While cities such as this lovely hilside-lakeside port town struggle to stave off new competing suburban malls and revive their own downtown business districts, the Carter administration is moving rapidly toward the United States' first national policy on regional shopping centers.

The new federal policy, being thrashed out in cabinet secretary Jack Watson's Interagency Coordinating Committee, would flatly commit the federal government to discourage proposed regional malls when it's clearly shown they would undermine city business districts and seriously increase gasoline demand. The policy, which may be announced this month, could have a drastic effect on future shopping, transportation and land use patterns.

Washington lacks power, of course, to prescribe exact land uses. But most regional malls don't just happen. Usually they're possible only because of federally financed interstate roads, beltways and highway interchanges, and/or by huge federal outlays for water-and sewer-line extensions.

Medium-sized cities like Duluth are particularly in danger of finding their "downtowns doomed" by construction of competitive regional malls, says Robert Embry, the assistant housing and urban development secretary who, wrote the first draft of the regional mall policy for the White House.

Then, he added, the cities "come to us with a request for millions of dollars to rebuild themselves and get back to where they were before the shopping center was constructed."

Regional malls, Embry said, frequently take away retail jobs from public transit-dependent poor people in the cities and place them in inaccessible suburban locations unserved by public transit. City tax bases are drained, depriving cities -- including their poor -- of needed services. Other results include urban sprawl and the loss of needed farm and recreation lands.

That doesn't mean all regional malls are bad, Embry notes. Some are needed to serve expanding areas. But the new policy would require all federal agencies, even those whose past agendas never included urban issues, to review actions that foster big, outlying, regional malls.

On its face, the mall policy smacks of strong federal interventionism. Albert Sussman, executive vice president of the International Council of Shopping Centers, says federal offices are trying "to play God" and "determine by edict where people should live, where they should shop, and what their lifestyles and living patterns ought to be.

Not so, says Dan Sweat, president of the International Downtown Executives Association. It's simple economy, as Sweat sees it. He said Washington has been "robbing Peter to pay Paul" by providing multiple subsidies for regional malls "in the boondocks" to the "absolute detriment of center cities the government was also trying to help."

Watson, concerned that the federal hand might seem too heavy, says his Interagency Coordinating Committee will usually wait for pleas for help from city officials before stepping in to block federal support. But he acknowledges that a national mall policy will dramatically increase cities' consciousness about malls' adverse impacts -- and thus the number of cases.

The case of Duluth's center-city Harbor Square development -- supported by Mayor Robert Beaudin, the city business establishment and Contax, an active citizens' group for the downtown -- seems overwhelming. A large regional mall, together with thousands of parking spaces, would be constructed on air rights over a planned (and already funded) segment of Interstate 35, the region's major highway. Harbor Square's front door would face Superior Street, Duluth's main shopping street (where about 550 buses pass daily).

On its "back side" Harbor Square would be linked, by one of the many all-weather skyways that now honeycomb downtown Duluth, with the impressive Arena-Auditorium complex on the Lake Superior harbor. It would represent a capstone to several years' downtown development.

Harbor Square's $27.5 million of retail space would be financed by retailers and developers; the cost of the platform, public spaces and parking would be shared by the developers, the city, the state highway department and a federal urban development action grant of $9 million.

By contrast, the competing site, in suburban Hermantown, would require $30 million in public outlays for road improvements and be built atop a marshy area (literally a peat bog) that's already produced, through overbuilding, four "hundred-year floods" since 1971. The site would trigger shoppers' burning of 857,000 extra gallons of gasoline yearly and probably cripple downtown Duluth's comeback.

Why isn't Harbor Square proceeding? Duluth Downtown Development Corp. president Dennis Dunne provides a concise answer: "Our problem is Sears Roebuck. Thus far they have been unwilling to locate here even though we have the interest of fashion-oriented retailers such as Dayton's and Donaldson's."

The intransigence of big retailers may melt in the face of a coherent national regional mall policy that denies the familiar federal subsidies for suburban malls.

The city-versus-suburb mall battle continues to rage nationally in smaller cities. It's even found in such big metropolitan areas as the New Jersey Meadowlands, where the New York Regional Plan Association has taken a strong stand against two huge regional malls that would gut the retail revival of nearby Newark, Jersey City and Paterson.

Rather than being too assertive, the problem with a national regional mall policy may be that it's too long overdue.