India's Supreme Court has allowed the Exxon Valdez, the oil tanker involved in one of the worst U.S. oil spills, to be dismantled in western Gujarat state.

The court ruled Monday that the ship could anchor near Alang, the hub of India's shipbreaking industry.

The ship, now known as the Oriental Nicety, entered Indian waters in May. The Supreme Court had temporarily denied permission to its new owners to anchor the tanker at Alang while it examined a petition filed by an environmental activist saying the vessel contained toxic substances.

The ship is currently owned by Best Oasis, the Hong Kong-based subsidiary of an Indian shipbreaking firm.

The Supreme Court's order said the ship's owners must pay for the disposal of any toxic materials found in the ship during dismantling.

Environmental activist Gopal Krishna, who had petitioned the court, said he felt let down by the decision.

"It's disappointing that the toxic-laden vessel has been given entry into Indian waters. The ship poses a grave environmental threat because a variety of hazardous materials are on board," Krishna said.

On March 24, 1989, millions of gallons of crude oil spewed into Alaska's ecologically sensitive Prince William Sound when the Exxon Valdez dashed against rocks, coating the shoreline with petroleum sludge and killing hundreds of thousands of birds. The spill caused incalculable environmental damage and demolished the area's fishing industry.

India has one of the world's largest industries for breaking down old ships and oil tankers. Workers in Alang are expected to break up the ship and salvage metal and other parts that retain value.

However, environment activists say shipbreaking companies do not follow sufficient precautions, exposing workers and the environment to toxic materials.