A $10 million plan to bring less-expensive high-speed Internet access to rural parts of Maryland is on hold because of a bureaucratic dispute that critics say is a case of red tape getting in the way of progress.

State lawmakers voted two years ago to set aside the money to build a "spine" of fiber-optic cable in three rural regions of the state —Southern Maryland, the Eastern Shore and Western Maryland —where Internet-service providers don't always provide high-speed access.

At the time, supporters said the Maryland Broadband Cooperative would bring big-city Internet access to underserved parts of the state, which would attract high-tech businesses and allow more rural Marylanders to work from home.

The money was set aside, politicians trumpeted the initiative and about 100 miles of cable were laid. Workers laid cable from Wallops Island, 42 miles south of Salisbury, on the Eastern Shore, up to Dorchester County on the way to the Chesapeake Bay Bridge.

But work stopped last fall at the Choptank River in Cambridge because the Maryland Department of the Environment told the cooperative it would need wetlands permits to cross the river. Though the cooperative is quasi-governmental, and the cable was to be laid along an existing bridge, not under the Choptank or through undeveloped land, environmental officials declared a $1-a-foot annual permit would be needed.

Environmental officials say the broadband initiative is a laudable effort but the cooperative must apply and pay for annual permits just like everybody else.

The cooperative thinks it should be exempt and that the fees amount to shuffling taxpayer dollars from one agency to another, with fees piling up until the rural broadband initiative far exceeds its budget.

"Long after we were heavily into construction and completed that initial link, we learned that Maryland has additional permitting," cooperative president John Dillman said.

The dispute has lawmakers' attention and is headed to the desk of Gov. Martin O'Malley, a Democrat, as the cooperative plans to seek a permit exemption from the Board of Public Works, of which Mr. O'Malley is a member.

"Your agency has single-handedly brought rural broadband to a screeching halt," Delegate Jeannie Haddaway-Riccio, Talbot Republican, told Environment Secretary Shari Wilson at a recent legislative briefing.

"Up to now, the project has been ahead of schedule and under budget, so we were completely blindsided by this problem with the Department of the Environment," she said later.

With permit fees looming, the cooperative plans to resume work building the spine where wetlands permits are not required. But the 800-mile effort won't be complete until the cable is laid across rivers and wetlands on the Eastern Shore.

"Permits are required, and it takes time," Miss Wilson said of the holdup.

Department spokesman Robert Ballinger said safeguards are an important part of the process.

"We are working to make sure we can assist the citizens on the Eastern Shore by getting broadband, but also make sure the environmental safeguards are adhered to," Mr. Ballinger said.

It isn't clear what is the total cost for an annual wetlands permit fee; however, at a recent briefing with Southern Maryland lawmakers, cooperative director Patrick Mitchell said it would come "close" to canceling the project.

"We need to raise hell about this," replied House Republican Leader Anthony J. O'Donnell, Southern Maryland Republican.

Mr. Mitchell and Mr. Dillman hope the dispute can be resolved in coming weeks, but they are preparing permit applications. Work in wetlands areas could resume by June even if permits are required.

Cooperative officials say the spine roughly follows existing highways and that cable would not be laid in undisturbed areas.

Mr. Mitchell and Mr. Dillman did not criticize state officials but said a permit issue amounts to red tape.

"We're basically using state dollars, and we're being obligated to spend those on the state," Mr. Dillman said. "It doesn't seem to make sense."

O'Malley spokesman Rick Abbruzzese said environmental officials have "legitimate concerns" but that the governor will untangle the initiative from the red tape.

"The governor is absolutely committed to rural broadband," Mr. Abbruzzese said.

However, many rural residents continue to wait for fiber optics to lower the cost of high-speed Internet service.

"If it costs more than it does in the metropolitan areas to get this Internet access, you're put at a disadvantage," said Sen. George C. Edwards, Western Maryland Republican.