After a three-hour meeting Wednesday with Attorney General Janet Reno, Sen. Orrin Hatch, R-Utah, says he's more convinced than ever that she is flouting the law to protect President Clinton.

He said memos by her staff and FBI Director Louis Freeh make clear she knows the law required her long ago to appoint an independent counsel to investigate irregular fund raising by President Clinton and Democrats in 1996 - but she still refuses."This matter has now passed the point of reasonableness, and I am no longer willing to give the attorney general the benefit of the doubt: It is now beyond dispute that she is not living up to her duty to enforce the law," Hatch told the Senate.

But stories leaked to the national press on Thursday suggested Reno finally may be close to appointing that independent counsel to probe 1996 Democratic fund raising, which Hatch has sought for a year and a half.

The Washington Post, quoting anonymous sources, said Reno ordered her staff to finish a review by next week into whether grounds exist to open up a more formal 90-day inquiry into whether such an independent counsel should be appointed.

Hatch complained that Reno doesn't need additional inquiries and that a mountain of evidence of possible wrongdoing has already surfaced - and she should appoint an independent counsel now.

"The law allows her to appoint an independent counsel if she has information that a crime may have been committed," Hatch said, "but she has read the law as requiring that the evidence shows without a doubt that a crime has been committed.

"This standard is way too high," Hatch complained in a Senate speech. "By setting up these legal standards, she basically has required that a smoking gun walk in the doors of the Justice Department before she will do anything."

Hatch - chairman of the Senate Judiciary Committee - requested Wednesday's meeting with Reno last July. Also attending were chairman of two House committees investigating possible campaign finance misdeeds: Henry Hyde of the House Judiciary Committee and Dan Burton of the House Government Reform and Oversight Committee.

Reno showed them heavily edited memos by Freeh and Charles LaBella, who had headed a Justice Department task force looking into fund-raising matters.

Hatch said that even though more than 60 percent of the memos had been blacked out, "It is clear that both gentlemen have advanced strong, convincing arguments in support of a broad-based independent counsel."

But Hatch said, "When I asked the attorney general and her top advisers why those recommendations have, thus far, been rejected, the answers I received were vague, insufficient or unconvincing."

Hatch also said he is concerned by a comment by LaBella that "the public only knows 1 percent of what's out there. That scares me because I thought we have heard a lot about abuses by the DNC (Democratic National Committee) and how foreign money corrupted our system. His remark shows just how much we need an independent counsel."

Reno's meeting with Hatch may have defused, however, a push by Burton to charge her with contempt of Congress for not giving his committee full copies of the memos by Freeh and LaBella that urged appointment of an independent counsel into fund raising.

Hatch said Reno's showing them edited versions of those documents Wednesday "is a solid first step toward a reasonable resolution of the dispute." But he added, "Nobody should conclude that the attorney general has been completely forthcoming with the Congress."

Burton said forcing a House vote to hold Reno in contempt is still a possibility, "but we made some progress today."

Burton, like Hatch, also said, "It is clear that an independent counsel in the campaign finance investigation is mandated by law. After today's meeting, my views have been reinforced that the attorney general appears to be trying to protect the president and vice president."

Hatch also complained that Reno's recent start of two narrow 90-day reviews of potential perjury by Vice President Al Gore and former White House chief of staff Harold Ickes are designed "to relieve the political heat."