The Environmental Protection Agency announced yesterday that, as an experiment, it will permit the burning of more than 700,000 gallons of toxic chemical waste off the Atlantic Coast next year.

The waste, mostly oils laced with polychlorinated biphenyls (PCBs), are to be burned aboard an incinerator ship owned by Chemical Waste Management Inc. at a site about 140 miles east of Cape May, N.J., and about 175 miles northeast of Ocean City, Md.

It would be the first test of ocean incineration since a 1982 research burn in the Gulf of Mexico, and the first at the Atlantic site, one of several the EPA is considering as regional ocean-incineration sites.

EPA officials called the experiment "a very significant step forward" in the agency's decade-long effort to license seagoing incinerators as an alternative to land-based disposal or destruction of hazardous wastes.

"The research burn would provide more data on the technical and operational issues related to ocean incineration, as well as respond to the interest and questions about this technology from the scientific community and the general public," the agency said.

But the announcement was quickly attacked by some environmentalists, who contend that the plan is "ill-conceived" and could cause irreparable damage to the marine environment.

"New Jersey is being used as test lab again," said Peter Dykstra of the environmental group Greenpeace. "Once again, they're following the path of least political resistance."

The EPA contends that the tests will release less than .02 gallons of residue a day into the environment, an amount that "will not be distinguishable from levels of substances already present in the environment." Conservationists said they were concerned about the cumulative effects of the residue and about the possibility for massive impacts from spills and other accidents.

Sally Lentz, an official with the Oceanic Society, said the EPA "has not addressed the public fear inherent in transportation and transfer" and may not have enough information on the Atlantic site to determine if the residue is having an impact. For comparative purposes, she said, the agency is using data from an adjacent site that has been used for years as a dumping spot for New York City sewage sludge.

The EPA has conducted four experimental burns since 1974, with what agency officials described as encouraging results. But ocean incineration has become a politically touchy issue in recent years, particularly along the Gulf of Mexico, where test burns aboard Chemical Waste Management's incinerator ship Vulcanus I have been conducted.

In 1983, thousands of angry Gulf Coast citizens jammed into public hearings to protest the EPA's plans to grant Vulcanus I a formal operational permit, contending that the test burns were flawed and the agency had not considered the impact of transporting and storing millions of gallons of toxic chemicals in the ship's proposed port of Mobile, Ala.

Last year, the EPA agreed to delay the operational permit until it had cleared up the remaining scientific questions and written formal regulations for the seagoing incineration industry.

At present, Chemical Waste Management of Oak Brook, Ill., which has since built a second incinerator ship, is the entire industry in this country. A would-be competitor, the New Jersey-based At Sea Inc., defaulted on its government-guaranteed loans last week and the future of its two federally financed incinerator ships is in doubt.

EPA officials said yesterday that they were initially prepared to grant test permits to both firms, but decided not to approve At Sea's application because of concerns that the financially troubled company would not be able to pay the estimated $1.8 million it will cost to run the tests.

EPA officials said the test burn will take place next spring, and is expected to last 18 days. According to Chemical Waste Management official William Y. Brown, the company will burn PCB-laced oil that had been stockpiled at its hazardous-waste landfill in Emelle, Ala., in anticipation of getting a permanent permit two years ago.

Last year, EPA charged Chemical Waste Management with storing the waste at Emelle illegally, and the company agreed to ship it to Chicago for destruction in a land-based incinerator. But company officials said they expect to have about 600,000 gallons remaining by next spring, which will be shipped by rail to Philadelphia and transferred to the incinerator ship.