In the new lawsuit, Great Falls residents claim Chester County officials were negligent to allow the business to reopen. Meanwhile, the county's former emergency management director said he told a county administrator two years ago that the situation was "a disaster waiting to happen."

CBCL, a plastics grinding and recycling business, was located inside the former J.P. Stevens No. 3 mill that burned for a week and caused a mass evacuation of the town.

The Chester County Council was aware the business was closed for safety violations in September 2004 but had no authority to keep the business closed or to reopen it, council members say.

About 50 residents, represented by Rock Hill attorney Randall Hood, filed suit against the county for allowing CBCL to operate with known safety hazards that preceded the fire.

The plastics recycling plant did not have a proper fire retardant or fire containment system in place, the suit states.

County officials should have known CBCL did not have a proper sprinkler system and did not properly handle or store hazardous chemicals, Hood said.

The business was "strictly liable" for chemicals in the plant that could have caused a public hazard, he said.

Attorney Hemphill Pride II of Columbia, who represents Ping Lee, the owner of CBCL, said his client is not responsible for the fire.

"There are some people responsible for the fire -- those who did absolutely nothing," Pride said. "It's not Mr. Lee or the owner of the mill. It's the county."

John Clark, the county's former emergency management director, said the county's decision to allow the plant to reopen "was all about economics."

County officials were concerned about people losing jobs, Clark said.

Clark could not say who made the final decision to reopen the plant but said he told then interim County Manager Gene Klugh the plant was shut down for lack of a certificate of occupancy, locked or blocked exits, piles of plastics debris not properly disposed of and other violations.

"I told Gene Klugh, 'It's a disaster waiting to happen,'" Clark said. "Had they (CBCL) been required to meet safety requirements, it's unlikely the building would be sitting on the ground today."

The mill's owner, John Tibbs, threatened to sue the county because the plastics recycling operation was shut down without proper authority, Pride said. Ten days later, the business reopened.

When Tibbs bought the mill in 1998, it had been closed for more than 10 years, Pride said. The building had an inoperative sprinkler but met fire inspection approval and the owner was issued a certificate of occupancy, he said.

Clark argues that Lee was unable to produce a certificate of occupancy and that Tibbs initially opened a furniture business inside the mill that was "very low hazard.

"There was no need, at that time, for a new sprinkler system, Clark said. But when Tibbs used the mill for warehouse space and allowed the recycling business to operate, a greater hazard was created, Clark said.

Pride contended the sprinkler system was grandfathered in when Tibbs opened for business so it was improper to keep the businesses closed because of its sprinkler system.

$40,000 settlement

The county settled with the plastic recycling owner to avoid a lawsuit and a county insurance claim for $40,000 was paid on April 19, 2005.

But council members Gene Cudd and Alex Oliphant said the council never voted or took any action to keep the plant closed or to allow it to reopen.

"Once it was shut down, we didn't have the authority to open it back up," said Cudd, now the council's chairman.

Oliphant said Thursday he was "dumbfounded" to learn about the insurance claim.

"This is the first I've heard of it," Oliphant said. "I should have been made aware of it being a member of the council."

Chester County Attorney Joanie Winters said the county will respond to the suit.

Initial lawsuit

About 100 Great Falls residents are part of another class-action suit that claims residents became sick from smoke containing hydrochloric acid that hung over the town for nearly a week as the mill burned.

Hydrochloric acid resulted from the burning of polyvinyl chloride used in the plastics recycling operation. Water used to extinguish the fire mixed with the plastic chips and created the dangerous acidic smoke plume, officials said.

Mandatory evacuations were ordered for about 1,300 of the town's 2,200 residents. All residents were back in their homes by June 13.