Shipyard Commander Capt. John C. Bergner had called a temporary moratorium on the Environmental Protection Agency-approved burning March 21, after neighbors weighed in.
This week, Bergner still maintained the burning was safe. But he said he had yielded to neighbors' concerns about the cumulative impact of air pollution sources in the area.
The contaminated oil, removed from ship electrical systems, will be shipped off to a licensed incinerator elsewhere for disposal, Bergner said.
The Navy does plan to burn off contaminated oil already in the main boiler before returning it this week to normal natural gas operation.
Bergner promised to work with a committee of residents to make sure future Navy activities don't take them by surprise.
Burning polychlorinated biphenyls at concentrations greater than 50 parts per million requires approval from the EPA. The Navy oil has concentrations ranging from 57 to 137 parts per million, which the shipyard had planned to dilute with pure No. 2 fuel oil so that the material burned would have about 23 ppm.
Although the Navy said 99-plus percent of the PCBs would be burned up, Spofforth said environmentalists were concerned about formation of toxic dioxin.