SILVER CITY, N.M. -- For generations, cattlemen have grazed their herds amid the parched and rugged mountains of the Gila National Forest, earning private profits from public land in a partnership steeped in the traditions of the Old West.

But now that partnership is at risk. Angered by new environmental restrictions on grazing in the 3.3 million-acre federal forest in southwestern New Mexico, ranchers and local governments have squared off with the U.S. Forest Service in a modern version of an old-fashioned range war.

"Here's Saddam Hussein, walked in and took Kuwait -- and that's how it is with the Forest Service," said O.E. Grubb, 71, who recently was ordered to remove half his 200 Hereford cattle from the 15,000-acre grazing allotment he has occupied for nearly 30 years. "They run you down."

The conflict has echoes throughout the West, as ranchers fight for control of public lands that many long have treated essentially as their own.

Last summer, in a case closely watched by environmentalists and cattlemen's groups, one county government here went so far as to pass a law threatening federal land managers with jail if they impose new restrictions on grazing and logging, and the Forest Service promised to call in U.S. marshals if it were enforced.

"We're completely dependent on the management of these resources," said Dick Manning, president of the Catron County Cattle Growers Association and a prime mover behind the ordinance. "What we're looking at is protecting our stability."

Grazing is permitted on more than 250 million acres of federal forests and grasslands, roughly 12 percent of the lower 48 states. The land is managed by the Agriculture Department's Forest Service and the Bureau of Land Management, an arm of the Interior Department.

The system dates to the frontier era, when the federal government coaxed settlers westward with promises of ample public range on which to graze their livestock for nominal fees.

But critics cite evidence that the century-old grazing system has left lasting environmental scars: eroded streams, sinking water tables, trampled vegetation. Moreover, they say, the money-losing federal grazing program amounts to a generous subsidy to a handful of politically powerful "welfare cowboys" who produce less than 3 percent of the nation's beef.

Ranchers counter that their industry has been unfairly maligned by environmentalists bent on turning the nation's public lands into nature preserves. They note that grazing, properly managed, can benefit vegetation used by wildlife and suggest that ranching is a vital thread in the fabric of the West, its culture as well as its economy.

"It's not the money, it's the way of life," said Frances Biebelle, whose husband, Walter, 69, wears a neck brace from a "horse wreck" last October. ("My feet was in an oak tree and my head was in a rock pile," he explained.)

At first blush, the conflict over grazing may seem overblown in the Gila, an arid, Connecticut-sized expanse of sagebrush, juniper and pine forest. Cattle, after all, have been part of the landscape here since Spanish settlers drove them north from Mexico around 1600. The forests still are thick with elk, bear and other wildlife.

But there is little question that four centuries of ranching have taken their toll. Cattle are so pervasive here that Forest Service biologists complain they lack a natural "baseline" on which to judge range conditions.

"Other than mesa tops or a bench surrounded by rocky bluffs, everything has been grazed at one time or another," said Wayne Buckner, the ranger in charge of the Gila's Silver City district. But this is enough to give forest biologists a reasonable idea of how the range should look: a profusion of shrubs and grasses, lush stream banks shaded by willow and cottonwoods.

The reality often is quite different. Cattle are compulsive eaters, consuming an average of 900 pounds of vegetation each month. The result in many parts of the Gila is a landscape dominated by manure piles, juniper and "blue grama" -- a grazing-resistant grass that has supplanted other native species.

John Baldwin, a Forest Service range specialist on the Gila, parked his truck in the midst of one heavily used area. "Just looking at it from the composition and density of the plants, it's not near where we want it to be," he said. "We may never get it back to where it once was."

Cattle also had left their mark on the banks of a nearby stream. "It's just like a bombshell went off," Baldwin said. "There's not a blade of grass."

The situation on the Gila is hardly unique. The BLM, which oversees the bulk of the nation's public range -- about 174 million acres of it -- reported last year that 52 percent of its land was in fair or poor condition, compared with 3 percent in excellent or "natural" condition.

Much of the worst damage occurs in streamside, or "riparian" areas, to which the cattle are drawn, and which are critical to biological diversity in the arid West. More than half the streams on BLM lands in Colorado are in poor condition, according to a 1988 study by the General Accounting Office. The assessment for BLM lands in Idaho found that 80 percent of 12,000 miles of streams were "in some stage of a degraded condition."

"Cattle are alien creatures to this part of the world; it's too hot and dry for them," said Jim Fish, a New Mexico environmentalist and co-founder of the Public Lands Action Network. "It's like growing bananas in Alaska."

But grazing and environmental catastrophe do not necessarily go hand in hand. Range scientists say that grazing can actually improve vegetation, much as a mowing a lawn stimulates the growth of grass. The trick, they say, is good management: rotating pastures, building fences to protect sensitive areas, placing salt blocks away from streams to prevent overuse by cattle.

"You can't just say, 'Take the cows off and everything will be fine,' " said Pat Morrison, a wildlife biologist for the Reserve ranger district. "So many changes have occurred that it's never going to go back to what it was in 1900."

Under pressure from environmental groups and some members of Congress, land management agencies have begun to enforce with more vigor rules protecting streams and other sensitive areas. But the changes have caused deep resentment among ranchers who see them as eroding their claim to the public lands.

Nowhere is the conflict sharper than in Catron County, where ranchers say an overabundance of elk is responsible for much of the overgrazing the Forest Service wants to eliminate. "We just finally stood up and said, 'We're not taking the cows off until you take the elk off,' " said Manning, of the cattle growers association.

He and other local ranchers contend that grazing permits are akin to property rights, and therefore should not be subject to "third-party" interference by environmentalists and others. They note that a ranch typically is priced on the basis of the grazing permit associated with the property, and that the permits are taxed as assets on inheritance. Under the county ordinance passed last August, any Forest Service official who tampers with a federal grazing permit theoretically is subject to criminal charges.

But the Forest Service takes a different view -- namely, that a grazing permit is a privilege without monetary value, and that the government never intended to cede control of its public lands to a single industry.

"Somebody from New Jersey or New York, it's just as much their land as his," said Mike Gardner, the ranger in charge of the Reserve district.

Although the county ordinance has yet to be enforced, "it's made the job that we do a lot more difficult," said Toby Martinez, the Gila's chief range manager. "All of our employees are operating under threat."

Ranchers are equally resistant to another longstanding charge by environmentalists and some federal land managers: that they don't pay enough for the privilege of running their herds on public lands.

Congressional studies have shown that federal grazing fees are only about one-fifth the rate for private lands, prompting criticism that the government is subsidizing the 27,000 ranchers who hold federal permits.

Last year, for example, the BLM spent $35.3 million on its grazing program while recouping fees of $18.5 million.

But repeated attempts to raise the fee have run into a wall of opposition from cattlemen and their allies in Congress. "Never has so much been given to so few so easily," said Rep. Mike Synar (D-Okla.), a leading proponent of higher grazing fees.

Don Cullum, an oilman turned rancher near the Catron County seat of Reserve, said he thinks the local ordinance is misguided. But he called Synar's grazing fee legislation a "crime" and insisted that the government already gets the better end of the deal.

Cullum, 54, who began running cattle here 13 years ago, lives with his wife in a spectacular log house so remote that he has to ford a stream to reach his front door. He is proud of the work he has done to improve range conditions on his allotment.

He recalled his success in blocking a logging company from clear-cutting near his property and the poachers he has run out of the forest.

And Cullum warned that if higher fees force him out of the cattle business, he might be forced to sell out to the vacation home developers who routinely scout the area. "And now they want to run me off the land," he said, voice rising. "The goddam government should just get out of our business."