The Environmental Protection Agency, in an important regulatory decision for the biotechnology industry, yesterday halted the first authorized release of a live gene-engineered microbe into the environment, suspended the license of the company doing the experiment and fined the firm the maximum amount allowed by law.

The EPA charged Advanced Genetic Sciences (AGS) Inc. of Oakland, Calif., with violating an EPA permit and knowingly falsifying its permit application. The company was fined $5,000 on each of four counts.

"This is viewed as a very serious matter by the government and the industry," said Richard Godown, director of the Industrial Biotechnology Association. He expressed hope that AGS' actions would not be held against the industry.

AGS President Joseph A. Boukaert said the company was disappointed by the ruling and that it acted responsibly and in good faith, at no time knowingly falsifying information provided to the EPA.

The EPA has "set a precedent for the biotechnology age. Unlike petrochemicals and nuclear power, this is a sign regulators are going to be tough in the biotechnology age," said Jeremy Rifkin, a critic of gene engineering and opponent of the AGS experiment.

The case will change the way the EPA handles biotechnology cases, said John A. Moore, assistant administrator for pesticides and toxic substances. Proposals will be examined more closely and "anyone else in the biotechnology business can probably profit from the experience of AGS in this regard," he said.

He added that "the confidence of the public may have been eroded" by the case, making things difficult for others in the business.

The case is the first of many expected in which gene-engineered microbes are created in the laboratory and released outside to block pests or strengthen plant defenses.

The AGS experiment would have put two laboratory-altered bacteria onto strawberry plants to protect blossoms from frost. Such a product, if used on many crops, could prevent frost damage totaling hundreds of millions of dollars annually.

The EPA required the company to keep the microbes in a containment facility while testing to see whether they would be safe to release.

In some key tests, plants and trees were to be sprayed or injected with the microbes to determine whether they could cause disease in normal crop plants and fruit and nut trees. If disease was found, the microbes would have to be considered unsafe and the experiment halted.

But the company violated the EPA rules and conducted tests by injecting microbes into trees in open air on the company rooftop beginning in February 1985.

The company had told the EPA, in what the agency called "knowingly false" statements, that it would do the tests in a greenhouse at 21 degrees centigrade.

In addition, the EPA said, company notes on the illegal rooftop test failed to show even the most basic facts, including temperature, humidity or wind conditions.

The EPA also charged that the notes did show, but the company failed to tell the agency, that some canker development might have been caused by the microbes being injected. This could indicate that the microbe was not as safe as the company apparently assumed.

EPA officials said the agency will await a revised AGS experiment plan that, if approved and shown safe, may allow the company to go ahead with the experiment.