The preliminary talks mark the first time that the government has considered going overseas to scrap most of its aging, obsolete reserve fleet since the practice was ended nearly a decade ago.

The U.S. Maritime Administration (MARAD) stopped selling the rusting vessels to overseas scrappers in 1994 to comply with environmental laws banning the export of toxic polychlorinated biphenyls (PCBs) found in various shipboard components. The move also occurred amid reports of death and environmental damage suffered by developing nations such as India that were ill-equipped to handle the dangerous scrapping work.

Now, however, with Congress willing to pay for ship disposal, MARAD has received offers from foreign shipyards with high environmental standards, including a British company that might be able to do the work more cheaply than domestic scrappers, officials said.

"If there's a possibility that someone can get rid of a lot of ships for little money or no money, we want to know about it," said Robyn Boerstling, a MARAD spokeswoman.

The federal agency, an arm of the Department of Transportation, is under pressure to meet a congressional mandate requiring the disposal of all obsolete ships in the James River by 2006. There are now about 94 ships in the James River Reserve Fleet near Fort Eustis. Of them, 70 are considered obsolete and require disposal.

Many of the ships date to World War II and have long since become floating environmental hazards, chock full of PCBs and asbestos. Some have hulls so thin, crews must regularly patch holes to prevent oil spills or a quick sinking.

One bad hurricane, officials fear, could turn the James into a disaster zone.

MARAD is trying to negotiate a cost-effective deal to dispose of a large number of ships. Since the federal government began paying for ship scrapping two years ago, the average price has ranged between $1.5 million and $2.5 million a ship. At that price, with limited federal money, the agency has almost no hope of meeting the 2006 deadline.

But with the option of going overseas, officials are hoping that they can make their money stretch by widening the competition for scrapping work.

While developing countries like India are eager for the work and would pay the United States for the scrap steel, such sales would never be resumed because of environmental concerns. The export of PCBs is prohibited under the Toxic Substances Control Act.

Using a company in an industrialized nation such as Britain would require a waiver from the U.S. Environmental Protection Agency and clearance from the U.S. State Department, Miss Boerstling said.

Even then, however, the scrapping work couldn't proceed without U.S. subsidies. The high cost of environmental regulations and the low price for U.S. scrap steel, officials said, have made the ship-scrapping business unprofitable in most industrialized countries without subsidies. Congress began providing subsidies in 2001 with a $10 million allocation. About $31 million is available this year.