Two new street cleaning trucks went to work on the roads inside Armco Inc.'s Middletown, Ohio, steel plant on Friday, sucking up dust and dirt. Other trucks will spray a rubbery liquid on road shoulders to keep down the amount of dirt collecting there, and a new water tower will bathe the plant's one-million-ton coal pile regularly to control coal dust.

Armco's $4 million scrubbing is a closely watched attempt by the steel company to find a cheaper way of meeting the Environmental Protection Agency's air quality standards for the 1980s.

Armco has proposed a trade-off. It wants to reduce the dust rising from the grounds around its plant instead of installing a $16 million control system to trap "fugitive" particles that rise into the atmosphere after evading the plant's existing control equipment on stacks and vents.

It is the first major test in the steel industry of a new regulatory approach called the "bubble concept." This assumes that a plant is covered by an imaginary bubble with a hole at the top through which all pollution emerges. Plant managers would be allowed to find the cheapest way to reduce pollution as long as the total discharge still met federal requirements. Specific control standards for each foundry and oven would no longer be required, under the bubble concept.

The armco experiment will also test whether the adversarial relationship between the steel industry and its regulators is changing, in the face of the industry's severe economic slump.

The American Iron and Steel Institute, in its study "Steel at the Crossroads," contends that current and proposed environmental controls drain capital away from badly needed modernization programs that could restore the industry's competitive edge and profitability.

The Congressional Office of Technology Assessment has countered that the industry overstates its environmental burdens -- and that the cleanup is essential, anyway.

A hard fight lies ahead in Congress and the courts over the final round of EPA environmental controls attempting to bring the steel industry into compliance with the Clean Air Act by 1982.

While they fight with one hand, the industry and its regulators are warily exploring environmental compromises with the other. A tripartite committee of industry, union leaders and Carter administration officials is finishing work on a proposed "industrial policy" intended to strengthen the steel industry without rolling back federal commitments to reduce inflation, curb pollution and maintain a free trade policy.

Commerce Secretary Philip M. Klutznick says the committee should have its recommendations on environmental policies and other issues completed by the end of August for review by the White House.

The tripartite steel committee's preliminary report on environmental issues spoke glowingly of the Armco experiment, predicting it "will probably be approved" by EPA.

EPA enforcement officials say that however important the Armco bubble experiment is as a symbol of regulatory cooperation, the agency must be satisfied that air quality targets aren't sacrificed.

John Baker, Armco's director of environmental engineering, says that the company's plan will keep 4,000 tons of dust from being blown into the air each year from roads and coal piles -- and 83 percent reduction based on a consultant's calculations and the company's preliminary testing.

The process EPA now requires would compell Armco to build a huge vacuum cleaning system called a bag house to trap the iron oxides and other particles present inside the buildings.These emissions amount to only 651 tons a year, Barker said.

"The idea does not end everyone's air quality problems," says Armco Chairman C. William Verity Jr. "It does not ease the regulations, nor delay any compliance dates. What it does is give companies the freedom to find their own ways to improve ambient air standards.

EPA will be watching closely to see whether dust controls bring air quality around the plant to within required standards, says Richard D. Wilson, the agency's assistant association director for enforcement. Improvements is not enough.

"The bubble is a perfectly good concept, but there are lots of opportunities to take a valid approach and use it to delay meeting regulations or escape from them altogether," he said. EPA won't permit that, he said.