The fate of more than 400 acres of wetlands was left hanging in the balance of a disagreement between two federal agencies in August.

At issue is a permit needed by Newport News to construct a long-planned, but controversial, 1,500-acre reservoir on a tributary of the Pamunkey River. The city says the reservoir is essential to meet long-term water needs, but it would result in the largest loss of wetlands in the Bay watershed ever permitted under the Clean Water Act.

The Army Corps of Engineers announced in July that it would issue a permit for the project, but required extensive mitigation to make up for the loss of wetlands and other environmental impacts.

“The project’s purpose and need submitted by the City of Newport News is valid,” said Gen. Merdith W.B. Temple, commander of the Corps’ North Atlantic Division. He said the proposal was the least environmentally damaging practical alternative to meet the city’s water needs based upon current information.

But the decision was put on hold—at least temporarily—when the U.S. Fish and Wildlife Service, long a critic of the project, requested Aug. 11 that the decision be taken out of the Corps’ hands.

The service contends that provisions in the permit are not adequate to make up for impacts to an “aquatic resource of national importance.” The project would inundate 437 acres of wetlands, impact 21 miles of streams in the Cohoke Creek, a tributary of the Pamunkey River, and alter an additional 105 acres of downstream wetlands. The service said the project could affect several endangered species.

If the Interior Department Assistant Secretary for Fish and Wildlife and Parks agrees with the service’s objections, it would require that the issue be re-examined by the assistant secretary of the army for civil works. That is John Paul Woodley, who was Virginia secretary of natural resources under former Virginia Gov. Jim Gilmore.

The Interior Department has until early September to decide whether to back that request, and it was said to being bombarded by advocates on each side of the issue.

It was the latest round of controversy in the city’s decade-long quest to build a reservoir it says is essential. Critics claim it is unneeded, destroys wetlands, threatens fish, infringes on wild areas historically used by the Mattaponi and Pamunkey tribes, and would drown an estimated 100 archaeological sites.

Citing those and other issues, the Corps’ Norfolk District in 2001 rejected the city’s permit application, saying “it is not reasonable to build such an environmentally damaging project to satisfy a need that may never materialize.”

Then-Gov. Gilmore invoked the rarely used authority of a governor to challenge a decision of a district, and sent the matter to the Corps’ North Atlantic Division in New York.

Then, in 2003, the project again appeared dead when the Virginia Marine Resources Commission voted to deny a critical permit for a water intake on the Mattaponi River, which scientists said would be located in the most important shad spawning area in Virginia.

A year later, the VMRC reversed itself, against the recommendations of its own staff and scientists, and approved the permit after the city agreed not to pump water during the shad spawning season.

That left the Corps permit as the last remaining obstacle to the project. If the permit is ultimately issued, opponents have indicated they will likely challenge the project in court.