A company that wants to build a new town on 2,250 acres of forest near the Potomac River in Maryland's Charles County has cleared the last major regulatory hurdle.

The Army Corps of Engineers issued a permit June 26 allowing the developer to disturb a small area of wetlands so the company can proceed with plans for a community that would have up to 12,000 residents and millions of square feet of commercial space.

Environmentalists, who have fought a long battle against the project, criticized the corps and vowed the battle is not over yet.

"It is important that everyone is clear that this isn't the end of this controversy. There are other avenues for us to pursue," said Joy Oakes, regional staff director for The Sierra Club. "The Corps has made a decision that is neither rational nor reasonable."

"They made a decision that perhaps will allow a 2,200-acre forest to be changed into a city the size of Annapolis without an environmental analysis of the far-reaching impacts of such a decision," she added.

But Col. Randall K. Inouye, commander of the Baltimore District of the Corps, said the wetlands won't be damaged enough to justify a full environmental impact statement.

"In the case of this permit application, the road crossings, stormwater management facilities and utility lines impact approximately three acres out of the total of 1,426 acres (of wetlands)," Inouye said.

It is the duty of the corps to protect tidal and nontidal waters and wetlands, and "the design for permitted activities here accomplishes that," he said.

The project's developer, Chicago-based Banyan Mortgage Investment Fund, combined five parcels in the woodlands across the Potomac from Virginia's Mason Neck State Park. In addition to town houses and single-family houses, Banyan wants to build 2.25 million square feet of commercial and retail space and a 200-acre golf course.

The centerpiece of Chapman's Landing is a 630-acre antebellum plantation. Nathaniel Chapman, a friend and business associate of George Mason and of George Washington's father, purchased the plantation in 1751.

The developers plan to leave the Chapman house and a swath of land down to the river untouched, while preserving a 300-foot buffer of forest between houses and the Potomac.

With the issuance of a permit by the Army engineers, the developers cleared the last major regulatory hurdle to develop the property. Some local permits are needed, but the project has the support of the county government.

State officials also have allowed the project to continue despite appeals from environmentalists that it be stopped.

The project has drawn opposition from a wide range of groups including environmental organizations, garden clubs, Charles County civic associations and sports fishermen's associations.

They have argued that the project will destroy one of the largest forested areas in the Washington area, damage wetlands, degrade the Potomac and create traffic congestion as many residents of the development commute to jobs in Washington.

Oakes said opponents were preparing for a legal challenge even before Inouye made his decision. She said they also are exploring some other ways of stopping the project that she would not disclose.