Residents fear the liquid waste, equivalent of eight of the old Stanley Street pools, is polluting their groundwater.

But the company who provided a report to the EPA that sets the figure, says it is flawed and there is no problem.

Since July the Victorian environmental watchdog has issued three notices calling on the company to make improvements to the way it handles the liquid escaping from its compost piles.

The EPA believes it could be the source of the smells that have plagued the suburb for the past decade but Terry Corrigan from Greenchip Recycling says the issue is under control.

Late last week he was reluctant to say whether he would challenge the EPA’s actions.

“The model used to estimate the loss did not allow for evaporation around the clock, only in daylight hours; it assessed the loss on our total area where the composting occupies only half the site and where there is an excess, we have a licence to pump the leachate into the sewage system,” he said.

An EPA spokeswoman said Greenchip Recycling had until January to improve its practices.

“In July this year EPA moved to ensure groundwater was protected through a notice requiring Greenchip Recycling to create more hard surfaces, minimise the amount of liquid waste reaching the ground and ensuring leachate was directed to lined leachate ponds.

“A second notice also issued in July required Greenchip Recycling to conduct a water balance report to assess liquid management on site.

“Greenchip Recycling provided this report and the result identified an excess of liquids on site.

“Greenchip Recycling has until January 11 to change the current practice to meet the requirements.”

Wodonga Council is looking at its options to withdraw the planning permit for Greenchip Recycling after what it believes are repeated breaches of that permit related to odour and wastewater.