The most likely reason for this message is that the `env' program is not properly installed. This program should be compiled (for the correct architecture!) and installed with execute permission for everyone in Emacs's program directory, which is normally /usr/local/emacs/etc. You can find what this directory is at your site by inspecting the value of the variable exec-directory by typing "C-h v exec-directory RET". `env' should also be for the correct architecture (check using `file' command).
You should also check for other programs named `env' in your path (eg., SunOS has a program named /usr/bin/env). I don't understand why this can cause a failure and I don't know a general solution for working around the problem in this case.
The `make clean' command will remove `env' and other vital programs, so be careful when using it.
It has been reported that this sometimes happened when Emacs was started as an X client from an xterm window (ie. had a controlling tty) but the xterm was later terminated.
See also etc/PROBLEMS for other possible causes of this message.