JEFFERSON CITY, Mo. -- A proposed U.S. Environmental Protection Agency rule designed to expand biofuel has brought the biodiesel market "to a grinding halt" because it does not allow most blends of soy oil, according to the National Biodiesel Board.

The Renewable Fuel Standard, proposed in May by EPA, for the first time would require biofuels to meet emission-reduction targets.

At the same time, the standard is supposed to increase the supply of renewable fuels to 36 billion barrels annually by 2022.

EPAs proposal said that diverting soy crops in the United States to make biodiesel, rather than food, would lead South American countries such as Brazil to convert new land, especially rain forests, to soybean production, negating any cut in pollution emissions.

"The conversion of rain forest results in a much larger increase in [greenhouse gas] emissions than the conversion of grassland," the EPA document said.

But biodiesel and agricultural representatives in the United States said excluding the direct use of soy oil would cripple biodiesel production, and the EPA is wrong in its estimate of how much tropical rain forest would be cut to expand soybean production.

"In terms of the effects on the biodiesel industry, the EPA proposal has brought everything to a grinding halt because the people who have to do the blending are unsure what to buy," said Michael Frohlich, spokesman for the National Biodiesel Board.

Frohlich said 60 to 65 percent of all U.S.-produced biodiesel comes from soy oil.

"Under EPA reasoning, for every acre of soybeans cultivated in America for biodiesel, one acre of deforestation would occur in South America, particularly in Brazil," Frohlich said.

However, "biodiesel production grew in the United States from 25 million gallons in 2004 to 690 million last year, and if the EPA logic were accurate, soybean acreage would have increased in Brazil, when it has actually fallen."

EPA declined comment on Frohlichs statement.