The arcane intergovernmental process that first killed, then resurrected, Interstate 66 within the Beltway is under intensive review by the Office of Management and Budget and is almost certain to be changed.

The process is known by state and local planning agencies as the "A-95 review." It is a federal requirement that local governments in metropolitan areas avoid surprising each other with federally funded projects that might have a significant impact on a neighbor.

The term "A-95 review" is bureaucratic shorthand for OMB Circular A-95, "Evaluation, Review and Coordination of Federal and Federally Assisted Programs and Projects."

Various versions have been around since 1968, but now A-95 is among 39 regulations and paperwork requirements scheduled for review in OMB's second round of regulation-cutting.

More is at stake than the process. A-95 reviews are a common requirement when federal money is sent to a metropolitan area as a "categorical grant" for housing or health planning, to cite two examples.

The grants include money for agencies such as the Metropolitan Washington Council of Governments to perform A-95 reviews. Thus the nation's COGs stand to lose an undetermined amount of money if A-95 goes away. They are resisting, of course.

Secondly, the administration is seeking not only to reduce paperwork, but also to replace categorical grants with so-called block grants. Categorical grants specify the nuts and bolts of programs within broader areas (several different types of housing subsidies, for example), and sometimes insist that money go directly to metropolitan areas.

Block grants are defined more broadly. A block grant for housing would be sent to the state with a minimum of federal restrictions and without any specific reference to metropolitan area concerns. If there were only block grants, there would be no need for A-95 reviews, because the states would make the decisions.

John J. Bosley is the general counsel for Washington's COG and for the National Association of Regional Councils (NARC). "NARC's position strongly is that the A-95 system ought to be perpetuated; at the very least there has to be a transitional period," he said.

The idea of A-95 review, he said, "was that by pre-notification, local governments would negotiate out a lot of problems." The process, he said, has helped localities avoid such embarrassments as building a federally funded airport runway extension and a federally funded highway in the same place, but not discovering the problem until after construction began.

"The core issue for us on A-95," a top OMB official said, "is what the federal role should be once a decision is made to spend federal monies. Clearly there's a philosophy to this administration, and you want to make A-95 review consistent with that philosophy. The problem is in ensuring that all of the interested parties of the administration can feel comfortable with that approach."

The purest philosophical answer would be to abolish A-95. But there are too many considerations for that be the final answer, including the probability that, despite President Reagan, some categorical grants will continue. A compromise is in the works, OMB officials said.

The A-95 process has grown over the years to cover more than 300 federal grant programs, and is used in different ways for different programs, depending on the legislation.

A-95 review has real teeth in only two major areas. Where local regional councils just review most federally funded projects, they must vote to approve transportation and water quality projects. That is how Interstate 66 got into this story.

In the early 1970s, the Virginia Department of Highways proposed federally funded Interstate 66 from the Beltway through Arlington to the Potomac River. It duly appeared on the COG agenda for A-95 review, and was defeated on a close, complicated vote by a coalition of District of Columbia, Arlington and Fairfax County officials.

Time passed. Republican Jack Herrity defeated Democratic incumbent (and slow-growth advocate) Jean Packard in 1975 as chairman of the Fairfax County board. I-66 was proposed again by Virginia, and when the A-95 review came the highway passed.

The Fairfax County votes, with Herrity leading, went for the highway despite the wishes of Arlington and the District. That made it possible for then-transportation secretary William T. Coleman Jr. to cite the wishes of the community at large to justify I-66 construction.