She said train systems all over the world dump wastes on tracks. A report 11 years ago by the Department of Health, Education and Welfare found no evidence to link the dumping with illness. Because there was no sign of harm and the cost of fitting cars with long-term retention tanks was considered prohibitive, Congress exempted Amtrak in 1976.

''Our position is and continues to be that we are not governed by local laws,'' Mrs. Martin said, ''and we have a specific exemption from Federal laws to, in effect, release the waste that we do.''

But Tom Curtis, director of the natural resources group of the National Governors Association here, said the Federal Government , has given Amtrak permission to pollute at the same time the Government is suing municipalities for not having enough waste treatment centers.

Amtrak Is Taken to Court

''The waiver of sovereign immunity is thrown in our face all the time,'' Mr. Curtis said. ''This Amtrak case is just another example of the Federal Government acting in a way to put itself above its own law.''

Officials in Florida took Amtrak to court last year after the railroad refused to stop the dumping. In December, Amtrak was found guilty of littering and, pending the result of an appeal, is facing a fine of up to $20,000. Lawsuits are also pending in Utah and Oregon.

Amtrak is testing six new retention systems for toilets. It says that a solution is neither technically viable nor affordable right now, and that three years may not be enough time to develop a workable system that has to work up to 72 hours in temperatures from 60 degrees below zero to to 120 degrees Fahrenheit.

The Job Could Cost Millions

The total cost of adjusting the toilets on the aging cars ranges from $80 million to $300 million. Amtrak argues that at a time when it may be facing a cut in its Federal subsidy, such cost is prohibitive. This year Amtrak will receive a $519 million operating subsidy and an additional $83 million for new capital spending.