When Joe Smith was asked by his superiors at a large state institution in the Washington area to measure the threat of cancer-causing asbestos in their public buildings, he found that it was considerable. Several months later he discovered that conditions in one of the buildings were not being remedied adequately, and, he says, "My conscience started bothering me." He raised the issue with "my boss and my boss' bosses," to no avail. Then, in the summer of 1978, Smith (as we'll call him) detected hazardous asbestos in another building. His superiors told him, he claims, "to be quiet." That's when he decided to blow the whistle.

Smith told one of the building's occupants about the problem - and reported this conversation to his boss. Soon he was transferred from the asbestos investigation "and given vague duties and impossible tasks that would give them an excuse for criticizing and firing me."

Six months later, when the occupant of the second building saw th t nothing was being done about the asbestos threat, he turned over material - leaked to him by Joe Smith - to a local newspaper. A week after an article appeared in the paper, the asbestos problem in the second building was cleared up. But in the first building, where officials have removed most of the asbestos, there are still indications, Smith claims, that asbestos (which is used for fireproofing) remains on the walls and in the air-conditioning system. The building is still open to the public.

Smith, 32, claims that his mail is now being opened by his superiors. "They admit it," he says. "It comes with their stamp on it. They say they're just checking to see if I'm getting personal correspondence at work." He thinks his phone may be tapped, too. He no longer has supervisory responsibility and has "started getting ulcers." Co-workers refuse to talk to him; some won't even say good morning. "They think I'm a bad guy and don't want to get implicated." When he leaves the office he has trouble socializing. "I go out on a date and can't even have a good time. Asbestos is always on my mind. I'm always thinking about how some people may be exposed and don't even know there's a danger."

Last spring Smith read an article which mentioned whistleblower ac tivities sponsored by the Institute for Policy Studies, a leftist think-tank in Washington. IPS referred him to the Washington Ethical Society, which had recently started a whistleblowers' counseling service. "They've lifted my morale," Smith says. A. Stephen Boyan Jr., assistant leader of the Ethical Society, contends that he has verified Smith's allegations and is now helping him decide whether to talk with the media - onthe record - about the "cover-up." If he does, Smith is afraid hell be fired and have little hope of winning back his job on appeal.

Despite this prospect, Smith says he is not sorry that he decided to speak out. "I feel proud," he says, "that one day I may be able to look my children in the eye and say, "Your father stood up for something he believed in....""

In many ways Joe Smith is a typical "whistleblower" - that relatively new breed of American worker who, at considerable risk to emotional stability and career, exposes mismanagement, corruption or danger to the public health.

The fact that Smith, an obscure state worker, has received considerable legal aid and psychological support - and been able to tell his story (even under an assumed name) to the national press - indicates how far whistleblowers have come in the past 10 years. That despite these efforts he might lose his job shows how far whistleblowers still have to go.

In the 1970s whistleblowing has entered Congress and emerged from the Oval Office, embarrassed the nuclear industry and damaged the CIA. Recently it has surfaced in state and local government and private business. And it is now being encouraged by passage of the first comprehensive whistleblower protection statutes.

This is not to say that all, or even most, whistleblowers are heroic. Some simply act to attract attention, gain revenge or reduce a rival. But the ambiguous image of its practitioners - and the penalties they pay - has not stopped the spread of whistleblowing in the decade since A. Ernest Fitzgerald, a Pentagon cost analyst, told Congress that the Lockheed C-5A cargo plane was running $2 billion over budget - and later lost his position.

During his campaign for the presidency, Jimmy Carter had ridden the crest of the post-"Deep Throat" whistleblower-as-hero wave by vowing: "The Fitzgerald case must never be repeated." Within two months of Carter's inauguration, however, Philip G. Vargas, director of a Federal Paperwork Commission study, found that the secrecy classification system was wasteful and that the government withholds information that it is not entitled to keep private. After refusing an order by his superior to rewrite the report - which he felt would "whitewash" his findings - Vargas sent a copy to the White House and then was fired for going outside the chain of command. When he released his study to Congress and the press, it created a flurry of interest - columnist Jack Anderson called it a "devasating indictment" - and then was forgotten.

Unemployed for almost a year-and-a-half, Vargas lost his home when he could not make mortgage payments. He now calls himself "the Ernie Fitzgerald of the Carter administration."

In subsequent months other Carter-era whistleblowers sounded off, including Dale Kuehn, who in January 1978 received a cashier's check for $10,000 from an anonymous admirer after he had accused his superiors at the Federal Energy Administration of silencing an investigation into oil and natural gas in Florida.

The Fitzgerald and Vargas cases to the contrary, the federal employe is actually the most protected whistleblower, and thus the most common. The plight of state workers who blow the whistle, such as Joe Smith, is much worse. For them, access to the national media is limited and protection against reprisals almost nonexistent.

The corporate whistleblower has it even tougher, despite a recent Justice Department drive against what it calls "crime in the suites" - white collar embezzlement, fraud and theft. Courts have repeatedly ruled that the "at-will doctrine," first enumerated by a court in Tennessee in 1885, is still valid. Employers, the court held, "May dismiss their employes at will...for good cause, for no cause, or even for cause morally wrong." The reasoning is: If the employe is free to quit at any time then the employer must be free to dismiss him at any time, for any reason. Exceptions to this rule such as discrimination and labor laws usually don't help whistleblowers.

Michael J. Bayliss, a former supervising engineer at Hooker Chemical and Plastics Corp. in Niagara Falls, N.Y., found that out the hard way.

Between 1975 and 1977 Bayliss had called for new safety measures at Hooker. "I had a friend who was scalded in an accident," he recalls. "I saw guys whose faces turned purple from being exposed to toxic phosphorus. I got chewed out for bringing a gas mask to a worker who hadn't been issued one. I found out that the best way to get fired was to talk about health and safety."

After being dismissed in early 1978 Bayliss spent over a year writing letters and making telephone calls (often using his Hooker credit card) to federal agencies and top officials with Occidental Petroleum, which owns Hooker, "trying to find someone to turn myself in to." Bouncing between unemployment and work in a small electric supply store in Syracuse, N.Y., Bayliss became frustrated and depressed.

Then, last March, he decided to play his trump card: a confidential internal Hooker report, written in 1975, which indicated that the company had regularly released poisonous and carcinogenic chemicals into the air and sewers of the city and in spills inside the plant, endangering the health of workers and the community. Bayliss turned over the document to local news sources; almost immediately it received front page attention nationally.

"I'm on hot rocks now," Bayliss said afterward. "My neck is stuck out about six feet and no one seems interested in following up the story. I'm not going to go in, like the guy in "The China Syndrome," and take over the plant with a gun, but you can't tell me poeple aren't dying because of conditions in there." (Hooker vice president Bruce D. Davis contends that conditions in the plant have been cleaned up to meet all federal standards. The Department of Justice and the Environmental Protection Agency are currently preparing a major civil suit against Hooker for its dumping of toxic chemicals at the Love Canal, also located in Niagara Falls, and other sites in New York State.)

While Bayliss seems sincere, he has exhibited the obsessive qualities which frequently appear in whistleblowers whose revelations produce more questions than answers. At one point he claimed, "I might get bumped off - they handle dissidents on both sides of the Atlantic the same. When you blow the whistle on the hometown mill you're not the most popular guy in town. How can I prove I'm not crazy to people who are? I'm losing my voice and my temper. I'll follow Hooker officials across the country until they listen to me."

On June 14, three weeks after making this statement, Bayliss was arrested in Niagara Falls after a high-speed police chase. Bayliss pleaded not guilty to two felony charges of reckless endangerment and 10 traffic charges. It was reported that he had become "enraged" because a newly announced $1.6 billion federal proposal to clean up hazardous chemical dump sites failed to include money for remedial work at Love Canal, which he had earlier called "an environmental Auschwitz."

Police said that Bayliss had threatened two members of the Local Canal Home Owners Association - presumably for not protesting as strongly as he was - and then threatened to blow up the home of the group's president.

Corporate whistleblowing seems to be a growing trend in America , and the most popular target right now may be the nuclear power plant. Although people such as Michael Bayliss are the hardest to help, there are in Washington many new efforts on behalf of whistleblowers in and out of government. They may, in fact, finally be coming in from the cold.

In 1977, before he was dismissed by Hooker, Bayliss approached the Government Accountability Project - an offshoot of the Institute for Policy Studies - in Washington. GAP could not help him, director Louis Clark explains, "because we did not know how to protect him as a corporate whistleblower." But since then, GAP, which operates on a modest $38,000 budget, has aided hundreds of disaffected government workers.

Although GAP, which is supported by the Institute for Policy Studies, has lobbied for federal and state whistleblower protection, its primary function is as a rallying point, a referral service and a counseling program. Every week about three or four public servants call Clark for advice; some have already blown the whistle, most have not. Clark refers them to others along the informal whistleblowers' "network" - made up of congressional aides, former whistleblowers, lawyers, reporters and the Ethical Society.

"A lot of people come to me with dynamite material and then decide not to go public," says Clark, a former methodist minister, now a lawyer. "It kills me, but I return the documents without even making a copy. We can't manipulate their decision or even encourage them - I wouldn't want that on my conscience."

On March 2, 1978, President Carter called civil service reform "the centerpiece of government reorganization during my term in office."

Whistleblowing activists found little fault with Carter's plan to transform the Civil Service Commission, which had always been torn by responsibility to both management and employes, into two new departments: one to oversee the bureaucracy and one to handle employe's appeals. But they found unacceptable the president's whistleblowing proposals, which Andrew A. Feinstein, at that time a Nader lobbyist and now a staff director of a House civil service subcommittee, believed "gave the appearance of employe protection but no substance."

An amendment to the administration's civil service reform bill sponsored by Sen. Patrick Leahy and Rep. Morris Udall added safeguards against reprisals and broadened the areas in which employes could complain. (Under the Carter plan, they would have had to prove that a rule, law or regulation had been violated; under Leahy-Udall they could also point out "mismanagement, a gross waste of funds, abuse of authority or a substantial or specific danger to public health or safety.") And it also put teeth into the powers of a new special counsel's office which would handle whistleblowers' appeals.

After several months, the Carter administration accepted the amendment, and Carter signed the bill into law in October 1978.

Passed at the same time was a little-noticed but important provision which called for the establishment of inspector generals in seven executive departments (Agriculture, Commerce, Housing and Urban Development, the Interior, Labor, Transportation and Defense) and six agencies (EPA, GSA, NASA, Community Service, Small Business Administration and Veterans' Administration).

When Special Counsel H. Patrick Sygert receives a whistleblower's complaint, he can dismiss it, try to resolve it informally, or officially refer the matter to the head of the agency. (The employe's name is supposed to be kept confidential but there are occasions, Swygert admits, when this is impossible.) The administrator, who has 60 days to report back to the special counsel, may or may not choose to turn over the inquiry to his inspector general. When the special counsel receives the results of this probe, he can declare a case closed or, if he's unhappy with the agency's investigation, can report this inadequacy to Congress or the president for further action.

Critics point out at least two weaknesses in this format: the dependence on an agency investigating itself; and the limitations of the special counsel's prosecutorial powers (he can recommend but not carry out legal sanctions).

Nevertheless, most whistleblower-backers believe that at least an apparatus has been set up to give the system a chance to cleanse itself. "The language of the law is clear," says Leahy aide Dave Julyan, "the protections sufficient. Now it's up to Swygert. He has to set the tone. Whistleblowers don't feel confident yet; I wouldn't either."

The suspicions are understandable," says Swygert, 36, a soft-spoken man who sits in one of the hottest seats in Washington. "The federal work force has seen reform come and reform go. I'm aware that we're being scrutinized more carefully than other offices. We've got to take on some tough cases at the start, to show the whistleblowing community that this office is not a sham - and prove to top management that we mean business."

Swygert has a considerable amount of cynicism to overcome. Many are watching to see whether he toils in pursuit of justice or his own advancement. Articulating a widely held assumption, Andy Feinstein has asserted: "Pat wants to go far in this town." Last year, as Civil Service Commission Chairman Alan K. Campbell's general counsel, Swygert "seemed to articulate a lack of sympathy for whistleblowers," Feinstein added. "I was not happy with his appointment."

Half a year later, most of those who opposed Swygert have been, as Feinstein says, "pleasantly surprised" by his early efforts at chiseling away the tip of an iceberg of whistleblower cases.

With some pride Swygert notes that in the first four months of operation he closed 297 cases, most via letters or casual phone calls to managers and administrators. Since his office does not have (and will likely never have) the resources to "fight every case tooth and nail," Swygert finds this cooperation "very encouraging." By merely threatening to order an investigation, Swygert often clears up uncomplicated cases.

But more than 500 complaints remain in the "active" file, many in the middle of the crucial 60-day internal probe period. (Approximately 20 percent of these cases involve whistleblowers; most of the rest have to do with prohibited or discriminatory personnel practices.)

When the congressional whistleblower amendment was being debated, many who opposed it as too sweeping indicated that it would lead to a rash of petty, self-serving or just plain imaginary employe complaints that would further clog the bureaucracy. Swygert, however, has found that not only have "99 percent" of the whistleblowers who've stepped forward in the past six months "sincerely believed what they were saying" but more than 50 percent are bringing charges which "have substance. The fears of indiscriminate whistleblowing," he adds, "are largely unfounded. It's still not a popular course to follow."

These findings have made it more difficult for Swygert to accept what he considers gross underfunding of his office. The budget for the special counsel's first year of operation provided for 25 full-time employes to oversee a federal work force of more than 2 million. In his request for the fiscal year starting October 1, Swygert noted that "the backlog of cases is increasing daily" and his staff is "losing the struggle to keep up. But in May a House appropriations subcommittee allotted only enough resources to provide for a total of 62 positions, not the 140 he sought. (The Senate is expected to raise that ceiling somewhat.)

"The special counsel is limping along," Louis Clark observes. "With the cases backing up and the limits on investigation, he's already lost some credibility and could be fatally damaged in a few months."

Swygert chooses his words carefully in describing the situation. "Some have argued that the administration has not been as supportive as it says it is," Sygert remarks. "It would not be helpful for me to adopt that position. I'll let others make that decision." (A top White House source has referred to Swygert's staff increase, which was approved by the White House Office of Management and Budget, as a "125 percent boost" and said that he couldn't "think of another office in the whole federal government that matches it. Obviously this demonstrates the president's commitment.")

At the same time, in his first major whistleblowing case, Swygert has been shaken by a rebuff from the Justice Department.

Last spring Swygert proudly discussed his office's support of four white deputy U.S. marshals in Georgia who were allegedly being transferred for writing letters to Congress which supported discrimination complaints made by black marshals in their district. Swygert managed to halt the transfer. "No one thought a few months ago that we'd take on the Justice Department," Swygert said at the time.

But in early June, after the Justice Department concluded that the transfers were not reprisals, the stay was lifted by the Merit Systems Protection Board (and only reinstated after another appeal).

"It's gotten a little ugly," one informed source in Swygert's office commented. "Justice is being hardnosed about it. They say they see the transfer orders as the agency's "prerogative." When they start talking like that it means "stay off our turf" - forget the merits of the case. We didn't want to go against the attorney general in our first case but now we're not going to back down. If this transfer stands it will encourage other agencies to act this way and discourage other employes from stepping forward."

Swygert admits he is operating under a cloud. Even with an infusion of resources, his office, he complains, "cannot do anything about the general dogma of government - that spirit of "creative indifference" and "don't rock the boat.""

During last year's Civil Service reform debate Chairman Campbell admitted: "I sometimes have the sense that I'm trying to repeal the iron laws of bureaucracy with mere legislation." And Sen. Leahy conceded that the new law did not eliminate "the need for whistleblowing."

Everyone concerned agrees that the special counsel's office is not the answer to how government should handle whistleblowing, but the first step. The problems that remain embedded in the beaucracy will never be solved until, as Leahy aide Dave Julyan has noted, "Whistleblowing, rather than being a grave act taken outside the stream of official conduct, is institutionalized and becomes a part of the process of good government."

Sen. Leahy's committee report noted, "Honesty and efficiency must be rewarded within the agencies themselves, and not only later by the media's and public's willingness to portray whistleblowers as martyrs."

It is hoped that agencies will voluntarily come up with their own programs to institutionalize whistleblowing. But the threat of outside intervention may significantly force the issue. Swygert believes that if management perceives that Congress may enact "more Draconian procedures" if administrators show that they cannot police their own agencies, then they may suddenly make internal complaint systems "work so well that whistleblowers may not have to go outside."

Ernie Fitzgerald, on the other hand, believes that the brightest hope for whistleblowers is not the special counsel's office, but "the taxpayers' revolt," which will hold elected officials and their appointees accountable for wasting tax dollars. "The only solution," he advises, "is to get the bad actors, the ones who cover up and get away with it and even prosper." Ralph Nader has drafted an employe's bill of rights to help those in the corporate sphere and has gone so far as to propose legislation that would enable citizens to sue "public trustees" for mismanagement.

Whistleblowers in and out of government are also being bolstered by a national "hotline," instituted last January by the General Accounting Office to combat the fraud and waste which costs the government, GAO studies show, some $25 billion annually. In its first three months, the hotline received calls from all 50 states, many of which were referred to other agencies or local officials and another 4,500 that were marked for GAO followup - including 2,587 "believed to be substantive." The calls are evenly divided between government workers and private employes (whose names are kept confidential), and cover everything from welfare abuse to kickbacks.

Ralph Stavins, GAP founder who now heads IPS's new Washington School, endorses the need for "a shift in incentives from careerism to candor. When we started GAP," he recalls, "the odds were 98 to 2 against whistleblowers. Now it's down to 70-30. Ideally, in a democracy, it would be 50-50 but frankly, I'd settle for 60-40."

Louis Clark laughs when he hears this assessment. "We've managed to open Pandora's box," Clark observes."Now we'll see what comes out." CAPTION: Illustration, The problems that remain embedded in the bureaucracy will never be solved until, as one Senate aide has noted, "Whistleblowing, rather than being a grave act taken outside the stream of official conduct, is institutionalized and becomes a part of the process of good government." By Tom Wilson Picture, H. Patrick Sygert, recently appointed head of a new special counsel's office handling whistleblowers' appeals, has a considerable amount of cynicism to overcome. Many are watching to see whether he toils in pursuit of justice or his own advancement.