A. L. Taylor owned a dump truck, a crane, and a 17-acre field about 20 miles south of Louisville. He parlayed those modest assets into a business that served many of Kentucky's best-known industries. Taylor hauled away their liquid waste, creating on his land what officials now call "The Valley of the Drums."

Stell drums, perhaps as many as 100,000 of them, are piled helter-skelter in Taylor's field. Many are rusted, dented, buckled, or riddled with gunshot holes. Oozing from them are a variety of unidentifiable fluids whose fumes permeate the air. The drums bear such ominous warnings as, "Hazardous properties of this product have not been fully evaluated," and "For laboratory use by qualified investigators only."

Wilson Creek runs through the site on its way to the Ohio River. Once a neighbor reported that the creek had caught fire. Three years ago a state water-quality engineer tested the creek and reported, "There is no need to run these samples, as they're almost pure oil or paint."

Labels on some of the drums indicate they contain sulfuric acid, solvents, paints, auto transmission fluids, chemical degreasers and a host of exotic industrial chemicals such as cyclohexanon, n-prophyl acetate, isocyanate, Triton-X and arapol 892X60. Officials warned, however, that the labels don't necessarily bear any relation to the drums' actual contents.

Kentucky officials took action against Taylor more than three years ago, charging him with a variety of water-pollution and solid-waste disposal violations.

Yet, when Taylor died last year, the state had neither fined him nor managed to shut down his operation. The delay was due to what a state bureaucrat admitted was "an oversight on my part." The drums remain piled in Taylor's field.

"The Valley of the Drums" is one of four Kentucky sites where liquid wastes with unknown potential for causing cancer, birth defects and other ills have been discovered in recent months. All the sites are in the general area of Louisville, and all have been operated illegally. Each site had a stream running throught it flowing into the Ohio River -- from which many metropolitan areas take their drinking water. No site is isolated from residential areas.

Estimates of the cost of cleaning up the four sites are now ranging to $10 million or more, possibly in taxpayers' money.

Federal officials who visited the sites Friday said the government is currently helpless to deal with the valley, and with more than 800 abandoned chemical dumps nationwide. However, they said, both the adminstration and Congress are preparing legislation to fund what could amount to billions of dollars in cleanup costs.

Already, the federal Environmental Protection Agency (EPS) has come up with an emergency appropriation of $100,000 to help clean up one of the Kentucky sites. When Kentucky Gov. Julian Carroll sought more money, EPA chief Doublas Costle reported the agency was "out of money, period -- not just for Kentucky but for everyone."

Hazardous-waste legislation is "certainly the number one enbironmental issue in this Congress," said Philip Cummings, counsel to the Senate Public Works and Environment Committee, who complained of a headache and watery eyes from chemical fumes as he walked through the valley Friday.

Assistant EPA administrator Thomas Jorling, who led the tour, said the agency is drafting a bill which would assess large fees from chemical companies to clean up abandoned sites. The fund would be similar to one adopted to reclaim abandoned strip mines. Another fund, to clean up oil spills, was defeated last year and will be debated again in this Congress.

Hazardous-waste legislation is expected to be extremely controversial, since it would open a new area of federal regulation at a time when regulation is increasingly unpopular. Chemical companies are expected to put up a vigorous fight and, Jorling said, some opposition has surfaced at the Department of Transportation and in the Office of Management and Budget.

EPA and Justice Department attorneys, also on the trip, are planning a lawsuit against Hooker Chemical Co., which dumped toxic materials in Love Canal, a New York site, allegedly causing birth defects and illness among nearby residents. However, Jorling said, most abandoned chemical dumps cannot be dealt with in law-suits because the law requires proof of an imminent hazard to public health.

The new legislation would come as amendments to the 1976 Resource Recovery and Conservation Act, which allows EPA to regulate future chemical dumps but not abandoned ones.

In December, EPA proposed rules requiring companies to make sure every ton of waste is placed in a secure landfill. However, Congress may reexamine these rules, Cummings said, because they "may squeeze out marginal operators" thereby eliminating adequate space for the growing volume of waste. There is already a shortage of safe sites since no one wants one in his neighborhood.

Congress will also look at who is to be liable sor dumps that injure people, Cummings said. Proposed regulations limit liability to 20 years after a dump closes, but cancer often doesn't show up until 20 to 40 years after exposure.

Meanwhile Sen. Wendell Ford (D-Ky.) is expected to seek a special congressional appropriation for the cleanup work in Kentucky. Other possibilities include seeking a special federal appropriation for a "man-made disaster," and asking President Carter for a grant from his emergency fund. All these tactics are patterned after those used by New York officials with Love Canal.

"The Valley of the Drums" is near Shepherdsville in Bullitt County, south of Louisville. The other three Kentucky sites are about 10 miles to the west, clustered around tiny West Point near the military installation at Fort Knox.

One West Point site is a 20-acre field that contained about 800 barrels when it was discovered a few months ago. The field had been flooded, and officials' immediate concern was that the drums would be washed into the Ohio River. The flood waters had deposited some drums in trees. This site was given first priority; most of the available cleanup money has been spent here.

The field is owned by Mr. and Mrs. William Distler, whose son, Donald, was convicted last year of discharging a pollutant into the Ohio River and interfering with the operation of a sewage disposal system.

The younger Distler, president of Kentucky Liquid Recycling Inc., was charged after two toxic chemicals were found in Lousiville's sewer system. The main treatment plant was forced to close, 13.6 billion of gallons of untreated sewage were discharged into the river, and residues are still being scraped from some of the city's sewer lines.

Distler said he has no connection with the drums stored on his parents' land. Tests of the material stored there identified 13 substances, including the two that were discovered in Louisville's sewers.

Another site is a two-acre field near Pond Creek in Jefferson County, which may be county-owned land. Drums buried there worked their way to the surface in December because of the flooding. One area resident reported having seen men bury drums there at night. Officials have not identified the contents of the newly emerged barrels, but are reported to be especially leery of them.

The fourth site is an abandoned brickyard at West Point where 2,000 to 3,000 barrels were stored, some reported to be leaking. Donald Distler has admitted owning these barrels, and has been ordered to dispose of them.

Distler is connected to a fith Storage site, a half-acre lot in western Louisville where 30 to 40 drums are stored. The site was purchased last year by a company whose sole officer is Distler's wife, Marilyn. The city of Louisville considered action against her in connection with the site, but determined that the goods stored there were not dangerous.

The companies whose drums wound up at Taylor's site comprise a virtual who's who of Kentucky industry: Union Carbide, Ford Motor Co., Celanese Polymer Specialties Co., Monsanto, E. I. duPont deNemours, Ashland Chemical Co., and Cheveron Oil Co., among others.

Spokesmen for most of the companies said they have no idea how their drums might have made their way to the dump sites. The companies apparently sought only written statements from haulers certifying that they would dispose of the materials legally.

The lack of laws and regulations concerning the disposal of liquid waste apparently allowed dump operators to go into business without background or backing, and to operate without careful supervision.

Distler is a former policeman, horse trainer, heavy equipment operator, bar owner and "junket representative" for a Las Vegas hotel. Twylor ran what a state official called "a shoestring operation" emptying drums and cleaning them for resale. Neither had a state permit to run a liquidwaste dump. In fact, there are no legal disposal sites in Kentucky.