The House Government Operations Committee has called for repeal of government bailouts for makers and distributors of imminently dangerous pesticides, criticizing the practice as a "federally subsidized insurance policy" for the chemical industry.

"At a time of severe fiscal austerity," the panel reported, pesticide producers should not be "afforded preferential treatment and protection from ordinary business risks."

The report caps a year-long investigation into provisions of the federal pesticide law compensating holders of pesticides considered so perilous that they must be pulled off shelves immediately.

The Environmental Protection Agency is required to indemnify the firms at the fair-market value of their unused stocks, take charge of the chemicals and pay for their destruction.

When Congress enacted the provisions in 1972, they were viewed as financial incentives to pesticide manufacturers and distributors to surrender quickly chemicals caught in the so-called emergency ban.

But a committee investigation of one emergency action, the banning in 1983 of a grain fumigant called ethylene dibromide (EDB), illustrated how the provisions protect corporate interests more than the public health, according to the report.

The EPA has paid $2.3 million in indemnifications and $1.75 million to a firm that was to have disposed of the chemical completely by last February for half of that amount. The costs may eventually reach $10 million.

But none of the 328,000 gallons of the pesticide has been disposed of, while thousands of gallons, warehoused in flimsy cans, have leaked into the environment, the committee said.

"Pesticide manufacturers received sizable indemnity payments for EDB that no longer exists," the report said.

Only one other chemical -- 2,4,5-T Silvex -- has been banned under the emergency rules by the EPA, which is often accused of lax regulation of pesticides. As the agency comes under congressional pressure to review the 50,000 pesticides on the market, it is expected to invoke the emergency decree and indemnity and disposal obligations more often.

The report recommended that Congress repeal the indemnification provision and require chemical producers to shoulder disposal responsibilities under EPA supervision.

A pending Senate bill would eliminate automatic indemnities, requiring the EPA to seek a specific appropriation for each case, and would require the companies to pay for disposal of the banned products.