The Interior Department, although conceding possible environmental problems, is renewing long-term water leases to farmers in central California in an attempt to put to rest an emotional fight over federal water in the West.

The controversy over water distribution to central California farmers has been marked by disagreement within the administration for months. Environmentalists have characterized the outcome as another barometer on the Bush administration's desire to protect the environment and natural resources.The Interior Department, which issues the leases, has favored automatic renewal, while the Environmental Protection Agency has argued that a formal environmental assessment should first be made. The president's Council on Environmental Quality is planning to review the matter Thursday.

But Interior Secretary Manuel Lujan Jr. announced Tuesday that he has decided to renew the first lease to come before the department, committing federal water to the Orange Cove Irrigation District in the San Joaquin Valley for another 40 years.

Lujan said the decision would not affect the White House council's proceedings. The council has no authority to block the leases or order a formal environmental impact statement.

Environmentalists have opposed renewal of the long-term leases because the commitment locks the government into supplying a certain volume of water to farmers well into the next century at a time when rapid population growth is creating new, non-farm water demands.