Officials with the California Regional Water Quality Control Board said the settlement with Northstar Mountain Properties is the largest ever proposed by the agency.

"It is a very serious matter," said Scott Ferguson, an enforcement chief with the board's Lahontan region.

The water board is expected to vote on the settlement in July.

The violations concern an alleged failure to adequately control storm water runoff at construction sites and failure to comply with provisions of a November 2006 cleanup and abatement order.

The problems occurred during construction of residential and commercial projects at the ski resort located between Lake Tahoe and Truckee, and resulted in sediment deposits into tributaries of Martis Creek, Ferguson said.

In addition to a $600,000 cash payment, the settlement would require the company to pay for environmental improvements, including a $2.1 million project to restore wetlands and habitat at the nearby Waddle Ranch, a 1,400-acre property east of the resort recently acquired for the public.

A Northstar official said the company agrees to the terms of the proposed settlement.

"This is a classic case of something positive coming from something negative," said Blake Riva, managing partner for East West Partners Tahoe, the principal partner of Northstar Mountain Properties.

"In 2006, we tried to undertake too much construction too fast," Riva told the Reno Gazette-Journal. "As a result, our storm water controls were inadequate and violations occurred."

The project at Waddle Ranch quickly will provide environmental improvements to Martis Creek that otherwise might have taken a decade or more to complete, if they occurred at all, said Michael Hogan of Integrated Environmental Restoration Services, a consultant hired by Northstar Mountain Properties to work on the project.

After the 2006 violations at Northstar, environmental upgrades were put in place that dramatically improved the situation there, Ferguson said.

"They turned around in 2007 and became a model for others to follow," Ferguson said.