Sens. Pete V. Domenici (R-N.M.) and Daniel Patrick Moynihan (D-N.Y.) entered themselves yesterday in the congressional churl-of-the-year contest.

They introduced a "sweeping" bill designed to break up the pork-barrel procedures that allow powerful legislators to land federal water projects for their districts.

"Before this Congress is over," Moynihan predicted, "we will hear screams and deprecations, we will hear horror" over their proposal for water-policy reform.

"Yes," Domenici said, "we've got a tiger by the tail. . . . This bill eliminates congressional pork barrel on water projects, which has gone on for decades."

How their plan would work:

Congress would be removed from most water-project selection procedures. The states would get block grants ( $4 billion annually) to help pay for projects they want, although each state would have to put up a fourth of a project's cost.

A revamped and independent Water Resources Council would have a final veto power over any state-selected project not approved by the federal agency that would build it.

The legislation would cover work now done by the Army Corps of Engineers, the Bureau of Reclamation and the Soil Conservation Service.

Using the federal block grants, based on population and area, governors would be empowered to choose the water projects most desired by their states.

A state's decision for construction would be approved automatically unless the WRC stopped it or if a neighboring state's governor objected that the project would have adverse effects there.

Congress, however, would retain a role in deciding which of the larger, more costly regional projects could go forward. The bill would allow 10 such regional construction projects at any given time.

"The 10 major projects would be a combination of politics, I assume, and needs," Domenici said, acknowledging that he expects strong opposition to his bill from southern legislators.

"Under this bill, two-thirds of the states would gain more money than they have had historically. . . . The South would be the biggest loser," he said.

Although they predicted success for their bill, it more likely will become a part of the larger debate between Congress and President Carter over federal water policy.

Domenici said Carter's newest policy proposal doesn't go far enough, and Moynihan said congressional traditions make reform of any kind difficult.

One of the troubles with the present system, Moynihan said, is that projects tend to go to the states whose legislators have the most clout in Congress.

"The power is held in little fiefdoms. It makes no sense," he said. "If we had a secret vote on this bill, it would pass today. This is major legislation."

The year is young, and there may be other candidates, but that is calculated to make Sens. Domenici and Moyhihan front-runners in the churl race.