Economic leaders in New Milford are disturbed this week by U.S. Rep. Chris Murphy's apparent change of heart regarding plans to transform the former Century Brass mill into a cellulosic ethanol refinery.

Christopher Brown, president of American Energy Enterprises (AEE) in Brookfield, said he is "aghast'' Murphy wants to derail federal funding for his proposal, which Mr. Brown said would not only produce a much-needed, clean-fuel option, but salvage a derelict town property.

"We are the best bet for that plant,'' Mr. Brown said Tuesday.

The New Milford Economic Development Commission sides with Mr. Brown.

Yet others, including a well-known environmental group and at least one town council member, share Congressman Murphy's reservations.

EDC chairman Frank Wargo mailed a Sept. 11 letter to the Democratic 5th District congressman and to federal Department of Energy Secretary Steven Chu, asking Mr. Murphy meet with town leaders before funding is withheld.

He suggested the congressman's recent turnaround may be rooted in erroneous information.

In July, Mr. Murphy wrote to the U.S. Department of Energy favoring AEE's proposal. A month later, Mr. Murphy said he was alerted to concerns that prompted him to change his mind. On Tuesday, he said he received a letter from the Housatonic Valley Association in Cornwall and from at least 20 area residents.

AEE is seeking a $50 million federal Department of Energy grant to help finance the plant and it has already completed the first round in the application process. Mr. Brown said he hopes to learn within three weeks about the request.

However, Congressman Murphy cites residents' worries about the aquifer beneath the property, increased traffic, and other environmental impact the plant might have.

"A facility of this scale and purpose is simply not appropriate to be located in New Milford's downtown region," Mr. Murphy said.

EDC members say the DEP would not allow anything to jeopardize the town water supply. They also dispute it would affect residential neighborhoods, primarily because the 72-acre property is fairly isolated and most of the homes within sight of the mill existed when the plant was operating in the 1980s.

Vin Nolan, economic development supervisor, said Mr. Murphy's recent letter would not "kill the deal,'' but could limit the federal dollars available.

The commission simply wants the project to be given a fair shake, Mr. Nolan said. Otherwise, the mill will just continue to deteriorate at the town's expense.

"This could become a never-ending burden on this community, if we don't have an industrial-type buyer,'' Mr. Nolan said.