The Environmental Protection Agency is embroiled in a dispute over a new ruling that precludes some environmental groups from challenging agency decisions on use of pesticides.

The ruling involves a complicated redefinition of who is "adversely affected" by agency actions restricting use of pesticides under a 1972 law and, thus, who can challenge them.EPA now says that only groups with an economic stake in the decision may take issue.

The Environmental Defense Fund contends it has the right to protect decisions it believes do not go far enough and has appealed. The ruling, says EDF attorney Jackie Warren, "has streamlined the public right out of the process."

Warren said the effect of EPA's action has been to "insulate themselves from criticism."

EDF's charges have set off a debate inside EPA. The head of the toxic substances division disagrees with agency lawyers on the issue, but says he will await a final decision by EPA administrator Douglas Costle, who has promised an answer by the end of the month.

"We ought to have open hearings and shouldn't as a policy matter restrict groups like the EDF," said Steve Jellineck, assistant administrator for toxic substances.

The controversy had its origins in a 1978 case involving an agency decision to limit use of the chemical DBCP, Shell Oil Co., the manufacturer, challenged the right of a California farm-workers group to contest the ruling and the judicial officer involved agreed with Shell, saying the farm-workers had no economic interest in the case.

On the basis of that ruling, an administrative law judge for EPA ruled earlier this year that the Environmental Defense Fund had no standing to challenge an EPA decision to ban some uses of the pesticide chlorobenzilate. EDF argued that the limited ban did not go far enough to protect the public's health.

EDF has appealed the ruling freezing it out of the hearings process to Costle and says it will go to court if he rules unfavorably.

EPA attorney Mitchell Bernstein said the current rules give environmentalists two options to fight the use of pesticides: they may file separate motions through the courts to cancel use of a pesticide, or they may submit their information during the hearings which take place before the EPA issues notice of its intent to cancel a chemical.

But Warren said these methods are clumsy and time-consuming. Court cases could take up to three years, she said, and the EDF, with less money and time than manufacturers, needs to be able to know its adversary's position in order to challenge it most effectively.

"The only way you can show the benefits of a chemical are jumped-up is through cross-examination," she said.

The rationale behind the EPA ruling is that complaints by outside interests delay effective action with endless hearings, according to Bernstein.

If no complaints are offered on an EPA decision to cancel some uses of a chemical, the decision goes into effect 30 days later. Otherwise, hearings can postpone bans of chemicals.