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A former owner of a Dunkirk steel plant will contribute $8.9 million to help clean up toxic contaminants at sites in Chautauqua and Albany counties.

Negotiators said the proposed agreement forged between the state and GATX Corp. was a key factor in maintaining the viability of Empire Specialty Steel, a Dunkirk facility that currently employs about 200 workers. Formerly known as AL Tech Specialty Steel, the manufacturer of stainless steel bar, rod and wire filed for Chapter 11 reorganization two years ago after it was unable to pay suppliers.

AL Tech emerged from bankruptcy earlier this year under a reorganization that involved the sale of the plant to an entity controlled by employees and by Atlas Steel Co. of Ontario, a major supplier. In August, employees approved a contract containing wage cuts of about 20 percent, concessions designed to help return the troubled steelmaker to profitability.

Another component of the reorganization included the sale of some contaminated sites In Dunkirk and Albany County to Realco Inc. of Lakeview. Realco President Jin(cq) Park said his company will oversee what is expected to be a five-year cleanup effort, then attempt to sell the remediated sites to new investors. Revenues derived from future land sales will be channeled to an environmental remediation trust fund.

Officials from Empire Specialty Steel referred media inquiries to Park, who underscored the importance of the cleanup agreement. He said the pact that was negotiated with GATX by officials from the state Attorney General's office and the Department of Environmental Conservation was critical to saving the Dunkirk operation.

"Without this arrangement, I don't think the new company would have bought AL Tech and the remaining jobs would definitely have been in jeopardy," Park said Monday.

At one point, AL Tech employed 500 people. Officials are hoping the facility's payroll will grow to 300 as production increases over the next several years.

There are several contaminated parcels on the Dunkirk site, but Park said the looming priority is a 10-acre site on Lucas Avenue that formerly housed a wire mill. He said environmental tests have confirmed that there is underground water contamination at the site. Additional testing will be performed in the coming year and Park said the actual cleanup is expected to begin in the year 2001.

"We're still working on finding out the extent of contamination, but we don't expect to find too many surprises," said Park. "Phase one of our investigation has already identified many of the issues."

Officials from the state Attorney General's office said the Dunkirk sites are contaminated with chromium, lead, chlorinated solvents and PCBs. Groundwater at the site exceeds state standards for metals and chlorinated solvents. PCBs have also been found in Willowbrook Pond near the manufacturing facility.

The cleanup tab is expected to exceed $15.7 million and includes work at a contaminated plant in the Albany County community of Watervliet. The Chicago-based GATX was the corporate parent of the company that owned the two steel plants in the 1980s.

Allegheny Ludlum Corp., another prior owner of the plants, has already contributed $2.8 million towards the cleanup while other entities, including the current operators of the plants, are contributing $4 million under separate agreements negotiated by the DEC.

State Attorney General Eliot Spitzer said the proposed agreement with GATX was filed Monday in U.S. District Court in Albany County. Following a 30-day public comment period, a court is expected to take final action on the agreement.

"This settlement allows a comprehensive cleanup program to move forward, while helping to preserve hundreds of jobs," Spitzer said.

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