After the chaotic 23-horse Kentucky Derby in 1974, officials at Churchill Downs adopted a rule that would limit the size of future fields to 20. If more were entered, the 20 with the greatest career earnings would be permitted to run, a standard that seemed simple, logical and fair.

But it has been none of these things. The earnings rule has triggered lawsuits and controversy that may tarnish this year's Derby. It may permit relatively bad horses to enter the race while excluding legitimate contenders. And instead of keeping the size of Derby fields manageable, it has made 20-horse cavalry charges an annual affair.

This year's problems began when Latonia Race Course emulated Churchill and instituted an earnings rule for the $200,000 Jim Beam Spiral Stakes. Fourteen horses were entered and the top 10 money-winners were drawn into the race, but before the stake Latonia officials learned that the Daily Racing Form had printed the wrong earnings total for Marfa, who happened to be the favorite. He didn't belong in the race. But the people at Latonia chose to do nothing, and when Marfa won, the lawsuits started flying.

The owners of the second- and third-place finishers, Noble Home and Hail to Rome, asked that Marfa be disqualified, but the Kentucky Racing Commission upheld the result after a hearing Tuesday.

Afterward, the attorney for the losing owners said he thought that even if they didn't get the purse money, the horses should be credited with it for purses in determining Derby eligibility. Noble Home and Hail to Rome currently rank 17th and 21st in earnings; their Derby status is iffy. But if they should be credited with money they did not win and bump other horses out of the race, there would be more lawsuits and more chaos.

Nearly 50 horses still are listed as potential candidates for the Derby, and so for the first time the earnings rule is likely to have a significant impact on the lineup for the race. And the inequities of the rule are becoming apparent.

Yesterday, the trainer of My Habitony, who finished second against a strong field in the Santa Anita Derby, said he wouldn't be coming to Churchill Downs because it seemed so unlikely that his colt could get into the race. Yet Luv A Libra is guaranteed a place in the field; he won a $270,000 stake limited to Florida-breds last September and hasn't won a race since.

There was a time when the trainer of a horse like Luv A Libra wouldn't seriously consider coming to the Derby because the animal wouldn't belong in the race. But now the fact that he is the 11th-leading money winner among the Derby candidates has legitimized him.

"Ten years ago," said William Rudy, Churchill Downs' public relations director, "a man who thought he had the 20th best 3-year-old would go somewhere else. But now they start saying, 'We're in the top 20,' and the rule almost forces them in. It has created 20-horse fields as a matter of course, and it's working to the detriment of its original purpose."

Rudy indicated that the track may scrap the earnings rule next year and adopt a system that awards points to the top four finishers in major stakes races. That would exclude a horse like Luv A Libra, but it also would exclude Deputed Testamony, a legitimate Derby contender whose trainer chose to prepare him in a stake for Maryland-breds.

"I think I can argue against any system," Rudy said. But the arguments against the earnings rule are so forceful that the current system needs to be overhauled.