WASHINGTON (AP) _ Government inspectors on Monday criticized the federal agency in charge of making sure coal companies pay for environmental damage for wiping $96.8 million in debt off the books.

The Interior Department's inspector general said the Office of Surface Mining wrote off debt without the approval of the department solicitor.

''Surface Mining did not have the authority to terminate this debt,'' the audit report said.

''Generosity is a virtue, but this is ridiculous,'' said Rep. Nick Rahall, chairman of the House mining subcommittee.

The debt has accumulated since 1978, when the government began assessing civil penalties against coal mine operators that failed to clean up land and water they contaminate while mining.

Harry M. Snyder, who heads the Office of Surface Mining, took issue with the inspector general's interpretation of what happened. He said mining companies aren't off the hook when the government writes off their debts as uncollectable.

''Debt write-off does not mean debt forgiveness or debt amnesty,'' Snyder said in a written statement. ''If the debtor ever applies for a new coal mine permit, the application is blocked until the debt is settled.''

Snyder said his agency hasn't closed the books on that $96.8 million, even though it was not mentioned in a required financial report to the Treasury Department. He said the agency is awaiting final rulings on whether the debts dating from 1978 to 1983 are uncollectable.

The audit did not name the companies that have defaulted on their debts and the Office of Surface Mining as a matter of policy does not release the names of mines that have not paid abandoned mine reclamation fees.

Snyder agreed with another criticism against his agency.

The inspector general's office said the Office of Surface Mining was responsible for $2.5 million worth of property and equipment which now could not be located.

The report blamed that on the system used to keep track of what the agency owns.

Rahall said the missing property was evidence the agency is ''having difficulties managing itself, let alone implementing the federal surface mining act.

''I am certainly going to inquire as to what type of property and equipment the OSM has misplaced,'' Rahall said. ''In the meantime, perhaps Harry Snyder should begin bolting down all the desks and chairs at the agency.''

The inspector general's office said a detailed report on the missing property had been completed but not yet made public.