An Agriculture Department investigation has found the head of the Farmers Home Administration (FmHA) in California guilty of racial discrimination, but USDA administrators here apparently can't figure out what to do about it.

A decision on penalties against Donald T. Hallett, husband of a prominent California Republican, has been pending at the USDA for more than a month, although the department promised a House Judiciary subcommittee that it would make a decision by early October.

There has been speculation at the department that officials decided to delay a decision that could be politically embarrassing before next week's national election. Hallett's wife, Carol, was Republican leader of the state assembly, then ran unsuccessfully for governor in 1982.

The USDA investigation found that Hallett had directed that racial information be gathered about housing-loan applicants near Sacramento, then ruled that no loans could be made to persons who lived or worked more than 10 miles away from the subdivision -- a ruling that excluded most applicants.

The housing project, proposed by a black contractor, was to be built in Galt, a town near Sacramento that has only 10 blacks in a population of 5,500. The project was designed to attract black loan applicants from Sacramento, which was beyond Hallett's 10-mile limit.

FmHA officials here, after reviewing the investigation report, agreed that the state director had violated policy on two counts -- by collecting racial data and by imposing an arbitrary distance limit on loan applicants.

Hallett originally denied both charges and FmHA officials in Washington took his word and closed the case. But after an anonymous telephone tip, the department's Office of Equal Opportunity proceeded on its own with an investigation that turned up documents signed by Hallett that verified the charges he had denied.

Although the original complaint dates to 1982 and the investigation was completed in January 1983, the Hallett case languished at the FmHA until this summer when it came to public attention. The case played a part in the decision of the House Judiciary subcommittee on civil and constitutional rights to probe civil-rights enforcement at the department.

Alma R. Esparza, head of the OEO, told the subcommittee in September that a decision on penalties would be made within five days. Esparza's supervisor, John J. Franke, the assistant secretary for administration, said the matter is still in the hands of the USDA's personnel office and he had no word on when a ruling would come.

Franke said that the case was complicated because of his and the department's desire to be "fair" to Hallett with a final decision.

Documents obtained by The Washington Post under a Freedom of Information Act request -- first denied by the USDA, then granted on appeal -- show that the complaint was filed in October 1982 by William R. Coleman, a black who is Sacramento County supervisor of the FmHA.

Coleman charged, and the investigation found, that Hallett and top-level FmHA officials in the state had made repeated requests for racial and ethnic data on home-loan applicants. Hallett later issued an order banning loans to persons who lived or worked more than 10 miles from the Cloverfield subdivision.

Hallett told the investigator that he didn't recall signing the order but that he had been state director only seven days at the time and "did not know any better."