The bill was prompted by the uproar that greeted a Virginia shipbreaking company last year when it tried to find a site in Oregon to open the only West Coast facility to dismantle obsolete ships from the "Ghost Fleet" of deteriorating government vessels — a problem that has been slowing the disposal of ships in California's Suisun Bay.

"It's simply a matter of protecting our waters," said state Sen. Joanne Verger, D-Coos Bay, a lead sponsor of the bill.

Old ships may be loaded with asbestos insulating steam pipes, cancer-causing PCB fire retardants in electrical transformers, and lead or chrome-based paints. Water in their ballast can carry foreign pests, such as the mitten crab, that wreak havoc if turned loose in a new environment. Other things can hitchhike in the mat of organisms that foul a hull after sitting for years in the water.

The bill would require any shipbreaking to be done in a closed dry-dock, also known as a graving dock, where the ship sits high and dry on land and anything that spills out of it can be cleaned up without getting loose in the water.

Bay Bridge Enterprises of Chesapeake, Va., and the seven other shipbreakers disposing of the 165 aging government-owned ships currently in the U.S. Reserve Fleet, work in the water, according to the U.S. Maritime Administration, which oversees the fleet.

"Most people have seen the pictures in India," of derelict ships hauled up beaches for dismantling, said co-sponsor state Sen. Betsy Johnson, D-Scappoose. "I think the industry will tell you, `We don't do it like that. We're cleaner, environmentally responsible.' Until we have a discussion in the Legislature there will be a certain level of ambiguity about what this industry would do if they do come to Oregon and what expectations Oregonians will hold out to them with respect to stewardship of our environment."

Shipbreaking was common in U.S. ports until the 1970s, when cheaper alternatives on the other side of the world, where environmental concerns and wages are far lower, dried up business.

Most of the world's obsolete ships are towed to India, Pakistan, Bangladesh and China to be dismantled and sold for scrap. But aging Navy and other government-owned ships are still broken in the U.S., primarily due to a law that prohibits the export of toxic materials such as PCBs, said Jim Puckett, coordinator for the Basel Action Network in Seattle. The organization works to raise international compliance with the 1989 Basel Convention on disposal of hazardous materials. The U.S. is not a signatory.

International outrage over shipbreaking peaked last fall, when environmental groups shamed France into calling back an aging aircraft carrier sent to India for disposal.

Puckett said the Oregon bill meets the standards of the Basel Convention and hopes it will become law, serving as an example for other states.

"There is a massive industry looming, because a whole generation of single-hull tankers have to be phased out over the next 10 years," by international agreement, said Puckett. "These environmental rules internationally are going to drive all these ships into going off to Asia, which would be a disaster, or drive a green shipbreaking industry."

Eight companies — three on Chesapeake Bay and five on the Gulf of Mexico — are dismantling and recycling the old ships from the U.S. Reserve Fleet anchored in Virginia, Texas and California's Suisun Bay, according to the U.S. Department of Transportation's Maritime Administration. Known as MARAD, it oversees the "Ghost Fleet" of 165 vessels, 122 of which are slated for recycling.

None of them work in dry-docks, said Shannon Russell, director of congressional and public affairs for the agency.

"We would like to see more domestic capacity available so we can recycle these ships in the United States," she said. "The more capacity there is, the better value to the taxpayer."

One company in California is qualified to bid on these contracts, Allied Defense Recycling of Petaluma, Calif. But it has yet to win one, said Russell.

Gary Whitney, director of marine operations for the company, said the closest they have come to winning a contract is about $200,000. Even with up to $800,000 for towing thrown in, the outfits in Brownsville, Texas, consistently under-bid Allied.

Whitney said the reason is much lower labor costs and no state requirements to work in dry-dock.

Though California does not specifically require shipbreaking be done in dry-dock, tough regulations protecting water and wildlife make that the only alternative.

"The playing field needs to be level," Whitney said. "It's not. Even though we have what MARAD told us was the best environmentally technical plant they had ever seen, we've still been unable to get a vessel."

Bay Bridge and other shipbreaking companies did not return telephone calls for comment.

The Port of Portland, the state's biggest, is not looking for any shipbreaking business, said spokesman Eric Hedaa.

The International Port of Coos Bay would be willing to look at it, but not if it might harm local waters, home to the biggest commercial oyster beds in the state, said Martin Callery, port director of communications and freight mobility.

"We would be very likely to support that type of restriction on those type of marine industrial operations," he said.