THE INTERIOR DEPARTMENT is getting bogged down in a land war in California. Western agri-business interests have reacted harshly - understandably so - to the department's sweeping proposals for ending absentee ownership of federally irrigated farms and reducing those holdings to 160 acres per member of each farming family. This week the opponents won a key battle when a federal district judge in Fresno ruled that Interior must prepare an environmental-impact statement before proceeding with its plans.

The judge is right. The environmental-policy law applies to federal efforts that environmentalists like as well as to those they oppose. And beyond the element of poetic justice here, Congress and the public do need to learn more about the likely effects of breaking up the ownership and management of over 1.3 million acres of farmland. Interior's opponents predict, for instance, that small farmers would use pesticides more intensively. Former California Rep. Victor V. Veysey, who farms 1,200-plus acres in the Imperial ValleY, recently testified bluntly:

Let me tell you what I will do if you apply these regulations to me. I will avoid them to the legal limit of my ability. I will not execute any contracts to sell nor turn the land over to the government. I will farm with the water I am granted and I will sue you for the rest of my entitlement. That part of the farm that goes dry will quickly turn barren, and the dust will blow . . .

Of course that is not an environmental-impact statement, but a virtual declaration of war. To some extent the fray was started by federal court rulings that the Reclamation Bureau has failed to enforce the basic 1902 law and its commitment to providing water for 160-acre family farms. But Interior has taken up the cause of land reform much as the administration attacked those controversial water projects last spring: with almost evangelical zeal, possibly coupled with a political judgment that the agribusiness giants are so entrenched that only an all-out assault can make them give up any ground at all.

Like the water-projects fight, the land war could produce a useful compromise. For instance, it is about time to stop the insiders' deals and other devices that large landowners have used to get around divestiture requirements. It is also about time to review the structure of irrigation subsidies - which Interior recently calculated at $1,540 per acre on California's Westlands district - and to consider whether the 160-acre family farm is still a sound goal of reclamation policy. Perhaps Congress could increase the acreage limits somewhat, but require those who run the larger, more efficient farms to pay more for the federal water that keeps them green. The trick will be to reach such a result without causing so much political uproar as to jeopardize the administration's energy policies and other efforts that depend on good relations between the White House and the West.