The Department of Transportation is testing claims that an inexpensive and simple automobile engine valve can reduce automobile pollution dramatically and lower the price of gasoline by making octane ratings irrelevant.

There is a broad skepticism in the automobile industry that this valve, or any other product, could be the miracle cure for the problems of the combustion engine. Nevertheless, early test results have provided indications that the valve may be a significant development, according to a report by the Library of Congress' Congressional Research Service.

Along with some promising initial tests, the device has benefitted from the interest shown by influential Republicans, including Vice President Bush's counsel, C. Boyden Gray.

"This report should not be considered a recommendation for or against the Webster-Heise valve or the related technology. There is not yet enough evidence to support such a judgment either way," according to the report on the valve.

But the report calls for further exploration and adds, "If its potential for greater fuel conservation, reduced emissions and lower octane requirements can be even partially realized, the introduction of the Webster-Heise valve could be a very significant development."

The valve, installed below the carburetor, contains two mesh screens which break up gasoline droplets, causing them to vaporize faster for more efficient combustion. It can be produced for less than $100, according to the report.

It was designed by Washington investor Sherwood F. Webster and master mechanic Richard L. Heise, who own 51 percent of an Arizona corporation that holds the patents for the valve. Other investors include former president Gerald R. Ford, Sen. John Warner (R-Va.), former senator Carl Curtis and Secretary of the Army John Marsh.

Vice presidential counsel Gray contacted Reps. Edward Madigan of Illinois and James Broyhill of North Carolina, both high-ranking Republicans on a the House Energy and Commerce Committee. After making their own inquiries, the two members of Congress recommended to the DOT last month that testing be done.

"The interest that I've had is from a regulatory point of view," said Gray, counsel for the administration's task force on regulatory relief. "If the thing works the way some of the tests appear to say it works, it doesn't solve all the emissions problems but it provides considerable relief -- also on mileage," he said. "I'm not in any position to say whether it works or doesn't."

The valve is intended to remedy inadequate vaporization of gasoline, which reduces the efficiency of combustion in auto engines and creates problems that include engine knock, dieseling, engine deposits, increased engine wear and increased emissions of pollutants.

According to the Congressional Research Service report, tests performed six times at EPA-recognized laboratories on a range of octanes and on different vehicles have indicated that the valve might increase fuel economy from 6 to 20 percent and increase power as well. The results also indicated sharp reductions in emissions of nitrogen oxides and carbon monoxide and smaller reductions in hydrocarbon emissions. The valve also eliminates the need for costly additives such as lead and benzene to increase octane levels, say the its sponsors.

Government testing will be done by the National Highway and Traffic Safety Administration with technical assistance provided by Chrysler Corp. "The only involvement we have is we are advising the government on test procedures," said a spokesman for Chrysler. "We have never tested this valve ourselves. We don't know whether it works or not."

The NHTSA increasingly has cut back its activities, especially consumer-protection activities, saying that its focus is safety. Gray said that testing the valve could be construed as safety-related because, if it does produce better gas mileage, larger -- and therefore safer -- cars would become more affordable.

Ford Motor Co. and General Motors Corp. have tested the valve. GM's investigation several years ago was not completed because of problems with the experimental vehicle, according to spokesman Mark Cocroft. "We would be willing to evaluate the device again," he said. "It appears to have potential, but we weren't able to discern the practicality of the thing based on tests with their experimental vehicle."

"We have tested it, and we found it not to be to our advantage to use," said Ford spokesman Robert Horner. "We have trouble seeing that any one device is going to be the panacea for fuel economy. We think it's going to be a combination of a lot of things."

Webster, whose family owned Marjorie Webster Junior College now Gallaudet here, said he has been searching for a solution to the problems of the combustion engine since 1959. Webster said that he and Heise accidentally determined in 1977 that the combination of the two screens produced the effect desired. "It's a mechanical solution to a chemical problem," Webster said.