In the face of growing political opposition, the Interior Department is gearing up to defend its proposed regulations - breaking up large corporate farms on federally irrigated Western lands.

In a 4-inch-thick draft report on California's giant Westlands Water District, Interior for the first time computed that the federal subsidy per acre of irrigated land amounts to $1,540.

The 600,000 acres Westlands District, an immense complex of dams, canals and pumping systems is the focus of controversy because it contains a fourth of the land to be sold under Interior's regulations. The regulations were issued in August, after a federal court ordered the enforcement of a [WORD ILLEGIBLE] law limiting ownership of federally irrigated land to 160 acres per person.

The $1,540 figure - and the Interior calculates as the total Westlands subsidy - call into question clams by California farmers that they repay the cost of the project through water fees.Interior officials say only a part of the capital cost is repaid, and none of the interest.

Interior solicitor Leo Krulitz said yesterday the subsidy to land owned by the Southern Pacific Land Co., which owns 107,000 acres in the Westlands District, amounts to more than $150 million.

However, Dan Flanagan, Southern Pacific's Washington representative, said the figure is "a lie - there's no two ways about it. It's all conjecture and we're very upset about it." He added that any federal subsidies benefit the farmers to whom Southern Pacific leases its land.

Jerald Butcher, head of the Westlands District, said the $150 million figure is misleading because it represents a subsidy over the 40-year life of the project, and Southern Pacific will be forced to sell its land within about 10 years under the 1902 law, even without the new Interior regulations.

Interior officials, however, say the figure is valid because, unless the new regulations are enforced, the land could be sold, as it has in other parts of Westlands, in "insider deals" that would continue to cluster control of the land in a few hands, rather than dispersing it.

The distance is [WORD ILLEGIBLE] escalating rhetorical battle in which California farmers and Western members of Congress, backed by a massive advertising campaign, claim that Interior is unconstitutionally grabbing their land.

Bills have been introduced in the House and Senate to place a moratorium on enforcement of Interior's proposed regulations.A hearing is scheduled next week before the Senate Energy Committee.

Interior officials say their opponents are distorting the purpose of the regulations. "People are saying we're anti-farmer," Krulitz said. "That's not true. If Congress repeals the acreage limits or prevents us from enforcing them, then the subsidy goes into the pockets of those corporations, not to the family farmers for whom it was intended."

Krulitz said the reclamation program was designed at the turn of the century "to create family farms to settle the West by providing cheap water, I can't believe the country now wants to pay huge subsidies to corporations to being land into production - especially when the Agriculture Department is paying subsidies to keep land out of production."

Interior is now in the process of re-examining the entire reclamation program to see whether it has outlived its purpose.