A cloud around the state’s air chief

At the risk of oversimplifying, it is safe to say environmentalists always argue for higher standards. They are inherently positioned to oppose much of what goes on in the private sector. They assume that even the so-called clean companies have some environmental skeletons in their closets.

Given the propensity of those on the green side to want things squeaky clean, it is more than a little troubling to find Mary Nichols, a veteran environmental lawyer and federal and state environmental leader, with financial ties that may raise more than a few eyebrows. She holds considerable stock in companies -- such as Chevron Corp. and coal giant Peabody Energy Corp. -- that historically have sat at opposite sides of the table from environmentalists.

It is doubly troubling because Nichols has been appointed by Gov. Arnold Schwarzenegger to head the California Air Resources Board. Her investments in such corporations raise questions about possible conflicts of interest and also about her credibility as a state official who often must make tough decisions against those industries.

With a mandate to implement the state’s precedent-setting global warming solutions legislation, the Air Resources Board deals with many of the companies in which Nichols holds large chunks of stock. The friendly Democrat-controlled state Senate should not shrink from asking her about these holdings during her confirmation hearing this month.

Nichols has said that she plans to put her investments in a blind trust. A blind trust gives an independent third party the authority to invest on her behalf, but that may not be enough. Divestment would be a much better solution, but that is something Nichols has said she does not plan to do.

Nichols previously chaired the Air Resources Boardunder Gov. Edmund G. Brown Jr., held a top job at the U.S. Environmental Protection Agency during the Clinton administration and was secretary for Resources in Gov. Gray Davis’ administration. She most recently headed the Institute of the Environment at UCLA.

With such credentials amassed over more than three decades, Nichols was seen in July as a white knight when Schwarzenegger fired the previous Air Resources Board chairman. That act had prompted the agency’s longtime executive director to resign and complain that the governor’s people were politically interfering with the board’s implementation of the climate-change legislation.

Nichols’ filing of her financial holdings with the state Fair Political Practices Commission was routine, and, in fact, she has broken no law by owning energy stocks. But the 84-company portfolio that she and her husband hold includes 13 energy-related firms, one of which is Peabody, the world’s largest private-sector coal provider.

The Air Resources Board’s major focus for the future will be on global warming. The burning of coal is considered to be a major source of the problem. So how can the board’s chairwoman hold stock in a huge coal company without giving, at minimum, the perception of a conflict of interest?

Nichols’s financial report also noted that she holds from $100,000 to $1 million in stock in Chevron, an oil and gas company that has substantial dealings with the Air Resources Board and other parts of state government. Regardless of her obvious rapport with the Democratic Party and her many years of public service, state senators need to find out how long Nichols has had financial ties to major companies that fall under her new regulatory jurisdiction.

This is not to say that Nichols can’t invest, but she should divest the companies that pose the potential conflict. In addition, the extensiveness of her portfolio -- particularly among global energy firms -- raises some questions about her priorities at this stage of her career. Nichols’ defenders say she has “balanced” her portfolio with green investments, but the commission’s documentation doesn’t support this contention.

Would we typically expect the head of the Air Resources Board to hold interests worth from $10,000 to $100,000 each in Peabody, or Edison International, Southwest Gas Corp., BP,Suncor Energy, Royal Dutch Shell, Northern Border Partners, a natural gas pipeline or Chevron? Together with huge chemical and mining companies in her portfolio, it is the breadth and depth of Nichols’ financial interests that is troubling.

Nichols owes the citizens of California an explanation about how she will set this large economic stake aside and carry out the people’s business.

Richard Nemec is a Los Angeles writer who covers energy issues, including global warming, for a number of national trade publications. E-mail: rnemec@ca.rr.com