Federal agencies cannot award legal fees and expenses to public witnesses in administrative rule-making proceedings unless the agency has explicit authorization from Congress, a U.S. appeals court ruled yesterday.

The decision, handed down by the court for the 4th circuit in Richmond, was sought by the California-based Pacific Legal Foundation, a non-profit law firm with strong ties to the Reagan administration.

The court, reversing an earlier decision by a federal district court in Maryland, found in a 2-to-1 opinion that the Food and Drug Administration may not reimburse witnesses at hearings for their expenses or attorney fees.

On its own, the FDA began a reimbursement program in October, 1979, to encourage more public participation in the hearing process.

FDA spokesman Wayne Pines said that of the $250,000 originally appropriated for persons who wanted to testify but couldn't afford the expenses, only several thousand dollars has been spent. In each case, the witness's application for assistance was approved by an FDA evaluation board.

Two other agencies--the Agriculture Department and the Federal Deposit Insurance Corp.--have set up reimbursement programs for costs in rule-making proceedings without specific authority from Congress, according to a recent study by the General Accounting Office.

Several other agencies, including the Environmental Protection Agency, Federal Trade Commission, Consumer Product Safety Commission, and Federal Energy Regulatory Commission, have reimbursement programs that have been approved by Congress.

Under legislation passed by Congress last year, all agencies now must pick up the attorney's costs of individuals and small businesses when the government loses in a court case, unless the agency can get a judge to agree it had a good reason to bring the case.

The Pacific Legal Foundation, which describes itself as dedicated to the values of free enterprise, private property and limiting the role of government, argued that Congress never approved spending the money to implement the regulation.

Eileen White, the foundation lawyer who argued the case, said the purpose of the suit was to "see that the government sticks to the laws it has."

Congress did not authorize the payment program, but the FDA argued it held implied power to spend the money because it has broad regulatory powers and is required to hold frequent hearings.

The appeals court ruled, "It has always been the practice in this country's jurisprudence for a party to pay its own litigation expenses. Thus, in the absence of specific statutory authorization, a court is without authority to compel the losing party to pay the attorneys' fees of his successful opponent."