Two public-interest groups accused the Interior Department yesterday of illegally providing nearly $1.5 billion in "hidden" subsidies to irrigate farms in California's Central Valley -- many of them owned by large corporations.

The Natural Resources Defense Council and the California Rural Legal Assistance Foundation said the Treasury has paid nearly$3.5 billion in subsidies for irrigation systems in the desert valley, far more than the $2 billion intended by Congress.

The report, based largely on federal documents, comes as a deficit-minded Congress is once again focusing attention on western water projects.

According to the report, much of the $1.5 billion in extra subsidies stems from decisions by Interior's Bureau of Reclamation to extend repayment periods for portions of the massive Central Valley Project and to supply irrigation water at far less than its cost.

By law, construction costs for the project, which supplies billions of gallons of water annually to the parched lands of central California, were to be repaid by water-users within 50 years. In some cases, however, the bureau has extended the repayment period to as much as 80 years.

Because the repayments are interest-free, the extension amounts to millions of dollars in unintended subsidies that "have brought the Central Valley Project to the brink of bankruptcy," the report says.

For the last three years, water payments have not been sufficient to pay for operating the huge project, which is expected to run$5.3 million in the red this year, the report said.

On the average, Central Valley farmers are paying $6.15 per acre-foot of water (enough to flood an acre of land to a depth of one foot), the study found, while the cost of supplying the water is $72.99 an acre-foot.

Western water projects have long been criticized by conservation groups as a threat to wildlife and the environment. The Central Valley Project includes the Kesterson Reservoir, a waterfowl refuge that Interior Department officials closed earlier this year after discovering that contaminated agricultural waste water was killing and maiming hundreds of birds.

In recent years, however, the debate increasingly has turned to the financial implications of subsidized irrigation, first authorized by Congress at the turn of the century to promote family farming in arid areas.

According to the study, the principle beneficiaries of the Central Valley Project are large-scale farming operations, many owned by corporations and devoted to the production of crops that are surplus.

In the Westlands Water District, the largest recipient of Central Valley water, more than half the land is planted in cotton and other surplus crops, the report said, and the average Westlands farmer is getting an irrigation subsidy of almost $500,000 a year.

Despite the Central Valley Project's precarious fiscal position, the Bureau of Reclamation is considering requests for additional water that could double the size of the project, according to the report.

Rep. George Miller (D-Calif.), chairman of the House Interior subcommittee with jurisdiction over federal water projects, said that the study "once again raises serious questions about subsidies, surplus crops and water pricing."

But Interior officials said yesterday that none of the allegations in the new study come as a surprise.

"We'll have to look at what they're alleging, but the same kinds of charges have been made for some time," said Interior Department spokesman Bob Walker.