Speaking at a news conference on the banks of the James River, with the giant, gray outlines of reserve ships in the background, Schubert said the agency “has no plans” to move unwanted vessels to China or other Asian nations for scrapping. The United States imposed a ban on such exports in 1995.

He also praised his boss, President Bush, for recommending that $19 million be spent next year on ship disposal, the highest amount proposed in a decade.

“This is real progress,” Schubert said.

The Maritime Administration, a branch of the Department of Transportation, is under a congressional deadline of September 2006 to safely get rid of more than 100 obsolete ships nationwide; 63 are moored in the James River, off Fort Eustis in Newport News.

While the Ghost Fleet has existed since World War I, its fate has drawn recent attention because of small oil leaks into the James and because a consulting report two years ago described a worst-case scenario that stunned state officials and environmentalists. It detailed how just two ships might break apart in a storm and cause a 50-mile-long spill that could threaten historic Jamestown Island, nearby nature sanctuaries and shellfish grounds.

Under the contract announced Thursday, the three ships ­ the American Banke, the Mormac Moon and the Santa Cruz ­ will be towed this summer down the Atlantic coast and across the Gulf of Mexico to Marine Metals, a salvage yard in Brownsville, Texas.

There, about 90 percent of the ships will be recycled; the rest treated as waste.

All three ships were built in the 1960s, and have been tied up in the Ghost Fleet for nearly 20 years . All are considered “high priority” disposal candidates because their hulls are thinning and they contain substantial amounts of waste oil and fuel, officials said.

The three were supposed to be sent to England last year. But because of delays, and because the Maritime Administration wants to quickly handle high-risk ships, they are being sent to Texas, said Curt J. Michanczyk, who runs the agency’s disposal program.

Of the 83 ships now in the Ghost Fleet, 12 are classified as high priority. Three will leave this summer, and Schubert said he is negotiating with several unnamed U.S. shipyards to dismantle seven others. He said those deals should be completed by the end of the year.

A shipyard in Chesapeake, Bay Bridge Enterprises , won a contract last year to dismantle five ships and is bidding for more work in 2005, Michanczyk said. It was the only Virginia yard to bid for ship-breaking contracts.

Nearly all reserve ships contain heavy fuels and oils, mercury, asbestos, lead and toxic PCBs. Short for polychlorinated biphenyls, PCBs are found throughout ship wiring and in ventilation gaskets and are suspected of causing cancer.

During a tour Thursday of the Santa Cruz, agency officials described how most hazardous materials and wastes are found in the engine room ­ steam pipes wrapped with asbestos, gauges built with mercury, gaskets sandwiched by PCBs.

On one bolt-covered machine jutting into a walkway, a ship caretaker had spray-painted in orange the word “OUCH.”

Visitors were instructed to wear hard hats, gloves and life jackets while wandering the deck, where low-hanging steel cables, rusted ladders and peeling paint were common.

“We’re not going to go below,” Michanczyk said. “It’s a little too hazardous.”

With that, visitors were assembled in the ship’s mess hall. Yellowing newspapers were strewn on faded tabletops, and a book case still held novels from Jane Austen, Somerset Maugham and Graham Greene, though their covers were loaded with dust and grime.

“This used to be a beauty of a ship,” Michanczyk said. He then looked around at the decay and said, “It’s kind of sad, you know, to see them go out like this.”

Reach Scott Harper at 446-2340 or scott.harper@pilotonline.com.

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