[Sustain] Fwd: Air Board Chair owns Stock In 13 Energy Firms (Including oil & Peabody Coal)

[Eric Brooks]

No surprise that this was on the front page of the, Saturday, edition...


http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/08/18/MNGBRKMAO.DTL&type=printable


  California Air Resources board chair owns stocks in 13 energy firms

Matthew Yi, Chronicle Sacramento Bureau <mailto:myi at sfchronicle.com>

Saturday, August 18, 2007

Mary Nichols has a financial stake in 13 energy-related f... 
<http://sfgate.com/cgi-bin/object/article?f=/c/a/2007/08/18/MNGBRKMAO.DTL&o=0&type=printable> 


*(08-18) 04:00 PDT Sacramento -* --

The new chairwoman of the California Air Resources Board owns stocks in 
several oil, coal and utility firms, some of which are likely to be 
affected by rules the agency implements as part of the state's 
groundbreaking law to fight global warming, The Chronicle has learned.

Mary Nichols' stock holdings include shares in oil giants Chevron Corp., 
BP PLC and Royal Dutch Shell, as well as a stake in a Bermuda tanker 
company that transports crude oil, according to economic interest 
statements she filed this week.

She also owns stock in the world's largest coal company, Peabody Energy 
Corp., along with utilities including Edison International, whose 
subsidiary, Southern California Edison, serves most of the Southern 
California electricity market.

In total, she and her husband, John Daum, an attorney who represents 
Exxon in the ongoing Exxon Valdez oil-spill case, have a financial stake 
in 13 energy-related firms in a diversified stock portfolio that 
contains 84 companies, according to statements she filed on Tuesday with 
the state Fair Political Practices Commission.

The air board is expected to consider wide-ranging regulations that will 
affect what kind of fuel motorists pump into their vehicles and help 
dictate what sources of energy utility companies can use to generate 
electricity.

Nichols told The Chronicle this week that she realized there would be a 
conflict of interest when she filled out the economic disclosure form 
shortly after Gov. Arnold Schwarzenegger announced her appointment on 
July 3. But rather than divest holdings, she said she plans to put her 
investments in a blind trust and to have that in place before the next 
air board meeting, which is set for Sept. 27.

"I think it's a wise policy for regulators to divest themselves from 
holdings in companies that they regulate," said Sierra Club lobbyist 
Bill Magavern. "It's important to avoid any conflict of interest, and 
it's important to avoid any appearance of conflict of interest."

In late July, however, Nichols presided over two days of board meetings, 
one of which resulted in the adoption of regulations to limit emissions 
from off-road diesel vehicles such as construction equipment.

She said she didn't believe her stock holdings in oil companies were in 
conflict with her action because the regulations affect construction 
equipment owners and not fuel companies.

But air board spokesman Leo Kay said Friday that the agency's general 
counsel office is "considering that issue as we speak." The general 
counsel was unaware of Nichols' stock ownership until a Chronicle 
reporter called Thursday afternoon to ask about her potential conflict 
of interest.

This is not the first time Nichols has disclosed extensive stock 
holdings while working in government. She owned shares in Chevron, 
Valero Energy Corp., Enron Corp. and other energy firms when she served 
as Resources Agency secretary under then-Gov. Gray Davis and sat on the 
California Coastal Commission as a Davis appointee before his recall in 
2003.

Nichols said there was no reason to set up a blind trust at that time 
because she believed there was no conflict as secretary of the resources 
agency because her job was to advise the governor rather than make 
policy or regulatory decisions. On the Coastal Commission, it was easy 
to recuse herself from matters because the commission's actions usually 
affected individual companies, she said.

"But at the Air Resources Board, we rarely pass a rule that affects just 
one company," she said. "And with the new responsibility of implementing 
AB32, we will likely develop regulations that likely will affect every 
single sector."

That's why she believes setting up a blind trust is the prudent option 
at this time, Nichols said. Blind trusts have been a method of choice 
for handling personal investments for some public officials, including 
Schwarzenegger.

Five of the stock ownerships she disclosed in her recent statements, 
including the Chevron stock, are worth between $100,001 and $1 million 
each, and 78 of them are each worth between $10,001 and $100,000, 
according to the disclosure filing. The fair market value and nature of 
investment for a banking firm was not included in her statement.

"This is family money, and it's a joint decision (between my husband and 
me), and the decision is to invest it for the best long-term yield for 
us and our family," Nichols said.

Some state Capitol observers were surprised that Nichols, who is highly 
regarded in the environmental community as a longtime environmental 
lawyer who served on the air board three decades ago under then-Gov. 
Jerry Brown, would own shares in oil and coal firms.

"My perception is that she is a living legend in the environmental 
community, and I would have bet that she would have a greener 
portfolio," said Barbara O'Connor, director of Sacramento State 
University's Institute for the Study of Politics and the Media.

John Pitney Jr., political science professor at Claremont McKenna 
College, said that while not every public official's personal finances 
should be raised as an issue, higher profile positions do matter at 
least in public perception and a chairmanship on the state air board is 
one of them.

The air board's responsibility to implement AB32 has elevated the 
agency's status, and it came under scrutiny this summer when 
Schwarzenegger fired then-chairman Robert Sawyer after he tried to enact 
more pollution-saving measures than the three approved by the governor's 
staff.

Sawyer's firing was followed by the resignation of the air board's 
executive director, placing the agency in further turmoil and causing 
Democratic lawmakers and environmental groups to question the governor's 
commitment to fight global warming. Within a week, Schwarzenegger 
announced Nichols as Sawyer's replacement, drawing praise from those 
same critics.

Her appointment requires confirmation by the state Senate, which has a 
year to make that decision.

Andrew LaMar, a spokesman for state Senate President Pro Tem Don Perata, 
D-Oakland, who chairs the rules committee, said the committee "will take 
a look at her holdings in vetting her appointment as the chair of the 
Air Resources Board."

While he said it is encouraging that Nichols is considering creating a 
blind trust, LaMar said the "public has a right to know what the 
financial interests are for officials who are representing them."

/E-mail Matthew Yi at myi at sfchronicle.com <mailto:myi at sfchronicle.com>./

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/18/MNGBRKMAO.DTL

This article appeared on page *A - 1* of the San Francisco Chronicle

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