The Teamsters union is using a method of electing its presidents that key Labor Department officials have long believed to be illegal, but which the department has failed to challenge in two successive administrations, according to department officials and internal documents.

The President's Commission on Organized Crime has condemned the election method as apparently illegal, saying it may have helped organized crime maintain influence in the 1.8 million-member union by denying members a choice in selecting the Teamsters president.

The disputed method, enacted under the late Teamsters president Jimmy Hoffa, allows about 5,000 incumbent Teamsters officers to choose -- from among themselves -- most of the 2,000 convention delegates empowered to elect the union president. Rank and file members -- who Labor Department officials say are deprived of a direct voice in choosing their leadership by this arrangement -- are specifically forbidden from challenging the selection of convention delegates under the union constitution.

The Reagan administration has never moved against the Teamsters election method, despite the longstanding recommendations of at least 15 former and present Labor Department officials, according to interviews with those officials and internal documents.

Almost all of the 150 national unions elect their presidents by one of two methods specified in the 1959 Landrum-Griffin Act: members vote by secret ballot to elect a president, or to elect convention delegates who in turn elect the president.

The Teamsters method, which officials said exploits large loopholes in Landrum-Griffin, is almost unique. The Labor Department approved the process in a two-paragraph letter to the union in 1966, sanctioning its use as long as it was not used "to thwart the wishes of the membership," and the department reaffirmed its approval in 1971.

But since then -- following the imprisonment of three Teamsters presidents for criminal activities and the linking of two of the union's presidents to organized crime -- many Labor Department officials have come to believe that the election process is illegal because it gives incumbents too much power and can be used to weed out potential opposition delegates.

"It is my opinion that their procedures clearly were not lawful and were not fair . . . . I was satisfied there was a violation of law and we ought to move quickly," said Donald L. Dotson, now chairman of the National Labor Relations Board, who was assistant labor secretary for labor-management relations in 1981-83.

Dotson is one of the 15 officials, including former labor secretary Ray F. Marshall, former solicitor Carin A. Clauss, three assistant labor secretaries and other department election experts, who said they believed the Teamsters process was illegal.

During the tenure of former labor secretary Raymond J. Donovan, a 1983 proposal by Dotson's staff to challenge the Teamsters process was reviewed in the Labor solicitor's office, but was never acted on, records show.

According to documents obtained under the Freedom of Information Act and interviews with department lawyers and election experts, at least four proposals within the Labor Department from 1978 to 1983 to take legal action against the Teamsters' election procedures were sidetracked because of legal ambiguities, turnover among key officials and the political sensitivity of challenging the giant union.

Several past and present Labor Department officials said they believe the Teamsters' role as the only major union to endorse and actively support President Reagan in 1980 and 1984 was a key reason for the department's inaction. But others contend that the issue was assigned a low priority because of confusion about the law and the absence of direct evidence of election abuse.

Dotson, a Reagan appointee, said in an interview that his staff lawyers and election specialists concluded that Teamsters procedures "theoretically could get rigged by incumbents." The reform proposal, he said, "was one of the most important things to be done, because a lot of good people had been victimized by this system that helped create problems within this union."

"This was a hot potato for Democrat and Republican administrations alike," said Dotson.

He said he believes the proposal died during Donovan's tenure because "the Labor Department was constitutionally incapable of acting on it. The place has always been susceptible to political intervention . . . . My guess is that somebody got hold of this and said 'We don't need these problems.' The solicitor's office was the favorite burying ground for things being studied."

Donovan, who was previously a key Republican fund-raiser and maintained cordial relations with the Teamsters, is awaiting trial in New York on criminal fraud charges and did not respond to repeated requests for an interview.

But the two former Labor solicitors under Donovan, Timothy Ryan and Francis X. Lilly, said the union's political clout played no role in the department's inaction. They said the law is ambiguous and does not specifically ban the Teamsters method. They also said the department did not challenge the Teamsters largely because it had approved the method in 1966 and in 1971 and no new evidence of abuse emerged to justify reversing policy.

Lilly described the matter as "a ticklish and thorny policy and legal issue." He said the lack of clarity in the law made the decision on challenging the union "a policy call" rather than a law-enforcement matter.

Teamsters officials also contend that the election process is not illegal, that it has never been used to stifle opposition, and that because the department approved it before, there is no grounds for change, according to Teamsters lawyer Gary Witlen.

But the former Labor Department official who wrote the 1971 Teamsters approval letter said in an interview that he now considers it a mistake that should be reversed. Leonard J. Lurie, the retired chief of union election affairs, said, "If I were facing the issue today, I would reverse it. It is up to the membership by secret-ballot election to determine who their leader should be. At the time, it did not seem that important, but it seems to me to be a direct violation of the statute."

The Teamsters will again use the election process on May 19 in Las Vegas, when President Jackie Presser runs for a five-year term in his $755,000-a-year post. An anti-Presser group, Teamsters for a Democratic Union (TDU), has filed suit against the Labor Department in U.S. District Court seeking a wide-ranging overhaul of the Teamsters election process. Arguments will be heard Feb. 26.

Landrum-Griffin, which was passed in response to revelations of Teamsters corruption in the 1950s, specified that unions elect presidents "by secret ballot among the members . . . or at a convention of delegates chosen by a secret ballot."

While the vast majority of unions chose to hold special elections for this purpose, the Teamsters were among a dozen unions that did not. Those unions reasoned that local union officers -- by virtue of their secret-ballot election -- could legally also be automatically designated as convention delegates. The Labor Department upheld this "ex officio" method following passage of Landrum-Griffin.

But in the Teamsters case, the apparent illegality arises because not all those eligible to be ex officio delegates actually become delegates. The 700 Teamsters locals have a total of about 5,000 eligible officers. But only 2,000 are chosen as convention delegates -- in most cases chosen by local officers themselves.

The organized crime commission's report on the Teamsters released last month calls on the Labor Department to challenge the process, saying it "has defied the intent of the law" and "may inhibit" union members' efforts to eliminate organized crime.

The commission and other Teamsters critics said the election method is crucial because incumbents have used fear and intimidation to maintain control. The commission heard testimony that Teamsters leaders threatened violence against the Detroit-based TDU and other dissidents. TDU said challenging incumbents is also particularly difficult because local officers are fearful that national leaders will use their power to dissolve local unions or deprive of them of dues money.

TDU lawyer Arthur Fox described the elections as "the Achilles heel of the Teamster union. This is the method they have used to have a string of bad apples elected." The department's inaction forced TDU to sue, he said. "If department people had this many doubts, they have an obligation under the law to let the proper authority decide, but they are protecting this union."

Carter administration Labor officials in 1978 began a study of all unions as part of a program to reduce post-election legal complaints. A review of the issue by Richard G. Hunsucker, director of labor-management standards, noted that "With one exception, the department has taken the rather consistent position that delegates must be directly elected by the members." The one exception, he said, was the Teamsters.

"We always thought [the Teamsters method] was illegal; you didn't know if you were electing a delegate," said Clauss. "You elect an officer who might become a delegate. So the voters were not the final determiners, and it was not a democratic process . . . . Anybody who manages somehow to get elected [as a local officer] who is a dissident would never go to the convention."

In 1980, Carter officials told four unions, including the Teamsters, that they planned to challenge questionable delegate-selection methods unless the unions voluntarily changed. Two have changed, and only the Teamsters and the Amalgamated Transit Union continue using essentially the same method, department records show.

The Teamsters refused the Labor request to change. "Our position was that we had no complaints along those lines, and we did not think it was a likely problem to occur, and we weren't going to change a system used since the 1960s just because they felt a problem might occur somewhere down the line," said Witlen, the Teamsters lawyer.

Carter officials, however, had not mounted their challenge by the time Carter lost to Reagan in 1980. Officials said they were preoccupied by the massive lawsuit over misuse of the Teamsters' Central States pension fund, to which they and Reagan administration officials assigned a higher priority.

When Reagan appointees took over in 1981, Dotson's assistant, Hugh L. Reilly, wrote a legal review of the Teamsters process, concluding, "These methods and provisions wrest control of the convention from the membership . . . . It repels the 'one person-one vote concept' . . . and the idea that unions are best run by the rank and file.

"Obviously, the union's selection process is in contradiction of the provision's requirements. This has been [the staff] view for some time. Despite this, no enforcement action has been undertaken . . . . Efforts under the present administration have been recommended but blocked," Reilly wrote, adding, "Though the matter is apparently politically sensitive for administrations under both political parties, I recommend that the necessary program be approved."

Another 1981 review by Walter W. Comer, the veteran chief of Labor's bureau of election analysis, concluded that the department's position on the issue was wrong: "It would be most unfortunate ending up having to defend the Teamster procedure. Quite frankly, given the notoriety of the [Teamsters], I think they would get very little if any sympathy from any court, even with DOL support, if this issue was properly brought to a court's attention."

But the department never acted, and several officials who favored action said they never learned the reason. "We just never got an answer back," said John Walsh, a former FBI agent who was deputy assistant secretary under Dotson. "Nothing ever happened, and the puzzle is why."

"I assumed when we put [the proposal] forward [in 1983], it was being looked at, and that a decision would be forthcoming," said Ronald St. Cyr, who replaced Dotson as acting assistant secretary. "I do not know what became of it . . . . We feel it is still an unresolved question."

An election challenge would have prompted a major confrontation that Labor officials would rather avoid, said a key official during Donovan's tenure who asked not to be identified: "I think there was a decision made: not to make a decision." The attitude, he said, was "why do we turn the world upside down?"

Donovan's former chief of staff, Mark Cowan, said he had a vague recollection of the Teamsters issue: "But I don't think it ever got 'front-burnered' because nobody ever pushed it . . . . The easier things got done, and some of the tough ones didn't."

Michael Volpe, Donovan's former spokesman, said he was not familiar with the election issue, but said Donovan would have worried about potential political fallout. "Donovan was a political animal . . . . When we geared up for the [1984] election, we took great pains not to bust anybody's chops . . . . Why give [Democrat Walter F.] Mondale any more ammunition by stirring people up?

"When you are dealing with the only union that backed Ronald Reagan and was going to back him again, it adds a factor to the equation that you have to take into account," Volpe said.

The TDU contends that because local Teamsters officials are elected every three years, the lack of timely delegate elections "robs the membership" of a chance to influence presidential elections, Fox said. If U.S. elections were run like the Teamsters, he said, "we would go to the polls in 1985 . . . to vote for the Electoral College" that would pick a president in 1988.

TDU petitioned the department to adopt a policy to prohibit officers from automatically qualifying as delegates and to require special delegate elections within 120 days before presidential elections.

But the department, while calling that "a worthy concept," denied TDU's petition in a 1985 letter. The department said that Congress, in Landrum-Griffin, neither prohibited the ex officio method nor specified a time frame for elections.

For the Las Vegas convention, no challengers to Presser have emerged publicly. Presser was appointed president by the Teamsters executive board in 1983 when former president Roy Williams was sentenced to prison for conspiracy to bribe a U.S. senator. Presser said recently he would seek reelection in May as part of a team of 20 top officials seeking reelection. "We're going in a slate," he told reporters. "Everyone is endorsing each other." CAPTION: Picture, Teamsters President Jackie Presser will seek reelection to his $755,000 post. The Washington Post