by David Folkenflik, Baltimore Sun

But a divide remains over whether the contaminated vessels should be dismantled in the United States, at a significant cost to taxpayers, or abroad, where lower safety standards would allow the U.S. Maritime Administration to turn a profit by selling the ships for scrap.

Either choice would require a change in federal law.

"There's certainly quite a bit of momentum building" for altering current law, said Thomas J. Howard, an assistant inspector director in the Transportation Department, which oversees the maritime agency. "I don't think it's in a particular direction yet."

Howard's office issued a report this spring that found that the leaky government ships posed a threat to the rivers and harbors where they have been docked.

More than 100 vessels are waiting to be scrapped, some of them little more than decomposing hulls that have sat idle for more than two decades.

During the past week, Sens. John McCain, an Arizona Republican, and Ernest F. Hollings, a South Carolina Democrat, have been drafting legislation that would subsidize the shipbreaking work of some U.S. yards.

At the same time, the measure would prod the maritime agency to sell many of the most tainted ships to scrappers abroad, which would probably anger environmentalists.

A vote on their bill in the Senate Commerce Committee is likely next week.

Lawmakers say they have grown increasingly worried about the highly toxic materials in the deteriorating ships.

The most-contaminated of the vessels - in the James River in Virginia; Beaumont, Texas; and Suisun Bay, Calif. - are a half-century old.

At a House budget task force hearing Friday, maritime officials acknowledged the environmental peril posed by the ships and pressed for the authority and the money to pay U.S. companies to dismantle them at U.S. shipyards.

Rep. Darlene Hooley, an Oregon Democrat, said, "It just seems stupid that we don't develop our own program in this country."

It costs at least $900,000 a year to keep each of the decrepit vessels afloat while they await dismantling, said John E. Graykowski, acting administrator of the maritime agency.

In addition, the work required to remove environmental contaminants from the ships, he said, often renders them unable to make the trip to foreign shipyards.

"The answer is obvious," Graykowski said Friday. "We need to have the statutory authority to pay for this to be done. We need to recognize reality and pay for what we're doing."

Under current law, the Maritime Administration must sell all obsolete federal and noncombatant naval ships for scrap at a profit.

But in the mid-1990s, the ability of domestic scrappers to make money from salvaging the ships plunged along with the prices of scrap metals.

After articles in The Sun prompted an outcry about the deaths, injuries and environmental hazards that have occurred at the scrapping yards in the United States and abroad, safety rules in the United States were tightened.

As a result, only foreign companies, which are subject to less stringent and less costly environmental and safety regulations, could run their operations profitably.

In 1998, the White House responded to pressure from lawmakers and environmentalists by issuing an executive order barring the sale of ships for scrap to other countries for one year. The order has expired, but the maritime agency has not sold any ships to foreign yards.

The law requires federal officials to clear the backlog of obsolete ships by Sept. 30, 2001. A task that once promised profit to commercial shipyards now appears to hold almost no appeal. From 1991 and 1994, the government sold 80 ships for scrapping abroad at an average price of $433,000.

During the past year, sales of ships to domestic ship-scrappers yielded $10 to $105 each.

Rep. John E. Sununu, a New Hampshire Republican who is chairman of the House task force, appeared to favor McCain's two-track approach during the hearing Friday.

"This is a problem where we probably want to take multiple approaches," Sununu told Graykowksi. "There's no one solution."

Domestic companies might prove able to dismantle the ships while observing environmental and labor safeguards, Sununu said, but they might also end up squandering tax dollars.

"We need to deal with the 40 vessels that are in the most serious situations," he said. "Foreign shipping yards ought to be considered as an option."

Graykowski disagreed, arguing that Congress had to send a clear signal about how his agency should proceed. "We can't be chasing a whole lot of different options," he said. "Either we're going to export to foreign [yards] or we're going to deal with it here."

Officially, the maritime agency has taken no position on competing bills that would change the rules, because the administration has not approved budget cuts elsewhere to pay for the cost of subsidizing domestic yards to scrap ships.

Rep. Peter A. DeFazio, an Oregon Democrat, has proposed spending $40 million a year to subsidize the cost of dismantling the ships by U.S. companies.

A key Senate panel has approved $38 million for that purpose.

Sens. Ted Stevens, an Alaska Republican, and Barbara A. Mikulski, a Maryland Democrat, have promoted such spending as a way to find new work for struggling U.S. shipyards in Baltimore and elsewhere. The government's cost of retiring all the ships could range as high as hundreds of millions of dollars, raising concerns among other lawmakers.

Some Republicans are instead pushing to send the toxic ships elsewhere, away from U.S. waters. Rep. Herbert H. Bateman, a Virginia Republican, says he is outraged that 58 polluted ships are docked in the James River in his district.

Maritime officials say they share his concern that a severe storm could damage the ships enough to release a torrent of contaminants into the river.

Last month, the House approved a military policy bill that included a Bateman measure that would direct the agency to send as many vessels as possible abroad for scrapping.