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No surprise that this was on the front page of the, Saturday, edition...<br>
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href="http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/08/18/MNGBRKMAO.DTL&type=printable">http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/08/18/MNGBRKMAO.DTL&type=printable</a><br>
<h1>California Air Resources board chair owns stocks in 13 energy firms</h1>
<p class="byline"><a href="mailto:myi@sfchronicle.com">Matthew Yi,
Chronicle Sacramento Bureau</a></p>
<p class="date">Saturday, August 18, 2007</p>
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<p><strong>(08-18) 04:00 PDT Sacramento -</strong> --
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<p>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. </p>
<p>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. </p>
<p>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. </p>
<p>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. </p>
<p>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. </p>
<p>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.</p>
<p>"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."</p>
<p>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.
</p>
<p>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.</p>
<p>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. </p>
<p>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.</p>
<p>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. </p>
<p>"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."</p>
<p>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.</p>
<p>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. </p>
<p>"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.</p>
<p>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. </p>
<p>"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. </p>
<p>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. </p>
<p>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. </p>
<p>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. </p>
<p>Her appointment requires confirmation by the state Senate, which has
a year to make that decision. </p>
<p>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." </p>
<p>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." </p>
<p><i>E-mail Matthew Yi at <a href="mailto:myi@sfchronicle.com">myi@sfchronicle.com</a>.</i>
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<p id="url"><a class="moz-txt-link-freetext"
href="http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/18/MNGBRKMAO.DTL">http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/18/MNGBRKMAO.DTL</a></p>
<p id="pageno">This article appeared on page <strong>A - 1</strong> of
the San Francisco Chronicle</p>
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