The banks of the Wild Harbor River are posted with red signs, "Closed to Shellfishing." Falmouth's shellfish warden, George Souza, says, "After 10 years there is something still going wrong at Wild Harbor."

Early on Sept. 16, 1969, the barge Florida, loaded with 16,625 barrels of No. 2 heating oil, ran onto the shoals off Fassett Point. Although it was a small spill by industry standards, oil scattered over more than 1,000 ocean acres, and covered four miles of Cape Cod coastline. For days, the remains of fouled birds, lobsters, fish and a variety of marine life were carried ashore by the tides.

And though most visible signs of the spill had vanished within a year, everyone agrees its impact was serious.

Is what happened here just an isolated -- and in the long run unimportant -- event, or is it an example of the danger the nation faces if it drills for oil in the ocean off Cape Cod?

This question is at the center of a classic environmental court battle over the government's plans to lease sites in the Georges Bank fishing grounds for oil drilling. Georges Bank is 1,140 miles square, and lies 90 miles off Cape Cod. Unless the opponents, including the state of Massachusetts, the Conservation Law Foundation and fishermen's associations, win a delay in federal court, on Tuesday the Interior Department will lease 116 tracts covering more than 60,000 acres on Georges Bank to the oil industry.

Warden Souza, a former commercial fisherman and strawberry farmer who grew up on Cade Cod, is worried. "I've seen what local spills can do," he says, "and with Georges Bank we're talking about a fish kill that hasn't taken place yet."

Georges Bank has been fished commercially for nearly three centuries.It is the North Atlantic's richest protein factory, and the source of 14 percent of the world's annual fishing harvest, giving up million of tons of cod, haddock, hake and herring. More important, it also is a prime breeding ground for these fish.

Because of this, the Commerce Department's National Oceanic and Atmospheric Administration earlier this year asked Interior Secretary Cecil D. Andrus to designate Georges Bank a marine sancturary, a move that would have limited oil drilling. "Clearly the people who want the sanctuary want fish stocks preserved at the expense of oil and gas," said NOAA's Brian Gorman.

Secretary Andrus, who has won generally high marks from environmentalists, denied the request.

For years the major oil companies such as Exxon, Shell, Gulf, Conoco and Chevron USA have anxiously eyed drilling the Atlantic offshore frontier, including the Georges Bank. The reason is the possibility of major oil and gas finds near the energy-hungry Northeast. The U.S. Geological Survey estimates that the prolific fishing grounds overlie 123 million barrels of oil and 0.87 trillion cubic feet of natural gas.

Andrus says, "Georges Bank may contain no gas or oil, or it may prove to be another Prudhoe Bay or North Sea." As for the possibilities of a spill, the former Idaho governor defends his decision: "Our record shows a consistent decrease in the number of accidents and the amount of oil spilled."

The record he cites is impressive. While producing 292 million barrels from offshore wells last year, the oil industry had only two spills or more than 50 barrels, and the larger was 135 barrels, according to Andrus.

Conservation Law Foundation attorney Sarah Bates says Interior assumes that, at the least, one large spill of 37,500 barrels could occur. Worse, she adds, the department's environmental impact statement say that "a spill which contaminates the bottom could remove from productivity for several years spawning and commercial fishing grounds."

Dr. Howard Saunders, a Woods Hole Oceanographic Institute biologist, says, "The thing that frightens me most is that no matter how careful the industry is, there will be spillage, and oil slicks will be common on Georges Bank."

A recognized authority on marine animals that live near the ocean's bottom, Saunders has spent years studying the impact of the barge spill that took place within sight of Woods Hole.

Saunders says even a small spill would have have an impact on life at the bottom of Georges Bank. Further, he says, because of the bank's circulatory current system, eggs and larvae would be exposed to hydrocarbon poisons.

"We pose a real danger having a persistent oil slick in such sensitive areas, and still another problem is that oil getting into the bottom sediment can contaminate the food chain," Saunders says.

Saunders also counters arguments by Interior and oilmen that extensive drilling in the Gulf of Mexico has caused little environmental damage. "The concentration of hydrocarbons at the bottom [of the gulf] are higher than anywhere else," Saunders says. "The persistence of toxicity happens once the oil is buried." As a result of that, Saunders says, "opportunistic" species, animals that flourish when the environment is abnormal, have begun to dominate some gulf waters.

"The real problem is constant low-level pollution," says the Woods Hole biologist.

An American Petroleum Institute environmental specialist, Jack Gould, says "safeguards are built into all drilling operations" to prevent the events Saunders describes. Like Andrus, Gould says the industry has an "impressive safety record."

As for the Wild River Harbor spill, API says that it was " a special situation" and that an offshore spill of crude oil -- not refined product -- would not be as toxic.