Battalion Chief Tom Stepic of the Cleveland Fire Department says he made his way up the ranks the old-fashioned way: "I worked my butt off."

Now Stepic, who is white, sees his career stymied because Cleveland has pledged to promote more black officers to rectify past discrimination.

"Who's paying the price?" he asked, sitting at a long table in the kitchen of Engine House No. 39. "Me and Paul and Jimmy and Ted and all the guys standing in this room, and we ain't done [anything]" against minorities, he shouted.

But Fire Lt. Lloyd Noles and other blacks, gathered at their lawyer's office, see the situation differently.

"There has always been a quota for us," Noles said, contending that hard work and high test scores got him nowhere because he is black. "But now it's fashionable, you know, for a white guy to cry 'discrimination.' "

"They [city officials] even said our nostrils were too wide and we would consume too much oxygen," said retired battalion chief Eugene L. Guyton, a 33-year veteran who said the city kept engine houses like "little white islands sitting in the middle of the black community."

Stepic, Noles and Guyton, though worlds apart in their view of the situation, have one thing in common now: all say they are victims of racist policies.

Their dispute is to be argued before the Supreme Court today and could produce one of the most important civil rights rulings in years. The decision could answer a long-debated but still unresolved question: whether goals and quotas to remedy past discrimination violate the constitutional rights of whites such as Stepic.

The ruling, at the very least, will likely resolve a bitter political battle between civil rights groups and the Reagan administration, which has led the assault on such affirmative action plans. Cleveland's plan is similar to those in virtually every major city in the country.

The administration insists that any action to rectify past discrimination must benefit only "actual victims" of that discrimination, not broad groups of minorities or women. Under this argument, only those individuals who could demonstrate that they were actually turned down for a job or a promotion on account of their race or sex could receive favored treatment.

Civil rights groups say the administration's position would doom meaningful efforts to integrate workplaces across the nation.

This term, in addition to the Cleveland controversy, the court will rule on related affirmative action cases from Jackson, Mich., and New York City.

Of the three cases, Cleveland's presents the best opportunity to resolve the broader questions, lawyers on both sides believe.

"It got hairy," Firefighters Union local President James Andrews said, when the first promotions under a quota were announced in 1983 and whites saw blacks with lower test scores getting promotions. "I'm surprised there wasn't bloodshed."

The promotion plan settled a 1980 lawsuit brought by Vanguards of Cleveland, a group of black and Hispanic firefighters. Vanguards claimed the city had discriminated against minorities to keep them from being promoted.

The city, Vanguards and the union, after protracted negotiations, agreed to a four-year plan, bound up in a federal court consent decree, to have minorities fill between 10 and 25 percent of the officer ranks. The city conceded there had been a "long history of discrimination" against minorities in the fire department.

The union membership, despite its leaders' initial agreement to the plan, voted overwhelmingly against it and appealed. The union argued that the quotas were illegal and contended that innocent whites would be victims.

"Though we didn't do anything, we have to pay for what the city did," fumed Capt. Jim Peters of Engine 39. White firefighters would be "paying the bill because somebody was a slave years ago," he said. "I have to bear some of the burden."

"This whole business about affirmative action," he continued, "is if the city discriminated against anybody, fine, they should pay an indemnity. But they say, 'Gee, we were guilty of discrimination all these years, now we'll let this guy over here pay $3,000 a year penalty' " by not moving up in rank, he said. "That's where the injustice comes in."

Peters and others insisted that promotions must be given only to those who qualify by scoring high on the examinations. "They [officers]are leading guys into a situation where you could get somebody killed," Peters said. "Just think if airplane pilots got their tickets to fly like they gave out promotions in the fire department," he said. "Turn an airplane with 400 people on board over to some guy who's lowest on the list."

White firefighters say the plan has embittered and demoralized them. "You'll find very very few senior firefighters that passed [the tests] because you'll find very very few senior firefighters that even went down to take the examination," Andrews said.

"I've had it right up to here," said Stepic, who said his promotion to battalion chief was delayed because of the quota.

"You know what it takes to be on the top of a [promotion] list?" Stepic asked. "I put my life aside two summers in a row to study, six days a week, eight hours a day. A lot of emotion is involved in this, on you and on your family."

"You get to the point where you say, hey, they've whipped me, I've had it," he said. "It's tough to study, especially when you know you're going in and all these minorities have to do" is get a passing grade.

"We had a black battalion chief here [on temporary assignment] three weeks ago," fireman Jack Erb added. "The resentment you could cut with a knife."

Vanguards President Sant Lovett, the battalion chief in question, agreed that the promotion plan has dramatically increased racial tension.

"Once this lawsuit went in . . . I could see these very same guys I had worked with -- they don't speak to me today. They walk the other way," Lovett said, even though when he served with them as a firefighter years ago "I was the greatest thing since white bread."

But Lovett and other veteran black firefighters take issue with the whites' arguments.

Older firefighters, like Guyton, say that for years few blacks tried to be firefighters because blacks believed "this was a white man's job. A black man? You didn't see one, [so] you didn't go after it, you didn't seek it. You had no father, no brother, no uncle that had ever been in any of these positions."

After World War II, Guyton said, "they allowed us to go to 50 blacks. The department was at that time 1,300 men. If one was hired, one was fired. If one was fired, one was hired."

Even when blacks scored high on examinations, the black veterans said, they encountered bogus medical problems that barred them from jobs. Besides the large-nostrils argument, they were told they had "eye problems," flat feet, anemia, colorblindness, that they were too tall or too short.

One year, Noles said, there seemed to be an epidemic of curvature of the spine.

There was a "segregated bed" for the two blacks on the force in 1946, said Douglas F. Dennis, one of those two. Blacks could not eat with whites, were given menial tasks that more junior firefighters should have handled and were disciplined far more frequently than whites.

"One of the worst things that happens with a black," said former assistant chief John F. Bergeon, "is you are discouraged so you don't feel like taking a test . . . . When it comes time to study, being black, you can't put 100 percent into your studying because even if you're number one you're not going to make it anyway."

There is still discrimination and "rampant favoritism" for whites, Lovett said. "It is more subtle and more sophisticated, but it is still going on. The undercurrent is there." There are far fewer problems, however, when black supervisors are on duty.

"It's extremely important to have blacks in supervisory positions," Noles said. "It has made a big difference to blacks on the department."

The Vanguards gave up a lot during negotiations, Noles said, and the promotional plan is, at best, a "Band-Aid" to make sure at least some blacks fill officer positions.

A federal judge, after conducting hearings, concluded that the "use of a quota system for the relatively short period of four years is not unreasonable in light of the demonstrated history of racial discrimination . . . . It is neither unreasonable nor unfair," the judge said, "to require nonminority firefighters who, although they committed no wrong, benefited from the effects of the discrimination to bear some of the burden of the remedy."

He ordered the plan into effect despite the union's objections. Whether a federal judge has the power to do that is a central issue in Local No. 93 v. City of Cleveland.

Another issue involves the power of cities such as Cleveland to resolve their racial problems. Cleveland Mayor George V. Voinovich, a popular moderate Republican in an overwhelmingly Democratic town, strongly backs the plan. Voinovich won a third term last year with more than 80 percent of the black vote.

Voinovich, like mayors throughout the country, strongly supports affirmative action and the ability of cities to settle lawsuits without protracted, and costly, litigation.

The National League of Cities and the U.S. Conference of Mayors, in a court brief backing Voinovich, attacked the Reagan administration for trying to "force literally dozens of communities and millions of citizens to reopen old wounds" and litigate cases for no reason.

If the union and the administration's position "were to prevail," the league warned, " [it] would constitute a major and unwarranted invasion of state and local autonomy in an extraordinarily sensitive area."

John D. (Dave) Maddox, the city's lawyer, said the Cleveland promotional plan is "eminently fair" and "has affected few, if any, whites" because the city agreed to greatly increase the number of promotions it had intended to make.

As a result, Maddox contended, more whites have been promoted under the plan than would have been promoted without it. (The union says the city's numbers are incorrect.)

Maddox dismissed arguments that whites who were not responsible for the discrimination are paying the price now. "If you assume discrimination and the union was not involved, they were still putting money in their pockets," he argued. " 'We are the innocent union,' they say, but those are the guys who benefited from the promotions without having to compete with blacks," he said. "They benefited from the situation even though they were not the cause."

"As an ultimate intellectual exercise, everyone would agree with" the Justice Department that no employment decisions should be based on racial reasons, Maddox said.

"But I believe there is a separate good-government issue here and the court should be sensitive to it," he said. "This is not an intellectual exercise; we have to run a city. Not allowing this will cause serious governmental problems."

For now, all promotions have been halted while Cleveland, and the country, wait, as Stepic put it, "until the big guys set the new rules."

Setting clear rules in this area, however, is something the closely divided justices have not been able to do, though the court hinted in 1984 that it might be on the verge of taking a firm position on quotas. The court overturned a judge's order to the city of Memphis to disregard a collective bargaining agreement and lay off more senior whites than blacks in order to maintain affirmative action goals.

Though the Reagan administration hailed the ruling in Firefighters Local Union No. 1784 v. Stotts as a major victory, most observers said it might take at least one more case to see exactly where the court stands. The decision in the Cleveland case, many believe, could provide the answer.