Plea negotiations later this month might resolve federal criminal charges filed against Middleburg businessman James J. Wilson and two companies, closing a chapter on a significant environmental saga and eliminating certain legal objections to Wilson's attempts to establish a racetrack in northwestern Prince William County.

Wilson, his real estate company, Interstate General Co., and its subsidiary, St. Charles Associates, have since 1995 faced charges of illegally filling wetlands while building a housing development in Charles County, Md. Wilson and the two companies were convicted of four felony counts each in 1996, but the decision was overturned in 1997.

In an attempt to have the charges against Wilson and St. Charles Associates dropped, Interstate General plans to plead guilty at an Aug. 26 proceeding in U.S. District Court, said Alfred Moses, the attorney for Wilson and Interstate General. If the negotiations go as planned, Wilson's path to building a half-mile "European-style" turf track north of Haymarket will be made smoother because he will no longer face questions about his criminal status. The Virginia Racing Commission cannot issue racetrack licenses to felons.

But a clean record alone doesn't guarantee getting permission to build a track. Timing and the local mood in Prince William are working against Wilson and his family, who are spearheading the effort through Equus Gaming Co. and Virginia Turf Club Inc. Equus is majority owned by the Wilson family. Wilson resigned as chairman of the company in 1996.

Virginia Racing Commission Chairwoman Robin Williams said that because she has not yet received an application from the group, she doesn't know how largely Wilson figures in the proposal.

"We have to see the application and see who's applying. . . . I'm sure they're well aware of the language in the code of Virginia, and I don't think they would apply if they didn't feel they could pass that test," Williams said.

Several residents and local officials, including Supervisor Edgar S. Wilbourn III (R-Gainesville), strenuously object to the Wilson track because it would bring a simulcast betting parlor to the county.

Colonial Downs Inc., which owns the only racetrack in Virginia, is also trying to build a track in Prince William--specifically in the Town of Dumfries--before a five-year county referendum allowing racetracks and betting expires Nov. 30.

In 1996, Wilson and his two companies were each convicted of four felony counts for destroying about 50 acres of federally protected wetlands in a planned St. Charles community. In what was considered a record punishment for such a violation, Interstate General and St. Charles Associates were fined a total of $3 million. Wilson was fined $1 million and sentenced to 21 months in jail.

Wilson and the companies appealed. And in late 1997, the 4th Circuit Court of Appeals decided in their favor, ruling that specific parcels of land affected by the developer did not fall under federal regulation. Federal prosecutors vowed to try the case again.

This month's proceeding, which was originally scheduled for today, was delayed so both sides could work out final details, said U.S. Assistant Attorney James C. Howard.

Moses, Wilson's attorney, said Interstate General would likely plead guilty to fewer than the four felony counts. According to documents filed with the Securities and Exchange Commission in May, the company hoped to settle the case by pleading guilty to one felony count and agreeing to monetary penalties.

Wilson could not be reached for comment yesterday. His son, Brian Wilson, spokesman for the Virginia Turf Club, said he couldn't comment on his father's case or its potential fallout because "I don't know myself."