The conclusion of lengthy federal wetlands litigation frees Interstate General Co. to develop a large shopping center near the regional shopping mall in Waldorf, its executives said this week.

Interstate General, which built the planned community of St. Charles that dominates Waldorf, also will move to develop a site featuring nine restaurants near the St. Charles Towne Center Mall.

The land involved in both projects had been subject to forfeiture to the federal government after Interstate General and its founder, James J. Wilson, were convicted in 1996 under criminal statutes that bar the filling of wetlands.

Wilson and the company won an appeal before the 4th U.S. Circuit Court of Appeals, which returned the case to U.S. District Court in Greenbelt for a possible retrial.

Instead, federal prosecutors and Interstate General reached a settlement that requires the company to pay $1.5 million in fines and to restore and protect 155 acres of wetlands and buffer property.

Federal prosecutors also dropped charges against Wilson, 66, who had been fined $1 million and sentenced to 21 months in prison after the original trial. He remained free as his appeal was heard.

U.S. District Judge Alexander Williams Jr. approved the plea agreement and the dismissal of charges last week in Greenbelt.

U.S. Attorney Lynne A. Battaglia said the fine, along with the wetlands protection requirement, "highlights the very serious nature of the Clean Water Act violations committed by IGC."

Interstate General was convicted of destroying about 50 acres of wetlands by filling them as it built the Dorchester neighborhood between 1989 and 1993. Wetlands act as natural filters that prevent sediment and other pollution from reaching rivers, streams and bays.

In the settlement, Interstate General agreed that one wetland it filled had a stream running through it that connected with the Port Tobacco River. Prosecutors said that connection to the river means the wetland is subject to federal regulation.

Wilson said federal officials had no right to regulate wetlands such as those by St. Charles, which are remote from rivers.

"The case is dismissed on the basis that they had no right to bring the charges," Wilson said. "It's totally finished. Forever."

He estimated the value of the land that had been held vacant in case of forfeiture to be more than $20 million.

The shopping center, comprising some 250,000 to 300,000 square feet, will be built on an 80-acre parcel along Western Parkway, across from the Dorchester neighborhood of St. Charles, Wilson said.

He said it would include a grocery store and services such as barbershops so residents of the Westlake area would not have to venture out to the commercial strip on U.S. Route 301 to fulfill day-to-day needs.

The restaurants are to be built by the lake that sits near the shopping mall, also along Western Parkway, Wilson said.

Wilson said that Interstate General's outside directors agreed to the settlement to avoid an expensive and lengthy retrial and to free the land for development.

"That agreement is nothing but extortion," Wilson said.

The litigation did not affect development already completed in St. Charles, which houses more than 32,000 people, or roughly one in four residents of Charles County.