ANNAPOLIS, JAN. 2 -- A proposal that could have prevented Maryland Gov. William Donald Schaefer from building on Eastern Shore land he owns was killed tonight by a gubernatorial panel as one of a series of steps to make proposed development controls more palatable to landowners and county officials.

Schaefer had scheduled an appearance at the Governor's Commission on Growth in the Chesapeake Bay Region to urge members to "be bold," resolve festering differences and move forward this year with recommendations to manage a bay-area population boom expected over the next 20 years.

But, citing inquiries by reporters, Schaefer first discussed his purchase last September of a 2.7-acre lot near Ocean City and disavowed any role in the commission's decision tonight to exempt the coastal area from proposed limits on construction within the 100-year flood plain. The flood plain, as defined by the federal government, is an area that would be inundated by storms of a magnitude anticipated once a century.

Schaefer's $95,000 parcel in the Saddle Creek subdivision of Worcester County falls within that ecologically sensitive region, according to a county official.

"I bought the lot and paid full price, and I want any member of the commission to tell in open session," whether they were contacted by the governor, Schaefer said. No one replied.

"I was willing to take my lumps if I was dumb enough" to buy land that was unusable, Schaefer said, adding in a later interview that reporters' questions about his property -- as opposed to the substance of the growth proposals -- "makes me want to puke." He said the lot was "a retirement lot . . . an investment lot . . . . I could grow rice on it."

Schaefer's administration has been criticized by Eastern Shore landowner groups that feel new state environmental restrictions would deprive them of their property rights.

Commission staff members said Worcester County was originally included in the flood plain restrictions on the advice of local environmentalists, who have been increasingly concerned about water quality in the Ocean City area's tidal bays. They said they decided to change the recommendation after looking at federal maps and realizing it would have stopped development around Ocean City and other parts of the coastal county.

At Schaefer's urging, the commission worked through several other issues as well, putting the final touches on a plan that tries to funnel growth into already developed areas, severely limit it elsewhere, and reduce the need for new roads, sewers and schools. Final work on the plan is expected next week; the recommendations will then go to Schaefer for possible submission to the General Assembly.

"Any change in the status quo causes controversy," Schaefer said. "If it's right, do it . . . . This is the year of decision."

His appearance came two weeks after commission members voted to shelve the initiative unless the governor committed millions of dollars in new sewer and road financing to county governments, a potentially harmful position in tight fiscal times.

The commission relaxed that stance tonight, adopting instead language acknowledging that the counties need help in financing public works, but that funding won't actually be required until regulations take effect in 1994. In the meantime, Schaefer said he would provide almost $4 million in local government grants to plan for the new law.

The group also voted to ease proposed restrictions in rural counties and those of modest growth, an effort to allay fears of local officials that the state was infringing on their traditional authority over land use and zoning issues. The change, however, left environmentalists on the panel complaining about the "slippery slope" of making compromises now, when more will likely be demanded by legislators.