Last August, the Interior Department tried to reverse more than 10 years of federal policy toward the Pyramid Lake Paiute Indian tribe by recommending that the Justice Department not challenge a court ruling that would have provided less water to the Nevada tribe and more to a federal reclamation project.

Although Justice didn't buy Interior's recommendation, it was an example of a subtle effort by Interior Secretary James G. Watt and his assistants to bring their philosophy to Interior through administrative changes and new interpretations of old laws.

The changes have taken place mainly in Interior's solicitor's office and the Office of Surface Mining, two offices that have been targeted by conservatives as enclaves of environmental activism.

According to interviews with department employes, the changes involve not only heavy pressure to come up with legal opinions favorable to administration positions--whether or not they will hold up in court--but also transfers and personnel changes that have caused many of the lawyers to look for new jobs.

A recent evaluation of Watt's first year at Interior, circulated to the department, said that the solicitor and his top deputies are "important personnel who can advance administration policies," and that, to implement those policies, Carter administration holdovers who do not agree with those policies must be removed.

Lawyers say there have been major changes in the way they are asked to do their work. They say that virtually all legal decisions are being reviewed by political appointees in the solicitor's office to make sure they are in line with Watt's policies. They add that there are major changes in the type of cases that are being pursued.

Douglas Baldwin, an assistant to Watt, acknowledged that there have been changes in management procedure, but he says those are the prerogative of any new secretary.

As one example, Interior has initiated virtually no new cases on behalf of Indian tribes since Watt took over. In addition, the department has also instituted a policy, resisted so far by the Justice Department, of giving state courts jurisdiction in Indian water rights cases. The cases traditionally have been heard in federal court because of the animosity between the tribes and the states.

On natural resources, department lawyers say the emphasis has shifted toward encouraging development. For example, department sources say Interior officials are working on a legal argument that would give the president, rather than Congress, the power to approve development in areas under study as possible wilderness areas.

Department lawyers also say there have been far fewer appeals of cases that Interior loses, even when Interior may have had a good chance of winning on appeal.

"Their attitude seems to be that if industry won in the first place they must have been right," one lawyer said.

Employes in the Office of Surface Mining say there is so much encouragement now to cooperate with the states that one employe put up a sign saying: "State Permits Approved While You Wait!"

"There are two categories of persons in the department: liberals and Americans," said one lawyer who asked not to be identified. "I've been told not to bother with any option not in line with what the administration policy is."

A lawyer who recently left the solicitor's office said, "I think what happens essentially is those in the solicitor's office who provide legal arguments that don't go the way they want are simply circumvented. In terms of providing effective legal advice, the solicitors's office has been destroyed."

Employes in both offices say they believe that Watt is also trying to get rid of lawyers he is afraid may stand in his way.

Last March Watt announced the firing of 51 employes in the solicitor's office, including 28 lawyers. He said the office had exceeded its hiring ceiling and that the employes had been hired illegally by the Carter administration.

But less than two months later the department advertised for six new lawyers, some at salary levels at least twice that of most those fired.

Harman Kallman, a spokesman for the agency, said in an interview that the attorneys fired from Interior were not rehired because they did not have "the skills the department needed most. Most were junior people with limited experience and background. Since everyone counts at a time of reduced budgets , we'll try to get the most skilled and senior people we can."

But Rep. Edward J. Markey (D-Mass.), chairman of the House Interior Committee's oversight subcommittee, noted at a hearing that one of the new lawyers had experience in personal injury and child custody cases, not natural resources law.

Markey asked Watt last July to provide the subcommittee with extensive information on the new lawyers, but so far most of it has not been provided, his aides said.

Last May Watt also announced a reorganization of the Surface Mining Office, which enforces strip-mining regulations. During the transition period the office was targeted by the Heritage Foundation, a conservative research group, for its "zealotry."

Watt was forced to back off on a major part of the reorganization--transferring OSM's technical services division from Denver to Casper, Wyo.--after congressional hearings indicated that the move would be as hard on industry as on the Interior employes. But by then nearly half the employes in that office had quit.

There also have been widespread resignations among the legal staff in Denver, forcing the department to fly lawyers back and forth from Washington.

The latest personnel change is the transfer of at least 13 lawyers in the solicitor's office. The transfers involve major moves, from coast to coast in some cases, and in many instances will shift lawyers into areas about which they know nothing.

Harold Baer, for example, has worked in the Denver office as a trial attorney in the area of minerals, oil and gas. He is being transferred here, where his field will be wilderness, grazing and right-of-way law.

"They told me they needed my expertise," he said. But, he said, he is unfamiliar with his new area.

Baldwin said the transfers were "deemed to be necessary for the placing of staff resources where the work is . . . . There's always a certain amount of distress when people have to be transferred . . . but they all work for the government for the benefit of the taxpayer."

He insists that the moves are not a way of getting rid of unwanted lawyers.

Others disagree. "I believe they're going to have a wholesale housecleaning in this place," one lawyer said. "But none of us are political, none of us are policy makers. I think it's more a sickness that anyone who was there when they came in cannot be trusted. We're all a little at a loss as to why this is happening, but I think there are more to come, many more to come."