The U.S. Department of the Interior has warned developers that restricting public access to Wheatlands Lake in Frederick County, Va., would violate an agreement that poured $700,000 into improving the 132-acre fishing lake.

While the department found that developers who plan to build 1,800 houses surrounding the lake have not violated the grant agreement so far, it said plans to use a state access road for both the lake and private houses raise "several serious concerns."

"In effect, we're watching, and we are not going to allow the recreational potential of that site to be defeated," said George Berklacy, director of public affairs for the National Park Service.

Situated 75 miles from Washington, the lake has been called "the best-kept secret in Frederick County" since it was opened to public fishing in January.

The lake was donated to the state for public use by its original developers with the assurance that only 300 houses would be built around it.

When those developers sold the site last year to Intergate, a Loudoun County company, the new owner proposed the 1,800-house development.

Critics said the dense development would turn the public lake into a private pond for the estimated 7,000 new residents.

Any change that would make the lake less accessible to the public as a recreation site is subject to review because Virginia received a federal grant to renovate the lake's dam and to make other improvements there.

In February, the Commonwealth Coalition, a citizens group leading opposition to the development, petitioned Interior Secretary Manuel Lujan Jr. to investigate at Wheatlands Lake, saying the development plans would convert the lake from its public purposes.

In a letter to Rep. Peter H. Kostmayer (D-Pa.), who is chairman of the investigations subcommittee of the House Committee on the Interior, Lujan said a National Park Service report on the controversy "identifies several serious concerns about possible future conversions {to private use} as a result of the proposed use by the developer of the access road to the project."

Officials of Intergate could not be reached for comment yesterday.

"We've gone as far as we can at this time," said Berklacy of the Park Service.

"They're on notice."