Washington's Chicken War, a little known but long-running fowl fracas, escalated yesterday when the owner of the District's last live poultry market was arrested for being cruel to his chickens.

Mike Huneycutt, owner of the 51-year-old Arrow Live Poutry Co. at 517 Fifth Street NW, was charged with one count of "cruelly killing" animals and led from his market by three uniformed police officers.

Overseeing the operation was Duncan Bright, a Washington Humane Society officer who initiated the war against Arrow five months ago and had yesterday's arrest warrant issued for Huneycutt.

"He was surprised," said Bright who objected to the way Huneycutt's market slaughters its chickens.

"They have been observed using dull knives," says Bright who ordered Huneycutt last October to either purchase an elctronic stunning machine or begin decapitating the poultry with "one swift stroke."

Huneycutt, who was a meat cutter with A&P supermarkets in the District for 24 years before buying Arrow 14 months ago, says his knives are sharp enough to split hairs. He accuses Bright of applying pet store standards to a butcher's shop.

"They want to close me down," Huneycutt had said two weeks ago, after one of half a dozen surprise inspections by Bright. "I just don't think they like killing."

The fight between the Humane Society and Arrow is complicated by the fact that no local or federal agency will assume the responsibility for inspecting the market's slaughtering procedures.

"Arrow has an exemption from federal inspection," says Dr. Marcus Humphrey, the senior staff officer with the USDA's poultry inspection office which last year checked out 3.8 billion chickens.

Small "custom dressing" operations like Arrow were exempted from the Wholesome Poultry Products Act of 1969, explained Humphrey, in part because stationing a full-time inspector at small production markets would be too costly.

The District's Bureau of Consumer Health Services is required to inspect Arrow four times a year. But the bureau chief, Arnold K. Clark, says his sanitarians are not qualified to judge what constitutes cruelty.

After his arraignment in D.C. Superior Court yesterday, Huneycutt returned to his market and pondered his future.

"I'd love to countersue those people but I've got to live in this city another 20 years," said Huneycutt above the cacophony of clucking chickens awaiting their fate.