The National Endowment for the Arts yesterday bestowed 735 grants, including $8,000 apiece to two controversial performance artists who are suing the endowment for denying them funding in 1990. The artists, Holly Hughes and Tim Miller, claim they were rejected on political grounds because they incorporate homosexual themes into their works.

The endowment took an unusually aggressive tack in announcing the awards. Meeting with reporters, NEA Chairman John Frohnmayer spelled out the agency's grantmaking procedures and declared, "I simply cannot administer this agency otherwise than in fidelity to that process."

Frohnmayer, who has been attacked by NEA critics for funding works they consider offensive, said he would veto grants that were recommended by advisory panels only if he saw "no evidence of artistic substance." "I believe my role is somewhat like a trial judge who overturns the people's verdict only if there is no evidence to support it," he said. In the case of Hughes and Miller, he said, "I would hope these individuals wouldn't be condemned for who they are."

Just days ago, Congress resolved yet another contentious fight over the endowment with a so-called "corn-for-porn" deal. In the broad-ranging Interior Department appropriations bill, the Congress abandoned new restrictions on the type of art that may be funded in exchange for low cattle-grazing fees on federal land.

"Thank God there's cattle in this country," Hughes said yesterday. "Artists should, like, buy a cow or something." While she said she was glad to get the grant, she added that she had hesitated to apply for funding this year because of the "draining, humiliating" battle over her previous application. Hughes, based in New York, has done solo stage performances such as "World Without End," which explores her lesbianism and relationship with her mother.

Miller, an AIDS activist in Los Angeles, said: "It's certainly nice, when panels have recommended you, that the grant doesn't get tied up in John Sununu's office. But there's still, obviously, enormous concern. The question is not whether Holly Hughes or I get a grant. The damage that's been done and continues to be done is enormous. I know many artists now that don't even apply to the NEA."

Frohnmayer said he had received "sort of secondhand advice from people in Congress and so forth that the agency ought to be very circumspect" after the most recent NEA battle in Congress. But he said nobody in the Bush administration had commented on the planned grants to Hughes and Miller.

The grants are not tied to specific projects, and both artists said they would use the money to create new works. "It's vague," Miller said. "It's a fellowship. I'll just continue being the little point of light that I am."

Yesterday, Frohnmayer stressed the breadth of works funded by the $16.85 million worth of grants awarded for the final quarter of 1991. He highlighted such grants as $30,000 for a "Blues Mobile" that will visit schools in the Mississippi Delta and $18,000 to promote poetry by Hispanic cowboys at a folklife festival in Elko, Nev.

But NEA critics were not appeased. Paul Mero, a staffer in the office of Rep. William Dannemeyer (R-Calif.), said Frohnmayer "ought to be fired" for his performance. "They're just thumbing their nose at us," he said.

In Tupelo, Miss., the Rev. Donald Wildmon of the American Family Association vowed to fight on. "We're getting closer and closer," he said. "Next year is an election year. ... A lot of the support for {the NEA} will come home to roost."

Hughes and Miller are among the "NEA Four," solo theater artists who claim their grant applications were unconstitutionally denied in 1990 because of political pressures that had been brought to bear on the endowment. (Apparently the other two, Karen Finley and John Fleck, did not apply this year.) The four also say current law requiring the endowment to consider "general standards of decency" when awarding grants violates their First Amendment right to freedom of expression.

Frohnmayer said the Hughes and Miller applications were reviewed by nine panelists from seven states. Five of those had never served on an NEA panel before, he said. Miller and Hughes were among the top four of 19 applicants recommended in the solo performance category.

The decisions were based in part on statements submitted by the artists. Hughes wrote: "I have no problem with work that is shocking; but that's not my goal and now there are many people coming to see me who want to be shocked and I'm sorry to disappoint them. I suspect it is my identity as a lesbian, particularly now in a time when the U.S. Congress has equated homosexuality with obscenity, that is shocking."

Miller wrote that his work explores "the connection between my personal story as a gay person and social events and activism. ... I want to shake things up and create community through the weird and exciting reality of performing."

Hughes and Miller are scheduled to perform Sunday evening at the National Gay and Lesbian Task Force convention at the Old Colony Inn in Alexandria.