For more than two months the state of California has been engaged in a convoluted cat-and-mouse dispute with an Israeli chemical company over an embargoed shipment of the pesticide called DBCP.

The conflict, which has been played in the shadows of recent diplomatic maneuvering between the Carter administration and the Israeli government, has involved the California Department of Industrial Safety backed by Gov. Edmund G. (Jerry) Brown Jr. and has been the subject of urgent phone calls between influential members of the local Jewish community and the Israeli embassy in Washington D.C. The pesticide was produced by the Israeli chemical company, Bromine Compounds of Beerchiva.

The controvesy involves the shipment of the Israeli-produced liquid pesticide dibromochloropropane bound for the Occidental Chemical plant in Lathrop, Calif. The chemical cargo arrived in Oakland on Aug. 28 shortly after that substance was shown to be the cause of sterility among Occidental pesticide workers.

Ninety-five pesticide workers have since been diagnosed as being sterile at several U.S. plants. DBCP has also been linked to possible birth defects and cancer.

The shipment of 213 40-gallon drums was landed two weeks after it had been banned for use or sale in California. Two days earlier the Down Chemical Co., the principal American producer, had announced it was recalling its stock.

But, according to Michael Schneider, deputy director of the Department, deputy director of the Department of Industrial Safety, the Israeli firm refused to return the pesticide to Israel. "They said it was none of my business, insisted they had an unnamed buyer in Florida and could ship it there," he said.

Then began a series of phone conversations between Schneider and the Israeli firm's New York representative who insisted it has the right to move the DBCP shipment across state lines.

For over a month, both sides tried to outbluff the other. Schneider admits that he has limited authority to prevent the firm from making alternative transportation arrangements.

"We knew we were on shaky grounds," he said. "But we've had an overriding obligation to protect the public." California officials inititated a campaign to frustrate transportation plans by the chemical company. They began calling authorities in every state that the shipment would pass through and warned that it should be halted and inspected.

Finally Schneider went to influential members of the local Jewish community and pointed out that the delicate diplomatic maneuvering between the Carter administration and the Israeli government over the upcoming Geneva Middle East peace talks could be affected by adverse publicity.

A subsequent telephone campaign between West Coast Jewish leaders and the Israeli embassy in Washington apparently pressured Bromine Compounds to cancel its plans to send the chemical to Florida.

In late September, bracketed by a convoy of highway patrol cars, the chemical shipment was trucked downstate to Long Beach where it was to picked up by the freighter Haifa Zim.

However, roving pickets from the East Coast-based International Longshoreman's Association protesting in conjuction with the ongoing dock strike prevented the loading. On Sept! 13, the ship sailed, leaving the chemical cargo on the

"It's really been embarrasing to me." said Schneider, a Jew who fought in the Israeli independence army in 1948. "He were my own kin, manufacturing a known poison and giving me a lot of baloney about the need to sell it."

Despite repeated attempts, representatives of Bromine Compounds could not be reached for comment.