IF A FEDERAL judge approves -- and if the matter is not drawn out through protracted appeals -- the five-year battle over compensation for Vietnam veterans exposed to the defoliant Agent Orange may finally be nearing an end. A court-appointed "special master" has presented a tentative plan for distributing a $190 million settlement fund set up by chemical producers. The plan will not satisfy everyone. But it is surely close to the best compromise possible given the tangled history of the Agent Orange affair.

The plan was developed by Washington lawyer Kenneth Feinberg with the aid of a broadly representative advisory group of Vietnam veterans and after discussions with numerous veterans and veterans' groups around the country. It has three main elements: cash payments totaling $130 million to severely disabled veterans or to the families of deceased veterans; a $30 million endowment to aid children of veterans suffering from birth defects; a $30 million endowment to provide various kinds of services to veterans and their families.

Because the size of the fund is small relative to the number of veterans exposed to Agent Orange, cash payments will be limited to those most heavily exposed. But within that group payments will be made to any veteran who is already severely disabled by any disease or becomes so before 1995, or to the families of those who die from any disease- related cause before that year. Because this approach totally disregards any connection between the alleged wrong done by the defending chemical companies and the alleged harm resulting to the veteran claimants, it is obviously inconsistent with traditional tort law. But no other sensible basis for distribution exists.

As the federal judge presiding over the settlement has stressed, there is currently no scientific basis for linking any of the diseases claimed by the veterans to Agent Orange exposure. The chemical companies settled simply to avoid further litigation costs and bad publicity. Since the basic tort concept of linking liability for damages to responsiblity for their cause has already been violated, it is certainly better to hand out the money to people who need it most rather than to those who might be selected under some some pseudo-scientific scheme.

The most questionable part of the settlement is the $30 million endowment for providing social and legal services to veterans and their families. It goes without saying that much is owed to those who serve their country in combat. But Congress is far from insensitive to their needs. Many billions of dollars are spent each year by the Veterans Administration and other departments on cash, medical care, training, housing and other adjustment assistance for Vietnam veterans -- including full medical coverage for any veteran exposed to Agent Oranage no matter what his or her illness and an extensive program of Agent Orange research. Unless the reviewing judge finds good reason to believe that the money will be spent for some innovative and promising purpose -- and not simply to perpetuate the Agent Orange debate -- he might put the money to better use by distributing it directly to disabled veterans and their families.