In 1980, the real estate arm of Signal Oil Co. revealed its grand vision for Bolsa Chica, a huge salt marsh in Huntington Beach that was dotted with nodding oil rigs and polluted by urban runoff.

Landowner Signal Landmark wanted to build 5,700 homes on 620 acres and commercial development on 252 acres. Private and public marinas with canals leading to a new harbor entrance would round out the project.

Three decades later, the herons, stilts, egrets, brown pelicans, peregrine falcons, snails, stingrays, marsh grass and mudflats are still there. And work is beginning on a $65-million project to return the Bolsa Chica Ecological Reserve to its pre-20th century condition - the largest restoration project of its type in Southern California.

It's a heady moment for those who fought an epic battle to preserve the wetland. After almost 30 years of lawsuits, compromises and dogged grass-roots activism, all that remains of Signal's master plan is 379 homes to be built on 77 acres, far from the water. Most of the company's vast holding - roughly 1,200 acres of marshland - is now set aside as open space and wildlife habitat.

"Over the years, we printed a lot of 'Save Bolsa Chica' bumper stickers. Now, we can say we saved Bolsa Chica," Herb Chatterton, the first president of Amigos de Bolsa Chica, said during a ceremony last week that marked the beginning of the restoration.

The Bolsa Chica Ecological Reserve is off Pacific Coast Highway between Warner and Seapoint avenues in Huntington Beach. A short walk down a hiking trail or wooden causeway across the first lagoon quickly takes visitors away from the traffic noise on PCH.

Brown pelicans scoop prey from its waters. Egrets stand erect along the muddy shoreline, and hawks live in the tall eucalyptus. Sea bass, halibut and rays can be seen in the lagoons. All told, there are about 200 bird species in the reserve, including several endangered ones.

Before the controversy, builders and the public generally thought of wetlands such as Bolsa Chica as coastal swamps that were better off developed than left as open space.

"Wetlands were viewed as good places for marinas," said Shirley Dettloff, a former Huntington Beach mayor and founding member of Amigos de Bolsa Chica. "The greatest change has been the public's growing appreciation of these places."

The first phase of the restoration involves 584 acres on the southwest side. Millions of cubic yards of sand and sediment will be dredged to create a contoured tidal basin and new inlet through which ocean water can flow in and out of the wetland. Duck hunters dammed the original inlet in 1899, disrupting the tidal action that allows marine life into the marsh and flushes out decaying matter.

Restoration workers also will remove 64 defunct oil wells and 98,000 feet of oil pipeline. Other wells, however, will continue to operate along the periphery of the reserve.

As part of the work, 19 acres of dunes will be rehabilitated with native plants, and 20 acres of nesting area will be created for migratory and marine birds.

Cleanup crews will remove deposits of oil, heavy metals, PCBs (polychlorinated biphenyls) and mercury that have built up over the decades from oil drilling and urban runoff. A network of levees, drains and pumps will be built to protect bordering homes from high tides and increased water flows.

The 584-acre restoration - to be completed by early 2008 - is proceeding under the direction of a host of state and federal agencies - some that originally supported development of Bolsa Chica. Repairing the entire wetland will occur over 25 years.

Environmentalists say the restoration project is crucial for the state, which has lost about 95% of its coastal wetlands due to pollution, agriculture and encroaching development.

The battle over Bolsa Chica helped educate the public about the importance of coastal marshes to endangered species, flood control, reducing water pollution and checking erosion. Court cases from the struggle set tough limits for development in wetlands.

"What is really important about Bolsa Chica is that before the wetland was acquired, coastal land was considered too expensive to buy for preservation," said Marcia Hanscom, chairwoman of the Sierra Club's California wetlands committee. "The Bolsa Chica activists refused to take no for answer. They paved the way for these types of purchases statewide."

The saga began in 1970, shortly after Signal Landmark bought 2,000 acres of wetland for $20 million from heirs of the old Bolsa Chica Gun Club, which operated on the site from 1898 to the 1940s.

The state immediately claimed that 528 acres belonged to it because it was tideland. Signal contended the property had passed into private ownership under an old Mexican land grant. In a 1973 settlement, the state ended up with almost 328 acres, representing the first block of Bolsa Chica to be set aside.

Three years later, a group of Huntington Beach residents founded Amigos de Bolsa Chica, a name suggested by former Mayor Ruth Bailey.

The goal was the preservation and restoration of the salt marsh. "Save Bolsa Chica" became its battle cry. Ironically, the group's initial financial support came from Capt. Charles Moore of Long Beach, an oil fortune heir who gave the organization $18,000 in Signal Oil stock.

In 1979, with its membership swelling to 2,000, the group sued Signal, the state and Aminoil, which had acquired oil rights in the wetland. The Superior Court lawsuit contested the state's 1973 settlement with Signal and sought penalties for filling, diking and degrading the Bolsa Chica wetland. Their cause was bolstered in March 1980, when the state Coastal Commission ruled that Bolsa Chica was a wetland and subject to the protections of the Coastal Act.

A year later, Amigos de Bolsa Chica, telegraphing its political clout, sent then-Gov. Jerry Brown a petition signed by 17,000 people who supported wetland preservation.

Then, in 1983, the U.S. Fish and Wildlife Service determined that the wetland was highly productive wildlife habitat, not a degraded swamp, as developers had contended. But legal and legislative battles continued.

In 1989, the fight with Signal finally settled after a decade in court. Leading up to the resolution was the creation of a planning coalition suggested by then-county Supervisor Harriett Wieder. The panel brought all sides together in an attempt to resolve their differences.

After six months of meetings, Signal agreed to shelve its ambitious housing and marina plan. There would be far fewer homes and no commercial development, 900-foot-wide harbor entrance, or channel to Huntington Harbour. At a minimum, 1,000 acres of wetland would be spared from development.

"It was very frustrating," said Raymond J. Pacini, chief executive officer of California Coastal Communities, the parent company of Signal Landmark. "It was approvals and lawsuits followed by more approvals and lawsuits."

The state eventually purchased 880 acres of Bolsa Chica from Signal for $25 million, bringing the total acreage under public ownership to about 1,200. The sale was made possible by the ports of Los Angeles and Long Beach, which have contributed almost $90 million to the restoration effort. The money is compensation for wetlands destroyed by port expansion.

While the fight for the lowlands cooled, a new group emerged in the early 1990s - the Bolsa Chica Land Trust. It began pushing for preservation of the wetland's surrounding mesas, where Signal sought to build more than 1,000 homes.

By spring 1999, a lawsuit by the group and its allies had overturned earlier Coastal Commission decisions and set further limits on the use of fragile wetlands as well as environmentally sensitive habitat. Since then, California Coastal Communities has agreed to sell 103 acres of the mesa to the state for $65 million. The purchase, which has not yet been completed, will be funded by Proposition 50, a 2002 initiative that will provide $3.4 billion for environmental projects.

The developer is still planning to build 379 homes and a park on 105 acres that flank the preserve in an area known as the upper mesa. The Coastal Commission is scheduled Wednesday to consider the project - the last remaining skirmish in the Bolsa Chica saga.

Commission staff members have recommended against approval of the project because of potential effects on marine water quality and environmentally sensitive habitat for the southern tar plant and the burrowing owl. They also are concerned that the development would limit access to recreational areas in Bolsa Chica.

If the project is not approved, company officials say, they are prepared to pull out of the pending deal to sell the 103 acres of mesa property.

"This is a classic example of government regulation that is out of control," Pacini said. "We are trying to do the right thing. We have a project that complies with the Coastal Act. It is the most modest plan ever offered for Bolsa Chica."