Senate Appropriations Committee Chairman Robert C. Byrd (D-W.Va.), a legendary provider of federal funds to his home state, has dropped his plan to seek $16 million to $18 million for a West Virginia University building project after learning of the role a Washington lobbying firm played in the proposal. Byrd said he decided to cancel his support for a "materials research center" at the Morgantown campus after reading that the firm, Cassidy and Associates, had helped get several hundred million dollars in university building funds earmarked to clients' projects in appropriations bills moving through Congress. Byrd said he and fellow Appropriations Committee members had been largely unaware of the extent to which lobbyists were representing clients in their states and collecting hefty fees for congressionally earmarked projects back home. In an interview Friday, the former majority leader described his change of heart about a state project that normally would have received his powerful backing as he continued a campaign for sweeping reforms of existing lobbying laws. The Senate Wednesday passed a Byrd-sponsored amendment that would require persons or organizations receiving federal contracts, grants, loans or guarantees to report to government agencies the names of consultants and lobbyists who help them. Grantees also would have to say how much the consultants were paid, report the source of the funds and describe the activities covered. Current laws require registration by lobbyists who have an interest in pending legislation. Byrd's amendment applies to anyone influencing or attempting to influence congressional staff members or executive branch officials, and would forbid use of federal funds to pay for such activities. The information required under Byrd's legislation would be centrally available to the public and Congress, at the offices of the Secretary of the Senate and Clerk of the House. Washington lobbyists acknowledged last week that they were taken aback by the suddenness of Byrd's move and by the Senate's swift adoption of it as part of a bill funding the Interior Department in fiscal 1990. The Byrd amendment still faces a number of legislative hurdles. In a statement Friday, Howard Marlowe, president of the American League of Lobbyists, agreed that it was time for Congress to review lobbying laws and regulations to determine the adequacy of their coverage and the effectiveness of enforcement. But he said Congress should conduct a "comprehensive evaluation" before imposing new requirements. Byrd last week called on the Senate Governmental Affairs Committee to hold hearings on lobbying practices, and urged House Majority Leader Richard A. Gephardt (D-Mo.) to consider offering a House version of the amendment that passed the Senate Wednesday. In introducing the legislation Tuesday, Byrd said he was responding to recent revelations of huge consulting fees paid for influence-peddling at the Department of Housing and Urban Development, and to reports of lobbyists who "create projects and have them earmarked in appropriations bills and reports for the benefit of their clients." As the new chairman of the Appropriations Committee -- a job he assumed after stepping down as majority leader -- Byrd appears bent on imposing his stamp, congressional sources said. His high-visibility position on lobbying, they said, is certain to send a strong message that he will not tolerate private middlemen intruding into the arena of "pork barrel politics," which members of Congress consider their own. In a time of tight budgets, the power to allocate projects to home states and districts is a jealously guarded prerogative. Beyond that, congressional observers said, Byrd's efforts reflect his broader concern about the corrupting influence of money on the Senate, in which he has served for 30 years. He has emerged as one of the Senate's strongest supporters of campaign finance reform, and he complained in the interview Friday that senators now have to spend weeks out of town raising money when they could be overseeing government agencies. His renowned skill at channeling funds to his home state makes his decision in the West Virginia University case especially dramatic. Byrd said he learned that the university was using a lobbyist when a delegation arrived in his office several months ago to discuss the proposed materials research center. When a staff member told him that several present were lobbyists, Byrd directed them to wait outside while he met with his constituents. "I then began to express to the university people my indignation and anger," Byrd recalled. "I asked them: Why do you think you have to employ a lobbyist? I said I was for anything that benefits West Virginia, and that I was always going to be supportive. I'm on the Appropriations Committee -- if I can't do it, nobody can. I asked them: Why do you waste your money on a lobbyist when I'm being paid to be your senator? I voiced my anger . . . . I voiced my displeasure and anger and non-belief that they were being taken in by lobbyists. And I resented it and I said so." Byrd said he still offered to seek the funds. University President Neil Bucklew suggested the money might be available through the National Defense Stockpile Transaction Fund, an account financed in the Treasury Department appropriations bill. "I said, why can't it be done through Interior, that's my committee," Byrd recalled. The meeting broke up with an understanding that funds would be sought both in the Interior and related agencies subcommittee, which Byrd chairs along with the full committee, and in the Treasury, postal service and general government subcommittee, chaired by Sen. Dennis DeConcini (D-Ariz.). Soon after that, Byrd said, he changed his mind about supporting the project. The catalyst was a June 18 article in The Washington Post that detailed the extensive activities of Cassidy and Associates before the House and Senate Appropriations committees. Byrd said he was surprised to read that the Cassidy firm had conceived the idea of using the Stockpile Transaction Fund to get appropriations for university clients, including West Virginia University. The Post article reported that House and Senate appropriators had used the stockpile fund to set aside $78 million for nine universities, four of which were Cassidy clients. Partly with Byrd's help, West Virginia University has received more than $30 million in appropriations bills since 1983. Nonetheless, Byrd said, it was a complete surprise to him that the university had been a paying client of the Cassidy firm in 1987 when it obtained $15 million to help build an energy and water research center on campus. After reading the article, Byrd said, he ordered his staff to retrieve a letter he had sent to DeConcini's Appropriations subcommittee supporting the university's request for funds. "If that's how it is, I won't get the money for them," Byrd said. "I could have gotten the $18 million -- at least I think I could. I certainly would have tried. "I said to my {Interior appropriations} subcommittee people, now that I know how it's being done, we'll scrap the project in Interior, too. "I was angry that I was being used by the lobbyists. I'm not saying they intended to use me . . . but I don't want that kind of story on my committee," Byrd said. Officials of Cassidy and Associates did not return calls Friday. "I am not attacking lobbyists," Byrd said. "They serve a purpose. But they shouldn't get paid out of taxpayers' money, and if non-federal funds are being used, we ought to know what they are paying for and what services are being performed." West Virginia University President Bucklew confirmed Byrd's account, but said the university had used Cassidy and Associates only to "help us put proposals together," not to lobby or use influence with Congress. "To the best of my knowledge they never approached any member of Congress," he said. Bucklew said the Cassidy firm suggested the materials research center could be funded through the Stockpile Transaction Fund, but said the idea for the center was the university's. Bucklew said the Cassidy executive who came to Byrd's office with him was Donald P. Smith, who left the staff of the House Appropriations subcommittee on energy and water development in 1987 to join the lobbying firm. Two new projects involving Cassidy clients, at Rochester Institute of Technology and Michigan Technological University, were allocated $3 million and $5 million respectively in the Treasury appropriations bill passed by the House last week. The bill also contains another $1 million for a previous project of the University of Hawaii at Manoa, also a Cassidy client. However, as a result of a turf and funding battle with the Defense Department, the money was appropriated from the "salaries and expenses" account of the General Services Administration, rather than the stockpile fund. The move appears to remove the university grants from the control of the defense authorization bill, which this year requires grants to be approved by the stockpile manager and to be competitively awarded. While many of the projects earmarked in appropriations legislation are thought to be worthy, university officials say that the practice increasingly has made political connections rather than merit the key to getting federal money. They also complain that the system has opened a lucrative field for lobbyists who charge universities large fees for their services.