The Environmental Protection Agency decided yesterday to permit the continued use of agricultural chemicals that find their way into processed foods and that pose no more than a 1-in-1-million risk of cancer over a lifetime of regular consumption.

The action, in effect, continues to bypass a 37-year-old federal ban on allowing concentrations of carcinogenic chemicals in processed foods greater than those on the raw farm products.

The decision by EPA assistant administrator Linda J. Fisher applied for the first time a "neglible risk" standard to cancer-causing pesticides and other farm chemicals that concentrate in almost any food products that are canned, frozen, cooked or otherwise processed before sale. The new standard will be applied to dozens of the chemicals found in hundreds of food products that were licensed years ago and remain largely unregulated today.

In establishing the criterion, the EPA is attempting to resolve a longstanding conflict between two provisions of a 1954 food-safety law. The agency is required by one provision of the law to balance benefits against risks in regulating pesticides on raw produce, while another provision -- the Delaney Clause -- strictly prohibits carcinogens whose concentration increases when the food is processed.

The conflict lay dormant for years because there was little evidence on the impact of processing. But as new health studies discovered how such chemicals as Alar used on apples were transformed into potent carcinogens during processing, pressure intensified on the EPA to implement the Delaney Clause.

Yesterday's decision, applying the new standard to seven pesticides, reflects the EPA's belief that Congress envisioned a "cutoff" for chemicals of negligible risk, Fisher said. In coming months and years, EPA is to review dozens of additional chemicals under the criterion.

"What the agency is doing can only be called lawless," said Al Meyerhoff, senior attorney for the Natural Resources Defense Council, one of several groups petitioning the EPA to invoke the Delaney Clause. "It is grafting on to the federal statute a nonexistent power to determine how many cancers in the American population will be acceptable."

Meyerhoff said that if the Delaney Clause were faithfully implemented, the EPA would rid the food supply of all cancer-causing chemicals, creating incentives for the entry of safer alternatives.

"It's the only way you can make sense of two inconsistent provisions of the statute," she said. "We want the safest food supply possible. But agricultural chemicals greatly improve the abundance and variety of foods in our diet. We believe the statute allows for them as long as the health risks are trivial."

The "negligible risk" standard was proposed by the EPA in 1988 as evidence began mounting against Alar. It established a limit of 1 in 1 million on the odds of getting cancer from daily exposure to high concentrations of a single farm chemical for 70 years.

No limit was set for the cumulative risk of consuming the entire range of cancer-causing chemicals in the food supply.

According to the EPA, 63 agricultural chemicals are known to cause cancer in laboratory animals. To determine which of the substances increase in concentration in processed foods, the agency has ordered studies by the manufacturers. A 1987 study by the National Academy of Sciences identified more than 800 processed foods containing carcinogenic pesticides, many of which were believed to become concentrated during processing.

Yesterday's action was triggered by a challenge to the "negligible risk" standard from the state of California, the AFL-CIO and two consumer groups. In a petition to the EPA, they demanded that the Delaney Clause be invoked for the banning of seven carcinogenic pesticides that are said to concentrate in processed foods.

Fisher, the EPA's top pesticide regulator, said that continued use of two of the chemicals will be allowed because they pose "trivial" risks of cancer -- less than 1 in 10 million for benomyl, which is used on raisins and tomato products, and 1 in 1 billion for trifluralin, which is used in peppermint and spearmint oil.

A chemical used in cottonseed oil -- phosmet -- will be permitted to remain in use until the agency gets new data on its cancer potency in July, she said.

But the agency decided to err on the side of caution on dichlorvos, used for nonperishable, bagged goods such as chocolate powder. Unable to determine whether its risk is neglible and not expecting new data soon, the agency proposed to ban it.