Just north of the Bay Bridge off the shoreline of Kent Island, beneath the choppy waters of the Chesapeake Bay, lies an environmental battleground.

Known as Site 104, the area is where the Maryland Port Administration and the U.S. Army Corps of Engineers plan to dispose of 18 million cubic yards of soil dredged from the bottom of the approach channels to the Baltimore Harbor.

The administration of Gov. Parris N. Glendening (D) supports the idea. But this spring, five county governments, a host of environmental groups and many residents expressed opposition to the Site 104 plan in public and legislative hearings. Opponents say dumping dredge material would harm water quality and threaten nearby clam and oyster beds.

Last week, they were joined by the U.S. Fish and Wildlife Service. In a strongly worded letter, the service declared that a draft environmental impact statement on the Site 104 plan was filled with "errors, omissions, inconsistencies, and apparent bias" that had blocked consideration of "practical and environmentally preferable alternatives."

For Glendening, the opposition of a federal agency to Site 104 creates an awkward situation, complicating both the port's efforts to keep Baltimore's shipping channels navigable at low cost and his own efforts to build a record of environmental activism.

The Fish and Wildlife letter is a "major defeat for the port administration and the corps," said Patrick Welsh, a leader of Citizens Against Open Bay Dumping, a Kent Island group formed a year ago in opposition to the Site 104 proposal. "We're just business people, not scientists, and they nailed just about everything that we foresaw as a problem."

Glendening's office declined to comment on the letter. But Frank Hamons, the manager of harbor development for the port administration, defended the proposal. "We think we made a very lengthy, very intensive, good-faith effort to find the best location for placement of dredge material," he said.

The debate about what to do with dredge spoils revolves around economics and environmental science. Dredging is necessary to maintain the 45- to 50-foot-deep channels required by modern tanker ships. Without such channels, state officials say, international cargo companies will take their business to other East Coast ports, and Baltimore will lose jobs.

Dumping the tons of sandy soil in open water, as is envisioned in the Site 104 plan, is one of the least expensive methods of getting rid of it, according to Hamons. If the dredge material is simply dropped out of the bottom of a barge, it only costs the state about $2.50 per cubic yard of sludge. If the dredge material is funneled through a tube into deep water, the cost could rise as high as $5 per cubic yard, he said.

The approach favored by environmental groups and the Fish and Wildlife Service, known as "beneficial use" disposal, is more expensive. At Poplar Island in the St. Michael's area off the bay, the Army Corps of Engineers is filling in a vast stone dike with dredge material to rebuild an island that has been sinking into the water for decades. The result will be a new wildlife habitat complete with wetlands.

"But the disposal costs at Poplar Island are much higher, about $11 per cubic yard," Hamons said. "That's why we think we need a variety of disposal options."

Opponents say the port's accounting is shortsighted.

"The costs of overboard disposal don't include the cost of the additional nutrients that are going to be released into the bay," said Mike Hirshfield, vice president for resource protection for the Chesapeake Bay Foundation.

Nutrients are organic material, primarily nitrogen compounds, in the dredge material that escape when the soil is dumped. The Fish and Wildlife Service concluded that the Site 104 plan would put 1.8 million pounds of nitrogen into the bay and set off a damaging chain reaction.

"It would lead to algae blooms which limit the penetration of sunlight into the water," said John Wolflin, a Fish and Wildlife field supervisor. "That would have an impact on submerged aquatic vegetation. When aquatic vegetation dies, oxygen is depleted from the water, killing off plankton and algae. Without oxygen in the water, fish and crabs have difficulty breathing."

Port officials dispute that and say they will give a written response to the Army Corps of Engineers by the end of this month.

The Corps of Engineers is scheduled to issue a final environmental impact statement in the late fall. If it recommends going ahead with the Site 104 disposal plan, the Fish and Wildlife Service says it will refer the issue to the President's Council on Environmental Quality.

"We believe the issues raised in our comments are of national importance based on the expected adverse impact to the Chesapeake Bay," the agency said in its letter.

CAPTION: SITE 104: Proposed dumping site for dredge spoils (This graphic was not available)