A small but spirited congressional panel yesterday assailed William Bradford Reynolds, head of the Justice Department's Civil Rights Division, for his attempts to restrict the reach of federal civil rights laws.

Democratic Reps. Don Edwards (Calif.), Paul Simon (Ill.) and John Conyers Jr. (Mich.), and Mary Frances Berry, a member of the U.S. Civil Rights Commission, who sat beside Reynolds at the witness table, rejected his contention that his actions have been dictated by laws and court rulings.

The hearing, conducted by subcommittees of the Judiciary and the Education and Labor committees, marked the second time in 10 days that Reynolds was called to Capitol Hill to defend his record.

At one point, Conyers asked Reynolds, "Is there a doubt in your mind that . . . more than a decade of civil rights law, practice and policy at the national level is being reversed . . . ?" by the Justice Department.

"I think there is a perception of that reversal," Reynolds replied. "I think that it's exaggerated . . . . ."

"Why are we in any reversal whatsoever?" Conyers asked.

"To the extent that we've suggested changes . . . they are based on the legal analysis that's available to us. The law does compel that certain actions be taken or not taken," Reynolds said.

But Berry pointed out, "Every lawyer knows that you may interpret a statute narrowly or broadly . . . . To tell us otherwise is to assume that we know nothing about how lawyers do anything, that they have no range of discretion. To tell us otherwise is to mislead us."

When Conyers asked Reynolds if he regretted any of his actions, the assistant attorney general shot back: "I don't apologize for our interpretation at all, congressman. Opposing forced busing is the most advantageous change in this country for minority groups that anybody could come up with."

Reynolds added that racial quotas have been "nonproductive and counterproductive . . . . It is fighting discrimination with discrimination."

Berry and the congressmen expressed particular dismay at the news that the Education Department has drafted a proposed rule saying guaranteed student loans are a form of insurance and do not constitute "federal financial assistance."

The effect of the change would be to narrow the application of existing civil rights laws in higher education.

In March, Reynolds sent Education Secretary T.H. Bell a legal memo saying that only a direct recipient of federal aid could be investigated on a civil rights complaint. If a college receives federal student aid, he said, only the student financial aid office--not the whole institution--would be covered by civil rights laws.