A hotly contested initiative headed for the November ballot puts California's new governor in a position he's yet to face - taking sides in a fight between two powerful constituencies that are convinced he's on their side.

Gov. Arnold Schwarzenegger is already on record supporting the primary aim of the California Chamber of Commerce-backed measure to "reform" the state's Unfair Business Competition Law.

"We will get rid of the shakedown lawsuits," he told 2,000 people at a chamber breakfast in Sacramento last week, invoking the name of the chamber-led "Coalition Against Shakedown Lawsuits" that circulated petitions for the initiative.

"We certainly expect him to support it," John Sullivan, a leading proponent of the measure, said after Schwarzenegger's remarks.

But on the very day the Republican governor's comments were reported in the news media, leaders of the Sierra Club and other influential environmental groups who have been impressed with Schwarzenegger's early moves on environmental issues, released a stern warning about the initiative's impact.

"California's air, water and earth are simply too precious to allow polluters immunity from prosecution," the statement read.

"That is why California environmentalists oppose the big-business-sponsored initiative that would protect polluters. The initiative would severely limit enforcement of the state's unfair business competition law, which has become a crucial tool to protect the environment from the unlawful practices of polluters."

The way the initiative is written, private individuals or groups could sue a company only if they could show specific financial damage.

It has not yet been certified for the ballot, but more than enough signatures have been turned in, Sullivan said, and his group is "hoping and expecting" Schwarzenegger will appear in television commercials and actively campaign for the measure.

The main target of the initiative is said to be frivolous or exploitative lawsuits filed by private attorneys who use the broadly written Unfair Business Competition law to win big settlements for their clients.

"This law is valuable as consumer protection," Schwarzenegger said during his campaign, "but lawyers have abused it to extort settlement money from businesses, who pass the cost onto consumers."

But the law, also known by its shorthand title, 17200, for the section of the California Business and Professions Code where it resides, has been a powerful tool used by environmentalists and other private citizens to attack companies that pollute.

Schwarzenegger's own director of the state Environmental Protection Agency, Terry Tamminen, used the law several years ago to successfully sue Chevron Corp. for polluting the air in Southern California.

Tamminen, who was an environmental activist at the time, was not available for comment on this issue. But spokeswoman Michele St. Martin said he's in a different role now and she's not sure where he stands on the initiative.

"He tries very hard to keep his past activities separate from his current job," St. Martin said. "He's not an activist anymore. He's a consensus-builder."

Environmentalists say they support going after "shakedown suits" filed by unscrupulous lawyers, but they maintain that private enforcement of environmental laws would be severely curtailed.

"We can all get on the same page on the shakedown lawsuits, but that's different from this initiative," said Michael Schmitz, a Bay Area environmentalist with a group known as CLEAN, a consortium of environmental groups and law firms that take on environmental issues.

"The shakedown lawyers need to be gotten rid of. But this initiative has missed its target. The ballot language is so specific and so focused on taking away the ability to bring action on behalf of the general public, that it's really going to limit our ability to go after some of these bad environmental actors."

Bill Magavern, a Sacramento lobbyist for the Sierra Club, said "it was disturbing to hear Schwarzenegger use the chamber's trademark phrase" in his remarks last week. But given some of the strong environmental activists who have the governor's ear, he hopes Schwarzenegger will rethink his position.

In addition to Tamminen, Schwarzenegger gets environmental advice from Robert Kennedy Jr., a cousin of his wife, Maria Shriver, and one of the leading environmental activists in the nation. Bonnie Reiss, a longtime close friend and adviser, is a respected environmentalist who founded a group called Earth Communications Office, where she helped inspire entertainment industry heavyweights to promote environmental protection.

The governor also has pleased environmentalists by making a strong push for hydrogen-powered cars and by successfully helping to lobby Congress to exempt California from federal rules that would have limited the state's ability to regulate emissions from gasoline-powered lawn mowers and other small engines.

At least two Schwarzenegger actions have angered environmental leaders, however. Before taking office in November, he named James Branham, a former lobbyist and spokesman for timber giant Pacific Lumber Co., undersecretary to Tamminen at the state EPA. Pacific Lumber has long been a target of environmentalists who say the company is not sensitive to environmental concerns in its logging operations.

And in March, Schwarzenegger's office accepted the least-stringent among several options to regulate the level of perchlorate in drinking water. The chemical, found in jet and rocket fuel, is a major source of groundwater contamination around American military bases.

"We're still cautiously optimistic that he will live up to his promise to be a green Republican," Magavern said. "This is a very big test. Where Schwarzenegger comes down on environmental enforcement will be one of the key tests of his commitment to protect our air and water."

While he's getting overall high marks from environmentalists, there's no constituency closer to Schwarzenegger than California business leaders and the state Chamber of Commerce.

The chamber broke its tradition of not endorsing candidates for governor in last summer's recall campaign, choosing Schwarzenegger early on because of his commitment to improve what he said was California's hostile business climate.

Election Watchdog, a group that monitors proposed initiatives for their impact on consumers, posted a release on its Web site last week pointing out that Schwarzenegger has received $1.3 million from business donors who've also given $2 million to the chamber-backed initiative.

The list of companies that have contributed to Schwarzenegger and the initiative campaign include dozens of auto dealers, insurers and several firms, such as Kaiser Permanente, who've been sued successfully in public-interest lawsuits brought by private plaintiffs.

Schwarzenegger spokeswoman Margita Thompson said the governor hasn't taken a formal position on the initiative. But she confirmed that he enthusiastically supports its aim.

"He'll look at it once it qualifies, but he absolutely supports the end of shakedown lawsuits," Thompson said.

"The initiative addresses a serious issue for California businesses, while maintaining assurances for environmental protection. There are myriad existing protections for the environment and people with legitimate complaints still have access to" the unfair competition law.

Sullivan, who has spent more than eight years trying to win reform of the law in the Legislature only to see a variety of bills fail, said environmentalists aren't getting the whole picture.

"No one has to choose between consumer protection and this initiative or between environmental protection and this initiative," Sullivan said. "Our changes are not going to affect anyone's ability to protect the environment."

He said individuals can sue under provisions of federal clean-air and clean-water laws, and pointed out that the state attorney general or local district attorneys could also sue to stop polluters.

But environmental groups like the Sierra Club say those are federal laws and that 17200 is the best tool to use at the state level. They're hoping Schwarzenegger will be swayed by his environmental advisers to seek a compromise.

"If you look at what Schwarzenegger has done so far," the Sierra Club's Magavern said, "my hunch is that he'd like to come down in the middle and not have to choose either/or. On the initiative itself, he doesn't have that luxury. But there is still the possibility of working out a legislative solution and letting the initiative die."