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Sunday, November 24, 2002

By Tom Gibb, Post-Gazette Staff Writer

His plant briefly closed last week, only to reopen in what amounts to an ongoing near-death experience.

Most of his 80 employees remain out of work.

And A.E. Witt can only wait while state and federal government representatives wrangle over who will pick up the $40 million tab to clear the contamination from his company's quarters.

The company is PermaGrain Inc., operating on the wild, northeast edge of Clearfield County. And it is running out of money, trapped in leased quarters tainted with heavy -- albeit contained -- radioactivity.

Three years ago, rescuers in state and federal government seemed eager to be the company's salvation and promised a thorough radiation cleanup.

Rather than becoming PermaGrain's deliverance, though, the state is awaiting federal action, and the feds have been delayed because they're trying to see whether previous tenants can be billed for part of the cleanup.

PermaGrain's plan to move to fresh digs eight miles away and let crews remove radioactivity and haul away the building in which PermaGrain operates now also is in limbo. The company can't move until it gets the new quarters, and the cleanup can't happen until they're out.

"I'm trying to get additional financing," said Witt, president of the suburban Philadelphia-based company. "But everyone looks at what's happening and runs."

"If any of this is Witt's fault, it's a very small percentage," said Ray Savel, president of Quehanna Industrial Development Corp., covering the region both where PermaGrain is housed now and where it wants to relocate.

For almost a quarter-century, PermaGrain has manufactured commercial wood flooring in a state-owned building once used by Cold War-era defense contractors.

It's one of the few buildings in an untamed swath of state land called the Quehanna Wild Area. And inside the structure -- sealed, isolated and under watch -- is a room thick with radiation left by a previous tenant.

"Lenders want to know what if their collateral becomes radioactive," Witt said.

Between a soft economy and lenders loath to offer money to a manufacturer in those straits, PermaGrain Inc. was in jeopardy, Witt warned in August.

Two weeks ago, short of cash, PermaGrain closed.

Last week, it reopened with a work force of 10 to fill leftover orders.

But all that Witt would forecast was that financial salvation could come in the next phone call, could take weeks or might not come at all.

The short-term problem, he said, is getting a promise of indemnity from the state, shielding PermaGrain and any investors from liability for the radiation problems the company inherited as a tenant on state property.

"We're looking into whether that would be issued ... but we feel the letter he has now would be sufficient," said Ronald Ruman, spokesman for the state Department of Environmental Protection.

Indeed, the state gave PermaGrain a promise of indemnity with its lease, Witt said.

"Our lease says we're not responsible," he said, "but buyers want something a little more meaty."

In a letter last week to the state Department of Community and Economic Development, state Rep. Camille George, D-Clearfield County, said PermaGrain also was struggling with reluctant insurers who balk at property and workers' compensation coverage.

Longer term, PermaGrain faces the limbo brought on by a battle between branches of state and federal governments, a fight that Rep. John Peterson, R-Venango, is trying to arrange a meeting to referee.

The nuclear contamination at the heart of the dispute is a legacy of the days when Cold War military contractors envisioned Quehanna as a nuclear research area -- before the idea was abandoned and the land deeded to the commonwealth.

PermaGrain uses a nuclear reactor pool, left over from one of the building's previous incarnations, where relatively benign cobalt-60 is used to bond acrylic to wood.

But a tenant from the 1960s -- federal contractor Martin-Marietta, DEP says -- sullied one sealed-off room with strontium 90, so virulent that planners will use robots, not humans, to remove it before demolishing the building.

PermaGrain's building can't be cleaned of its radiation until the company is safely out of the way.

But the company can't leave until an $8 million replacement building is constructed -- at federal expense, DEP says, as part of the deal forcing PermaGrain out.

None of that is happening because of the state-federal impasse. And in a hobbling economy where he says he needed financing, the bottom fell out two weeks ago, and PermaGrain shut down temporarily, Witt said.

"If the new building were up, this wouldn't have happened," he said.

On one side is DEP, charging that the federal government reneged on a vow to bankroll much of a $40 million cleanup.

On the other is the U.S. Justice Department, trying to figure out if it can stick any previous tenants of the PermaGrain building with at least part of the cleanup tab.

"For the last six months, much of the problem has been typical bureaucratic snafus, where people make commitments but aren't high enough up the food chain to make them stick," Richard Wiles, Peterson's economic development coordinator, said.

It's a turn of events that has observers such as Savel seething.

"The government can help companies that are going to manufacture overseas," he said. "They can't help a company that wants to employ people here."