A sharply divided federal appeals court panel today ruled that the Fairfax County Police Department did not violate the rights of an employe who was demoted for giving a reporter a copy of a critical report on the county's communications center.

The 2-to-1 decision by the 4th U.S. Circuit Court of Appeals overturned a ruling by District Court Judge James C. Cacheris who had held that the police had no right under the Virginia Freedom of Information Act to withhold the report.

A federal jury in Alexandria subsequently awarded $12,000 in damages to the employe, Robert E. Jurgensen, then a supervisor in the county's Emergency Operations Center.

The appeals court ruling overturns that verdict.

If Jurgensen's award were allowed to stand, Appeals Judge Donald Russell said, disgruntled public employes would be "encouraged to purloin and publish public records of every type."

He said such a decision would be precedent-setting and dangerous to local governments.

The Fairfax report that Jurgensen said he gave a Washington Post reporter detailed equipment, personnel and training shortcomings in the communications center, which serves police, fire, and rescue services in Fairfax.

Jurgensen said he was frustrated by what he saw as the county's reluctance to act on the problems and, after a Post story mentioned the report, he decided to tell his superiors that he had released it.

He was demoted and given a desk job at a district police station.

A lawyer for Jurgensen said his client hadn't decided whether to appeal the latest ruling.

The appeals court panel was divided over whether the report detailed a matter of compelling "public concern" that justified Jurgenson violating Fairfax police rules, which restricted to his superiors the authority to release such reports.

The majority decision, written by Russell and partially concurred in by Judge Sam J. Ervin III, said the report mentioned neither "illegal or improper conduct" by Fairfax officials nor any suggestions "of corruption, nepotism, violation of law, or even inattention" by the county to the center's problems.

The two judges said Jurgensen and other employes had freely criticized the department without retaliation from superiors and that a Post reporter had been given opportunity to talk with the center's 60 employes.

In a sharp dissent, Judge John D. Butzner argued that "Jurgensen's interest as a citizen . . . outweighed the interest of the county" because the report detailed the inefficiencies in the communications center and recommended the use of public funds to correct them.

"These . . . are matters of public concern, which an employe, as a citizen, has a right to disclose . . . without fear of retaliation," he said.

Jurgensen's attorney, Victor M. Glasberg, ridiculed the notion that his client's case "would have resulted in a wholesale release of secret documents . . . . That has about as much merit as the proposition that the federal whistle-blower protection act legitimizes espionage," he said.

Glasberg said Jurgensen, who had claimed he had a First Amendment right to release the report, will have to decide whether to appeal, "but in all candor, the current Supreme Court is not one to which one runs with a First Amendment appeal."

Jurgensen, who could not be reached for comment, is currently a police communications assistant in the Chantilly District Station in Fairfax, the position he assumed after being removed from his job at the center.

Fairfax county officials said they did not have copies of the 56-page opinion and declined to comment on it.

The county officials had contended that under Virginia law they did not have to release the report. Judge Cacheris, citing a 1980 Georgia case in the 5th Circuit Court of Appeals, had ruled that the county's regulations "can't supercede" a state's freedom of information law.