In the face of Democratic opposition, Gov. Arnold Schwarzenegger on Tuesday withdrew a political appointment that was strongly backed by California businesses, marking the governor's first setback in picking top officials for his administration.

The Republican governor removed Edward Heidig as director of the Office of Administrative Law at Heidig's request, Schwarzenegger spokesman Vince Sollitto said. By acting now, Schwarzenegger avoided a confirmation fight in the Democratic-controlled Senate.

Heidig's April 2 appointment to the obscure but powerful agency was being closely watched by both business and consumer groups. The administrative law office wields far-reaching influence over the state's economy because it oversees how broadly worded laws are turned into nuts-and-bolts government regulations.