With 12,000 gallons of napalm already on a train headed for the Midwest, the Indiana company that agreed to recycle 23 million gallons of the incendiary mixture now wants out of the deal.

Two 6,000-gallon drums of the jellied gasoline, sitting in storage since it was stockpiled for the Vietnam War, were on the train somewhere between California and Indiana. The train was believed to be in New Mexico on Monday, a railroad spokesman said, but its location Tuesday morning could not be determined.The shipment - the only one so far - left Saturday.

Pollution Control Industries in East Chicago, Ind., had agreed to a $24 million contract under which the 23 million gallons stored at the Fallbrook Naval Weapons Facility north of San Diego would be turned into fuel for cement kilns over two years.

By Monday, the company's desire to get out of the deal had gone public.

"Though we still feel it's the right environmental thing to do and that we're the right company to do it, we're just not big enough to withstand this political pressure," PCI President Robert Campbell told The Post-Tribune in Gary, Ind.

And in a letter to the Navy and Battelle Memorial Institute, the project's primary contractor, PCI attorney Steven Jay Katz said: "PCI hereby advises Battelle to cease making any further shipments and to recall all shipments already made."

The Navy had little public reaction. Lt. Cmdr. Jon Smith of the Naval Facilities Engineering Command in Alexandria, Va., said he only could confirm that the letter was sent.

He said he didn't know what might happen to the 12,000 gallons already en route.

Monday's news further roiled congressmen who were already clashing over the napalm. Some had fought to remove the napalm, and others didn't want it hauled through their communities or recycled near them.

Rep. Ron Packard, a California Republican who wants the napalm removed, accused Indiana and Illinois congressmen of pressuring the Clinton administration to put pressure on the company to break its contract.