A prominent Silicon Valley venture capitalist has agreed to pay $3.7 million after wetlands and a stream were buried during development at one of his vineyards in Mendocino County, according to state water officials. Almost half of the penalty is to be suspended if an agreed-upon environmental project is completed.

Kevin Harvey’s Rhys Vineyards — which also grows grapes in the Santa Cruz Mountains — committed multiple violations of the federal Clean Water Act, the State Water Resources Control Board announced after a four-year investigation.

At the wine company’s 20-acre Mendocino County vineyard, a half-acre of wetlands were filled in, more than 2,000 feet of a stream channel buried, and roads and stream crossings built improperly and without permits, causing “irreparable harm to already fragile wetlands,” a state news release said. The work put endangered salmon and steelhead trout at risk, according to the release.

“The illegal and permanent loss of wetlands and streams caused by the vineyard construction was an egregious violation of state and federal law,” said Josh Curtis, assistant executive officer of the North Coast Water Board.

Harvey, a co-founder and general partner at Benchmark Capital, said in a 2015 interview in Edible Silicon Valley magazine that Rhys Vineyards was “strictly organic,” and added, “We also believe in adapting the vine as much as possible to the natural environment.”

A lawyer for Rhys, Tina Wallis, said in an emailed statement that the wine company “deeply regrets the mistakes made.” Wallis said in a phone interview that “right now Rhys, which would include Kevin, feels really bad about what happened and they are really working hard to do everything in their power to make things right.”

Under the terms of the settlement, Rhys is to pay about $1.89 million to fund two environmental projects, one for fish and wildlife habitat restoration in and around the nearby South Fork Ten Mile River and the other to enhance habitat in a stream called Dutch Charlie Creek.

About $1.7 million of the total penalty will be suspended if the Ten Mile River project is completed, according to the agreement.

The deal also requires Rhys to fix the entire road network on the vineyard, to prevent erosion. That provision was introduced by Rhys, Willis said.

“We volunteered to modernize all the roads,” she said. “It was going above and beyond.”

In her emailed statement, Willis said Rhys would explore possibilities for the “environmental conservation” of most of the wine company’s 4,591-acre ranch that contains the 20-acre vineyard.