Secretary James G. Watt, circling the wagons a bit tighter around the Interior Department, has cut off contact between congressional investigators and his department's professional staff.

Watt wrote Rep. John F. Seiberling (D-Ohio), "My Washington experiences have convinced me that the public interest . . . is better served if most, if not all, inquiries and oversight investigations are carried out in formal, on-the-record hearings." Seiberling, chairman of a House Interior subcommittee charged with overseeing activities of some Interior agencies, has been trying, without success, to set up committee staff interviews with Interior employes.

The issue, according to some environmental activists, is that of leaks. They say Watt and his political advisers would prefer to see information come out in a hearing room than ahead of time in the press, as it has been known to do when in the hands of Hill panels.

Watt's opinion of such tactics was made clear last week in a meeting with leaders of Indian tribes. "If your agenda is to play political hardball, to get news headlines . . . then why should I deal with you?" Watt told the group. "We're not going to give them another chance to cream us. Those are the hard politics of Washington, D.C."

A fuming Seiberling sees the dispute as hardball, too, but he calls it a constitutional challenge to the powers of Congress. Watt's policy, he says, "appears to be based on a total misunderstanding, or even a studied disregard, of both the law and tradition."