The nation's largest ski resort is up to its neck in legal troubles with the federal government for carving a dirt logging road across a bog.

Vail Resorts has said it was an honest mistake. And for nearly a year, until the Army Corps of Engineers realized what the resort had done, no one even noticed that the temporary road had been built in the wrong spot and was spilling sediment into a protected half-acre wetlands area.

Now, the resort could be looking at millions of dollars in fines, after having spent years fending off environmentalists over its plans to open new ski trails in the backcountry.

If the Environmental Protection Agency determines a violation of the Clean Water Act occurred, the resort could be hit with civil fines of up to $27,500 a day since the road was built.

In the meantime, the Army Corps of Engineers has closed the road, leaving the resort with more than a million board-feet of cut timber, and no way to remove it.

And it is a road Vail Resorts never wanted to build. The U.S. Forest Service had ordered Vail to build the road so logging trucks could remove the timber without rumbling through the tourist-clogged village.

Tom Allender, the resort's planning director, said he got confused when building the road because surveyors had left three proposed routes marked with ribbons through the wilderness.

But that is no defense. "If fill material is discharged into the waters of the United States without a permit, it is a violation. It's worse if they knew they were breaking the law, but whether it was unintentional doesn't change anything," said Steve Ireland of the EPA.

The Clean Water Act requires permits for construction through wetlands to protect migratory birds and other fauna.

The road is another chapter in the decades-long, controversial effort by Vail Resorts to complete a $14 million, 885-acre expansion project that will be powder heaven for intermediate skiers.

Environmentalists recently lost a legal challenge to the project, arguing unsuccessfully that the Forest Service did not adequately assess the effect on wildlife, specifically the lynx.

In addition to any fine, Vail Resorts will have to pay to fix the damage to the wetlands.

As for the cut timber, the wood may have to be burned on site, eliminating the need for the logging road. The trucks could be brought through town, though that might trigger another lawsuit.

Or, Vail could be required to build a new road, though federal wildlife experts oppose that because it would cause even more environmental damage.

Meanwhile, Vail is pursuing the expansion, hoping for completion by the 2000-2001 ski season.

"The thing that pains me the most is I think that we have done a spectacular job" in the expansion area," Allender said. "But it doesn't matter. We're never going to get an ounce of credit."

CAPTION: A crew works at Vail Resorts, where an incorrectly located road could cost the resort up to $27,500 a day in fines.