Trying to prevent local governments from being drawn into pollution litigation, an Assembly committee is moving a bill (A-1779) that says sewage or sludge from wastewater plants does not constitute a hazardous substance under state law.

The legislation, sponsored by Assemblyman John McKeon (D-Essex), was spurred when towns were drawn into an ongoing battle over how to clean up dioxin contamination in the Passaic River.

“It turned out to be incredibly expensive,’’ said McKeon, one of the most ardent environmentalists in the Legislature, who found himself at odds with people he usually backs.

Alleged polluters commonly call sewage or sludge a hazardous substance in order to spread the costs of cleanup among many parties — a way of reducing their liability when the state seeks to recoup cleanup costs from the company or companies for pollution.

In the Passaic River, more than 80 municipalities or sewerage authorities were dragged into the litigation, according to officials from the New Jersey State League of Municipalities.

Why are the Chemistry Council and various environmental organizations opposed? 

“It’s a flawed bill,’’ said Hal Bozarth director of the Chemical Industry Council of New Jersey, noting many of the streams and rivers in the state are not “fishable or swimmable’’ because of inadequate treatment of wastewater from plants operated by public authorities. “It’s not fair to let polluters off the hook.’’

Jeff Tittel, director of the New Jersey Sierra Club, said, “Under this bill, authorities will be able to dump sewage sludge or partially treated sewage into our waterways and not be held accountable.” He added, “This legislation is a threat to clean water and our environment and will only cause more pollution.’’

Others argue the bill sends the wrong message to the business community. Tony Russo, executive vice president of the Commerce and Industry Association, said the bill, if passed would hurt the business community in the state,