Rep. Vic Fazio (D-Calif.) told the House Appropriations Committee yesterday that "all hell broke loose" when House members began looking at his proposal to limit the amount of taxpayer funds each of them would be able to spend on "franked" mail.

Fazio, chairman of the panel's legislative branch subcommittee, made his remark in explaining why he was unable to propose new rules to govern House members' mailings to constituents as part of the $1.7 billion fiscal 1991 legislative branch appropriations bill that the committee approved yesterday.

The bill contained $32.2 million to pay off excess House mail costs from this election year and another $59 million to cover House mailings in the fiscal year that will begin Oct. 1.

Fazio's mail plan, which has drawn strong opposition from some fellow Democrats, would give members funding each year that would be the equivalent of the number of households in their districts times the cost of sending each household three first-class mailings. The average member would be entitled to about $160,000 a year under the plan. That amount is larger than most members have been using, even in election years when House members normally increase mailing expenses by up to 50 percent.

Members would be entitled to spend the mail allowance any way they want, for bulk-rate mass mailings, first-class letters generated by mailing lists or first-class letters in response to letters from constituents. Traditionally, House members have spent about 80 percent of the funds on mass mailings.

Under Fazio's plan, the mail allowance would become one of three funds available to a member to run his office. It would join his clerk-hire account, which pays for personal staff, and his office-expense account, which pays for printing, television and equipment. Fazio would allow members to transfer up to $50,000 from one account to the other, giving members added flexibility in running their offices.

That transfer feature may get Fazio additional support since many House members do not spend near $160,000 on mailings in a year.

Fazio said yesterday after the committee meeting that he had not completed the public disclosure portion of his plan. He said it probably would only require reporting funds spent and not the number of pieces mailed, both of which have been part of Senate reports since 1987.

One critic of Fazio's plan has been Rep. Martin Frost (D-Tex.), a member of the House Rules Committee. A spokesman for Frost said yesterday the situation was "unclear" because Fazio's proposal had not been put in print.

"Not a dozen members know what effect it would have on them," said the spokesman, Robert T. Mansker.

Frost, who ran without opposition in the 1988 election and garnered 92 percent of the vote in his district, has sent out five mass mailings this year and expects to send one more. Under Fazio's proposal, Frost's six mass mailings, if they hit every household in the district, would use up the allowance and require a transfer of funds from other accounts to pay for answering constituent mail.

Frost sent out a January questionnaire and a summer newsletter to all 283,000 households in his Dallas district, Mansker said. Two other mass mailings announced town meetings in March and July, but each did not cover the entire district. Another July mass mailing was a card encouraging voter registration, with two registration forms attached. It was sent to half the district households, but in areas where registration was low, Mansker said. Still to come is another town meeting notice.

Under Fazio's plan, Frost would still have money left for some mailings, but not much.