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&typ... California Air Resources board chair owns stocks in 13 energy firms Matthew Yi, Chronicle Sacramento Bureau <mailto:myi@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@sfchronicle.com <mailto:myi@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 ###