Katherine Town Council is exposed to potential penalties of almost $6 million from the Territory Day tyre fire.
The NT Environment Protection Authority has asked the council to "show cause" why it should not be found in breach of a multitude of environmental laws.
If all the possible offences the EPA have listed are found to be proven the council could be liable for fines totalling $5.8 million.
The EPA's "show cause" notice was presented to council at the end of November.
It is being raised as a late item on the agenda for tonight's council meeting.
Already Michael Knight, the owner of Katherine's waste management company M.T Bins, a harsh critic of the council's management of waste tyres, said heads needed to roll at the council.
"Clearly they are running a shonky deal with leaving the tyres there. They knew not to put them there without recycling.
"They must have known dumping tyres is not responsible.
"Someone must be held responsible. Whoever gave the directive to store the tyres illegally should lose their job," Mr Knight said.
EPA environmental operations director Peter Vasel told council the EPA's investigators have found "on examination of the information and evidence collected to date both about the circumstances leading up to the fire and of the fire itself, officers have formed the view that that KTC may have contravened the following sections of the Act:
Section 30(3) - a person must not, except under an environment protection licence or a best practice licence, conduct an activity specified in Part 2 of Schedule 2.
Section 83(1,2,3,4,) - polluting the environment causing environmental harm; and
Section 83 (6,7) - improper storage of wastes/contaminants.
"These offences can carry significant penalties for both individuals and body corporates if prosecuted."
The council has already spent close to $500,000 cleaning up the mess left behind from the fire near the showgrounds.
Council's outgoing acting CEO, Alan McGill, has recommended to council that it request an extension from the EPA until the end of February for council's submission.
Council is also considering the appointment of a new CEO at its meeting tonight.
Katherine Times has been told the new CEO is expected to begin late in January.
Council is in a race against the clock as concerns build over toxic soil left over from the Territory Day tyre fire.
More than 2000 tonnes of contaminated soil and burnt tyres will have to be relocated before the Darwin wet season kicks in costing the council $300,000.
The Territory Day tyre fire could end up costing Katherine Town Council the best part of half a million dollars. And that's before these potential fines from the EPA are considered.
Mr McGill told the November meeting the council was issued a directive from the Environmental Protection Authority, who is currently investigating the circumstances, to remove the waste.
"They are getting nervous with the wet season coming up," Mr McGill said.
It has been about five months since a fire erupted over 200 tonnes of tyres piled high between the speedway track and the Katherine Showgrounds causing toxic smoke to fill the sky in Katherine's south.
Firefighters worked quickly to manage the raging flames and soil was piled on to extinguish the fire.
Michael Knight, the owner of Katherine's waste management company M.T Bins, was among many questioning why they had been left there.
Residents were warned to close windows and shut off air-conditioners, but were not evacuated despite smoke from tyres burning typically containing cyanide, carbon monoxide, sulfur dioxide, and products of butadiene and styrene.
Council documents state the burning tyres "were covered with soil, though they continued to burn for the next four to five months."
A small portion of the tyres continue to burn today, leaking toxic hydro-carbons deep into the soil.
Mr McGill tabled a motion at the November meeting requesting councillors to vote on exempting the council from entering a tender process to remove the waste due to its urgency.
The vote was unanimously passed with the Mayor of Katherine Fay Miller labelling the crisis a "headache".
Katherine Mayor Fay Miller said it was "very fortunate" Darwin's waste facility had agreed to take the toxic soil, which could have racked up a bill in the millions if it had to go interstate.
The council now has just weeks to comply with the EPA's direction.
A fire swept through dry grass and shrub next to the busy Bicentennial road before reaching piles of discarded tyres, on July 1.
The NT EPA immediately launched an investigation into how the pile of tyres came to be stored in an unsecured location.
Council has said it created the second tyre dump because it considered the fire risks were greater at the rubbish tip, where a further 450 tonnes of tyres had been left.
Tyres must be managed in accordance with the Waste Management and Pollution Control Act 1998 and its Regulations, an EPA spokesman has said.
The EPA spokesman said tyres can only be stored in a licenced location and the unsecured area at the rear of the showgrounds appears to breach those requirements.
Firefighters have not been able to determine the cause of the fire, which blazed through bush land from about noon on Monday, July 1.
Despite many residents condemning the council's decision to dump the old tyres Alderman Elizabeth Clark said the tyres were deposited "with the best intentions".
"We were not storing them, we were trialing them for a fence," she said.
"At the time we thought it was a good idea, hindsight is a wonderful thing."
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