," Feagins said. "It's our opinion that the majority of the odor that the community's been experiencing will be managed by taking the distillate water out of the cooling tower."

Potter said it would cost the company $1.3 million to connect to Washington County's sewer system. That's on top of the $1.5 million investment the company would have to make to pre-treat the water before sending it into the public system and a monthly sewage bill of between $200,000 and $300,000 each year.

"It's something significant enough that it would really inhibit our ability to make any money in the future," Potter said, "but we were willing to do that to eliminate this problem."

MXI considered moving to Bristol, where it could have connected to the public sewer system without a large fee, but residents there expressed concerns about the effect on air quality in their city. Potter said the company had looked at different places to relocate, but he would not discuss details.

Robbie Cornett, general manager of the county's sewer authority, said the utility must charge the fees to pay for the cost of building the capacity that customers use. Were the service authority to pay the fee, he said, other customers' rates would have to increase to subsidize the cost.

"We certainly think the service that MXI offers is environmentally outstanding service. I'm glad they provide the service not only to our community, but to others," Cornett said. "At the same time, wastewater treatment capacity costs money."

Potter and Washington County officials said MXI has never received local government subsidies, including when it located to the area a decade ago and when it did a major expansion in the mid-2000s. The company has asked the county to waive the sewer connection fee.

"We've never had any sort of government subsidy here before, and that's the only thing we've ever asked," he said. "And it wasn't for us. . It was to try and fix this odor problem."