It was May of 1979 when the U.S. Army first informed Arnie Thomas that his backyard vegetable violated federal regulations.

"It was this guy Knapton from the Corps of Engineers," Thomas recalled recently. "He comes into my shop" -- Thomas is the proprietor of the Model Barber Shop, a two-chair establishment where a haircut cost $3.25 -- "and he says, 'Hey boy, you violated section so-and-so of the such-and-such act and you better get that fill out of there! Or else you got to get a government permit.' And I says, 'Okay, how long does this permit take?' And he says, 'It's usually about three months.'"

In the 22 months since that conversation, Arnie Thomas has received visits, letters, forms and telephone calls from three federal, one state and two local government agencies. He has been assigned two federal case numbers (one is NCSCO-RF [80-480-13/VF 8-/302-15]).

He has been warned that his backyard may make him liable for civil fines up to $25,000 and criminal penalties.

"It's so crazy it's loony" Thomas says. "All this garbage over an eightfoot strip of my own property. And I never did nothing on it without getting the government's permission first."

"It's not crazy," says Gary Knapton, an investigator in the Army Corps of Engineers' local field office.

"He filled in part of a protected wetland. If he can do it, then the neighbor fills in his eight foot, and the next one fills his eight foot, and in the end there's no wetland left."

Appleton is a pleasant and prosperous town of 60,000 in the east-central part of Wisconsin which, for the purposes of Washington readers, may be regarded as an American everytown. Appleton has paper mills and a university, dairy farmers and small businesses and, above all, it has the presence of federal regulation. The feds are everywhere in Appleton, actively involved in the life of this modest community to a degree that official Washington perhaps doesn't fully appreciate.

Among those people in Appleton who share Ronald Reagan'sd view of government regulation, Arnie Thomas' vegetable garden is considered one of the better horror stories about federal excess. But it is not the only one going around.

With only the slightest encouragement, people here will reel off a whole series of regulatory horror stories, including:

The $4,000 wheelchair lift at Lawrence University's Brokaw Hall that has been used once since it was installed, at government behest, in 1978.

The used boiler that Kimberly-Clark Corp. bought from a federal agency -- only to find that the unit doesn't come close to meeting federal environmental standards.

The dilapidated building on Appleton Street that cannot be torn down because government historical preservation experts think it may once have been the home of magician and escape artist Harry Houdini, Appleton's most illustrious native.

The 10 months that WROE-FM has been waiting for federal approval of a routine antenna repair -- a repair job that can be completed in one day.

But there are others in Appleton who talk about federal regulation as a series of success stories. The stories they tell deal with:

The waitresses at Frank and Pat's Pizza Parlor, who are finally being paid the minimum wage because the Labor Department sent an inspector.

The Shell station on Wisconisin Street that received gasoline during the oil shortages because of federal allocation rules.

The Fox River, once nothing but a smelly latrine for the 39 paper mills here, but now so clean that City Hall is planning a chain of parks along its banks.

Mainly, though, when lawyers and business people and government officials and other interested citizens of Appleton get to talking about federal regulation, they talk about how much of it there is. "The federal government is everywhere," says Bill Brehm, the city's planning director. "I mean, I don't even see how you can measure it! I mean, the enormity of the whole thing!"

One way to measure federal regulation is to keep watch on the Washington side -- tallying the number of pages in the Federal Register, for example. But you can also gauge the range of federal regulation from the receiving end, from a place like Appleton, where one can literally walk down the main street and find federal regulations at work behind every door.

The government, of course, tells business and industry how much pollution can be emitted and how much workers must be paid and how long pension records must be maintained and what kind of subcontractors must be hired.

But it also governs smaller matters in the life of Appleton, sometimes extraordinarily small: The wattage of the fluorescent lights in a dairy farmer's barn. The kind of plastic tops that seal a pharmacy's prescription bottles. The amount of table space per pupil in school lunchrooms. The width of the masking tape on a bag of powdered milk. How far the thermostat can be from a window in public buildings. How a college's admissions application should be worded. What the label on a wool shirt must say. How many applicants a bank must condsider before it fills a job. How much "entertainment" a radio station can broadcast in a week. How much fire retardant must be added to paper diapers. How often the grass must be mowed outside a meat-packing plant.

And the federal government tells citizens like Arnie Thomas how they can use eight-foot strips of their backyards.

Arnie Thomas and his wife, Ruth, live north of Appleton on Shawano Lake and, for the most part, they consider themselves supporters of government regulation.

"When the EPA [Environmental Protection Agency] said all the houses on the lake had to have a sewage system," Ruth Thomas notes, "we never signed those petitions to stop the project. You've got to have regulations and that. Otherwise, people go ape about what they put in the lake."

In a way, that sewage system was the source of Arnie Thomas' current woes. During its construction, the local sewer authority dumped excess fill dirt from the project in the swamp behind the Thomas home. Thomas leveled off the fill and planted grass, turning a rat-infested swamp into a small backyard.

Then Thomas decided to extend the yard out to the border of his property -- extra eight feet. Because he knew that government regulates land use, he asked his county zoning authority about his plans; the county said no government approval was needed for such a small project.

For $150, a trucker dumped 50 cubic yards of soil into the swamp. Thomas planted more grass seed, started a vegetable garden, and made plans to build a small garage on the plot. "On that back eight foot, I'm going to plant trees," he says. "Cherry and hazelnut. You get a real sweet nut from that hazel."

"We found out about it from the zoning commission," says Knapton, of the Army Corps of Engineers. "There' a law on this. Section 404 of the Federal Water Pollution Control Act. You can't discharge dredge or fill material on a wetland without a permit. The county may have told him different, but that's not the way the law works.

"We wanted him to take the whole thing out, but the sewer authority fill went in before the regulations took effect. . . . For the strip he filled, I made an inspection and told him to take it out or else apply for an after-the-fact permit."

"After I got that [permit] application," Thomas says, "I tell Ruth, I says, 'We're just going to have to go down and get ourselves a lawyer. . . . I mean, you're not going to believe this form they sent me!"

As a general rule, individuals and businesses in Appleton rarely see any of the people who regulate them. Even an installation as big as Kimberly-Clark's Lakeview Mill -- the world headquarters of Kleenex -- with 1,300 employes, sees an EPA inspector only about once per year, and OSHA (the Occupational Safety and Health Administration) comes less often than that.

A smaller plant or business can go years without having a single government inspector cross its threshold.

But the government's presence is still felt in the form of forms. There are forms on which the business answers questions about itself for such agencies as the Census Bureau or the Bureau of Labor Statistics. And there are forms for certifying that regulations are being followed, for agencies like OSHA and the Equal Employment Opportunity Commission. Those who fill out the forms are skeptical about what comes of their work. "There's no way the government could read all this stuff," people say.

People here also feel that government is oblivious to the amount of work its forms require. "Some days I spend most of my time on these forms," says Viona Klemp, who tabulates the payroll for Appleton's 600 municipal employes. "There's this one that asks for the sex of every employe. Now, how am I going to know that? Like a name like Laverne -- we have somebody named Laverne something -- how do I know what sex that is?"

Regulatees and regulators agree that completion and maintenance of forms has become an end in itself. When a Food and Drug Administration inspector checked the instrumentation at a paper plant here, he found all gauges properly calibrated, but he zapped the company anyway, the foreman recalls, for keeping its calibration logs in a central office rather than next to the machines.

"I don't know if that happened, but it could, I guess," says Walt Stauffacher, of the regional FDA office. "We have that on the checklist -- where the maintenance schedules are posted. We have to. It's in the law, promulgated by Congress. All we can do is carry out the law Congress gives us.

"The way you apply for a permit is all set by law," says Gary Knapton. "We sent Mr. Thomas the application form, and when he sent it in, we sent it out for public comment."

The form Arnie Thomas and his lawyer filled out, " ENG Form 4345," asked 55 questions about the "project area," which Thomas answered as best he could. He certified that the swamp behind his home had no evident historical value (the form suggested he look for arrowheads or burial mounds) and no "unique natural features." He said his new yard had caused no noise pollution and no emissions into the air. Asked about the effect on navigation, he noted that "there is no waterway on the project site."

The Corps of Engineers sent notice of the application to "interested parties" -- all except one were government agencies -- and responses began to trickle in. The federal Fish and Wildlife Service sent an inspector to the garden and then filed an objection to "this unauthorized fill activity." The EPA objected on grounds that "the cumulative effect of numerous small changes" can destroy protected resources.

Thomas' lawyer rebutted with letters from the three neighbors closest to the garden.

"The back part of his lot was previously filled with rubbage," wrote Don Juedes, one neighbor.

"It was a breeding ground for mosquitoes and rodents," wrote Les Foesch. "It is a residential lot," wrote Al Buhrandt. "I feel it will benefit all of the neighborhood."

"They say my yard is against the public interest," Thomas says. "But I think, you know, the local neighbors, the people around here, that's the public. They're with me."

"The neighbors' comments had some impact," says Gary Knapton, "but I don't think they would have as much impact as a federal agency that can take an overall look at a situation."

Some of the "victims" of federal regulation in Appleton -- the term favored by Don Utschig, of Utschig Construction -- aim their criticism of the regulatory system at the people who work in it. "A bunch of petty tyrants," Utschig says. But there are others here who see different reasons for the basic tension between regulator and regulatee.

"I can see a difference in perspective," says Marvin Wrolstadt, a vice president of Lawrence University. "We would like the government to recognize that there are certain things about a small private college that . . . don't fit a national standard. They feel, I guess, that the only way they can apply the law fairly is to treat everyone the same.

"We would like them to consider us from the standpoint of our particular environment, of Appleton, Wisconsin. I guess they think we are part of a national [education] system and they look at us that way."

It is not just the university, though, that recognizes the basic "difference in perspective" that causes strain between Washington's regulators and Appleton's citizens. Although Appleton generally is a conservative city -- along with Houdini it claims the late Sen. Joseph R. McCarthy as a native son -- people here seem more willing than Ronald Reagan and his advisers to recognize that there are two valid sides to almost every argument about government regulations.

"See, for us," says Jim Bethke, general manager of WSVMS-AM, "we're just a little radio station out here on the lake with 12 employes. To the FCC, we're part of the whole broadcast network, or grid, or whatever, and they've got to handle us just like a station in Milwaukee, or wherever. So I just say sometimes that must be why they have a lot of these rules that don't always make much sense for us."

On March 4, 1981, Arnie Thomas received a registered letter from the Corps of Engineers. His new backyard, the corps declared, "is not in the best interest of the public." Thomas could leave the first 40.71 feet of his yard (the sewage authority's contribution) in place, but the remaining eight feet had to go. The letter threathened "potential imprisonment, and monetary fines" if Thomas did not comply.

"This project cannot be permitted under the law," explains Don Kohler, a staff ecologist in the corps' St. Paul District, where the case was handled. "There's no compelling reason for a person to have eight more feet of yard at the expense of the nation's waters. . . . You can't let that kind of precedent be established."

"A wetland is what a lot of people would call a swamp," says Gary Knapton. "It's the marshy area adjacent to a river or lake, and it serves an essential purpose. It cleans the water -- filters out the nitrates, the pollutants that are going to show up in the lake if they aren't removed. Really, the place you need to preserve the wetland most is in a residential area. If you destroy it there, well, the lake has no protection."

"When you read them letters, it makes you feel like a creep," Thomas says. "They say you destroyed this and you destroyed that and all this garbage. And they say they're going to turn me over to a U.S. attorney if I don't take [the fill]- out. They just want to scare the living hell right out of you, is what they want to do."

Thomas declares that he has no intention of taking out the fill. "If I had snuck this in the middle of the night, yeah. I could see their point," he says. "But we went down and asked the county in good faith.

"I'm just setting here and planting my seeds. If they want to turn me over, they can go ahead. Okay, we'll see if some judge is going to go after eight lousy feet of soil that I had government permission to put in. I mean, there's got to be some little bit of human compassion in this system somewhere."