Washington Federals owner Berl Bernhard yesterday denied reports that he had already decided to fire Coach Ray Jauch if he did not turn around the team in the second half of the season, but did not rule out making coaching or management changes at some point. Also, Bernhard differed with Jauch over the use of star running back Craig James.

However, said Bernhard, "It's easy to make decisions. We're building for the long haul, though, and I don't want to make any quick moves that I might regret. I am determined not to be rushed into anything."

Quoting an unnamed "high league source," the Toronto Globe and Mail had claimed that Jauch, who has a guaranteed three-year contract worth $575,000, would lose his job if the 1-8 Federals did not improve. Bernhard, however, said, "It's just not true. No decisions like that have been made.

"Right now I am looking at a series of options to make this team better. I am making a hard appraisal of what we need. There are all kinds of rumors going around because I've asked so many questions lately."

Bernhard said he hoped Jauch would begin using James more frequently. "I'll make suggestions to Ray, but only as an outsider," Bernhard said. "If I did otherwise, it wouldn't be right."

Jauch said he will "continue to use James the same way. We have two backs and we plan to use them equally."

After the Federals lost, 35-3, to the Birmingham Stallions last Sunday, Bernhard met privately with the players, Jauch and General Manager Dick Myers "in order to find out what's gone wrong."

When Mike Faulkiner quit as the Federals' director of player personnel in late February to join the New York Jets as an assistant coach, the responsibility of finding new players fell entirely to Myers. Bernhard said he hoped to hire a player personnel director soon.

Last week, Jauch replaced quarterback Mike Hohensee with Joe Gilliam in the second half. This week, against the Chicago Blitz, it appears Jauch plans to use Hohensee much longer.

"We'll still have two active quarterbacks," said Jauch. "But Hohensee will get most of the work. He'll see most of the action."

At practice yesterday, Hohensee quarterbacked the team and said, "It helps me a little knowing I'm going to play. You don't have to be worried about being pulled after making a mistake or two . . . I felt a little pressure every game because I felt if I didn't do well I was coming out, and I didn't feel I played that badly."

In other developments, Commissioner Chet Simmons said Denver likely would be the site of the U.S. Football League's championship game July 17. New Orleans had been considered, but because that city does not have a USFL team and can be extremely hot during the summer, Denver was thought to be more desirable.

Simmons said expansion plans for the league would be announced next week, with franchises going to San Antonio, San Diego, Houston and Pittsburgh.

"Afterward, we may even announce one or two more," he said.