The company behind plans to scrap so-called US "ghost ships" on Teesside has been fined more than £20,000 for improperly disposing of asbestos.
Environment Agency officers twice visited the landfill site
Able UK admitted failing to cover or dampen the hazardous waste at Hartlepool's Seaton Meadows landfill.
Heavy machinery used to crush the asbestos could have released dangerous fibres into the air, magistrates heard.
Alab Environmental Services, which carried out the work on behalf of Able UK, called the breach "unfortunate".
The Environment Agency had twice raised concerns with the site manager during two routine inspections of the landfill in October 2005 and January 2006.
Able UK had no previous convictions for environmental offences and had entered an early guilty plea to two offences under the Pollution Prevention and Control Regulations 2000, Hartlepool Magistrates' Court was told.
The firm was fined £22,000 and ordered to pay court costs of £4,522.
Andrew Dobson, Environment Agency officer, said: "The regulations specify strict controls on the disposal of hazardous waste, including asbestos, with the purpose of minimising the risk of harm to people and the environment.
"Failure to adhere to the requirements of these regulations potentially increased the risk of asbestos fibre release and I am pleased that the court has viewed this incident so seriously."
Able UK held the permit for disposing of the asbestos, though the site was being operated by Alab Environmental Services.
Ian Fenny, operations director of Alab, said "We obviously regret the circumstances which led to today's hearing and which resulted from a combination of unfortunate and unforeseeable mechanical problems and human error."
On 25 October, Able UK was granted conditional approval to dispose of four US Navy ships moored in the town.
Planning disputes and concerns from environmental campaigners delayed the project for several years.
The setbacks cause the firm to lose an order for nine further vessels, and it is now seeking to recoup legal costs from Hartlepool Council, which could be as high as £1m.