Ship Repair Firm Withdraws Asbestos-Violation Guilty Plea

Pacific Ship Repair & Fabrication, banned from Navy work because of asbestos violations, was allowed to withdraw a plea of guilty to violations of the U.S. Clean Air Act.

The ruling Monday by U.S. Magistrate Roger Curtis McKee gives Pacific Ship time to fight the ban imposed by the U.S. Environmental Protection Agency and possibly evade bankruptcy.

The government strongly opposed the action, and U.S. Atty. William Braniff said McKee’s order would be appealed to a federal district judge later this week.

The ban stems from the company’s guilty plea last May to improperly handing asbestos during 1989 repair work on the carrier Ranger.

Last July, McKee fined the company $20,000, and, in a related case, McKee sentenced a Pacific Ship foreman to six months in custody.

Company officials said they later realized that the guilty plea automatically put Pacific Ship on an EPA list of firms ineligible to receive government contracts.

Pacific Ship President Dennis Shaw said the ban could force the San Diego company, which counts on the Navy for nearly 100% of its business, into bankruptcy within 60 days.

According to court documents, the company has lost out on the chance to bid on 14 Navy repair contracts, totaling more than $6.2 million, since Aug. 22.

McKee scheduled a bench trial in the case for Jan. 14. In the meantime, Pacific Ship lawyers will try to persuade the EPA to lift the ban.

Corporations may be removed from the EPA ban if they can show that the original violation has been corrected. But that process can take several months, and two new, lesser, asbestos charges against the company could slow the EPA action further.

M. James Lorenz, a Pacific Ship lawyer, said the company has corrected the problem. He added that McKee’s ruling “is a first step to showing the government that the company is moving forward under new management.”

Pacific Ship, the city’s fourth-largest ship repair concern, has 300 employees and does an estimated $40 million in repair work a year.