In one of his few recent public appearances, National Endowment for the Arts Chairman John Frohnmayer told about a dozen representatives of the Seattle arts community Wednesday that he may veto some controversial grants on political grounds, according to several who were present.

Frohnmayer's comments stunned some in the group, who protested by leading an impromptu walkout of Frohnmayer's subsequent luncheon speech before the Seattle Corporate Council for the Arts. But council President Peter Donnelly observed that 960 people -- the vast majority of the audience -- stayed for the speech and "stood and cheered at the end" to show support for Frohnmayer's efforts to preserve the endowment from those in Congress who would abolish or restructure it.

No verbatim quotes from Frohnmayer were available and the chairman did not respond yesterday to inquiries about his remarks.

The meeting was the first time the arts community was directly confronted with the reality that Frohnmayer is likely to make some concessions to the endowment's critics in the continuing fight over NEA reauthorization. And the question of support for Frohnmayer seemed likely to cause a rift among NEA supporters at a time when they are scrambling to pull together backing for the endowment.

"My fear is that some very vocal members of the arts community at this point are making noise at the wrong time," said Seattle Repertory Theater Artistic Director Dan Sullivan, who attended the meeting with Frohnmayer but did not participate in the walkout, which numbered 30 to 50 persons.

Sullivan, whose theater won this year's Tony Award for regional excellence, said he fears the NEA is withdrawing support from cutting-edge art. "My hope is that once this terror passes, if it ever does, that we can organize against that," he said. "But walking out on Frohnmayer at this point is a very bad idea."

Donnelly concurred. "I think we have to be very clear about who the enemy is, and it is not John Frohnmayer," he said.

Even some of those who participated in the walkout were ambivalent. "We were hoping we weren't making some grave error in manners or politics," said David Mendoza, executive director of the statewide Campaign for Freedom of Expression. But though many regard Frohnmayer as a sympathetic presence, they felt betrayed by his position.

"Granted, the guy is walking a tightrope in a hurricane," said Katherine Marczuk of the Seattle Center on Contemporary Arts, who attended the meeting. "I have to be supportive at one level. But he has to take a stronger position."

Mendoza recalled that Frohnmayer said in essence that he would make decisions about a group of controversial grants "in the context of political reality, and some things are going to be too politically controversial at this time."

Sullivan remembers that Frohnmayer said "he was not going to incur the wrath of Congress by okaying clearly controversial grants." He said Frohnmayer seemed to indicate that action on the grants is not imminent.

A floor fight over NEA reauthorization looms in the House in mid-July. This week the Senate canceled a markup of the legislation as key members of the Labor and Human Resources Committee groped for an accord on the controversy. The committee is likely to take up the legislation next month.

A key issue in both houses of Congress is whether the reauthorization bill will include restrictions on the type of art that the endowment may fund, and how such restrictive language should read. The Bush administration, which initially opposed any content restriction, has backed away from that position.

President Bush has remained firm in his support for Frohnmayer, who has been under steady attack from conservative opponents of the endowment. But some moderate Republicans who support the NEA have been disappointed in Frohnmayer's performance.

"I would say that the issue could have been nipped in the bud had he acted more forcefully. ... I think he got off to a very slow start," said Rep. Paul Henry (R-Mich.), a member of the House subcommittee handling the reauthorization and a key link between the administration and Capitol Hill on the endowment. Henry said Frohnmayer has assured him in recent weeks that he recognizes a distinction "between public sponsorship and censorship."

In the Seattle meeting with Frohnmayer, Mendoza said, his questions focused on whether the chairman would approve a grant for Karen Finley, a performance artist who has been singled out by NEA adversaries because she performs partially nude. While an NEA review panel approved Finley's grant application, the NEA's advisory council deferred consideration of her application and 17 others to performance artists at its May meeting in Winston-Salem, N.C.

Normally, the council advises the chairman to approve panel recommendations. In the case of this year's grants for performance artists, the council said it needed more information before acting. But council member Jacob Neusner said recently that Frohnmayer had indicated that he may act before the council's next meeting in August.

In a March 1989 letter, Frohnmayer estimated that the NEA chairman had reversed panel recommendations 35 times in the endowment's history (0.11 percent of about 33,700 grants), following the council's recommendation in about half of those instances.

Mendoza said that when he asked Frohnmayer whether he would approve Finley's grant, the chairman responded, "Probably not."

"That's verbatim," Mendoza said. "I used Finley only as the most obvious example. ... Everybody was pretty much stunned. Oddly, we might have expected it, but when we heard it we got this feeling of sickness in our stomachs."