The restoration of an abandoned Navy communications station on Skaggs Island into marshlands could begin next year after being held up by a long impasse between two federal agencies.

Skaggs Island, a network of wetlands and hay pastures at the southern end of Sonoma County on San Pablo Bay, includes a Navy communications base that closed in 1993.

Historically, the 4,400-acre island was part of one of the most extensive wetlands networks on the Pacific Coast, serving as a fish hatchery for salmon, a rest stop for migrating shorebirds and home to a variety of other wildlife. But to create farmland, the island was drained, diked and converted to hayfields, displacing wildlife.

Now it is eyed as the core of a massive San Pablo Bay wetlands restoration effort supported by local, state and federal agencies as well as private conservation groups. The program aims to reclaim half of the 55,000 acres of former tidal marsh.

"Skaggs Island is dead center in the heart of the Sonoma Creek and Napa River watersheds and is the keystone piece of the wetlands restoration," said Marc Holmes, a bay lands restoration manager with the Novato-based Bay Institute who has been working to restore Skaggs Island since before the Navy station closed. "To not secure it would be disastrous for the restoration effort."

County Supervisor Tim Smith, who has lobbied for the project for years, is hopeful the island will be restored.

"If we are aggressive, this could be the largest wetlands restoration project west of the Mississippi River," Smith said. "Skaggs Island will be a real positive step toward restoring thousands of acres of Bay Area wetlands."

The Navy owns 3,300 acres of Skaggs Island, although it heavily used only 65 acres. The remaining 1,100 acres of the island are a privately owned hay farm, which preservationists also hope to acquire and eventually restore.

The state has designated $8 million to demolish Navy buildings on the site, including homes, a bowling alley and a movie theater.

The proposed restoration of the Navy property has broad support, but the sticking point has been who would be responsible for any contamination discovered on the site. So far, studies have found no significant contamination and the site is expected to be clean, state and federal officials said.

The initial plan called for transferring the Navy land to the U.S. Fish and Wildlife Service, which runs the adjacent 13,000-acre San Pablo Bay National Wildlife Refuge.

The Navy maintained that if the property were transferred to a different federal agency such as the wildlife service, federal law required the wildlife service to assume responsibility for any environmental cleanup in the future.

But the Fish and Wildlife Service was unwilling to take the property under those conditions, which put the restoration project in limbo for years.

Under a new plan being negotiated by state and federal agencies, the Navy would give its land to the California Department of Fish and Game. Since that is not a federal agency, the Navy would retain responsibility for any contamination discovered.

"A lot of people have been working on this a very long time," said Christy Smith, who manages the San Pablo Bay Wildlife Refuge. "Our hope is we can transfer this to the state Department of Fish and Game and the Fish and Wildlife Service would manage it."

The idea needs approval from the state, the Navy and the Fish and Wildlife Service to be implemented. Those negotiations are under way.

Another complication is the adjacent hay farm on the island, owned by Jim Haire. When the Navy acquired the property more than 50 years ago, it agreed to manage a flood-control network of dikes and pumps to protect Haire's farm and that obligation remains for the new property owner, said Carl Wilcox, a habitat conservation manager with the state Department of Fish and Game.

The state wants the Fish and Wildlife Service to be responsible for protecting the adjacent farm, Wilcox said.

"Everybody is still committed to seeing it (the Navy property) transferred," he said. "It's just how do we work around this long-term liability? Our concern is that the Fish and Wildlife Service would assume the responsibilities that come with management, which would allow Mr. Haire to continue farming."

The string of bureaucratic holdups on the long-sought project caught the attention of Rep. Lynn Woolsey, D-Petaluma, who wrote to the Navy in March encouraging it to give the land to the state.

"Members of the Bay Area congressional delegation have long supported the inclusion of Skaggs Island in the San Pablo Bay National Wildlife Refuge," Woolsey wrote in her letter to Hansford Johnson, assistant secretary for the Navy's Installations and Environment Department.

Lee Saunders, a Navy communications officer based in San Diego, said the Navy is working toward that end, but he could not give a date on which the land would be handed over.

Smith, who helped secure the state funding to demolish the Navy buildings, remains optimistic about the project. "If this comes to fruition, and I believe it will, we're all going to be very happy."