The Environmental Defense Fund threatened yesterday to sue the federal Environmental Protection Agency unless the agency takes action to stop Montgomery County from using on county highways rock laden with cancer-causing asbestos.

The Defensea Fund gave EPA until May 30 to seek a federal court injunction against further use of the rock on Montgomery County roads or face court action itself, a spokesperson for the privately financed environmental group said.

The demand by the Defense fund was based in part on the unpublished findings of Dr. Irving J. Selikoff - regarded as the nation's leading authority on the relationship between cancer and asbestos - that the asbestos concentrations found near the Rockville Curshed Stone quarry, a privately owned quarry that provides the stone, "average approximately 1,000 greater than the average values found in 50 cities in the United States."

The quarry's main product is serpentinite, which contains about 1 per cent asbestos fiber. Serpentinite is commonly used through out the Washington area as a road-surfacing material.

Additionally, the fund demanded the EPA undertake a "comprehensive study" of other quarries in the United States whoes products may contain asbestos. The study could then be used as part of what the group proposed as a "revision" of the asbestos regulations of the Clean Air Act.

Spokesmen for the quarry and the EPA could not be reached for comment.

Defense Fund director Robert Harris told a Washington press conference yesterday that asbestos fibers in the rock are easily released through abrasion. He said that children who wait for school buses near unpaved roads lined with serpentinite, as well as children who play on playgrounds paved with the stone, constitute the "high risk" group.

Harris also urged the county to repave the 125 miles of rodds now covered with the rock. Such a resurfacing program would cost the county $750,000, plus an additional $6.25 million in maintenance costs over the next five years, according to Richard J. Lynch, director of the country's Department of Transportation.

Asbestos is known to cause a a rare type of cancer, called mesothelioma, which usually does not appear in persons until 20 to 40 years after exposure to asbestos.