Bloomberg News

Rice’s Holdings in Oil Sands Pipeline May Pose Conflict

November 29, 2012

Rice’s Holdings in Oil Sands Pipeline Builder May Pose Conflict

A mock pipeline during a demonstration against Keystone XL tars sand oil pipeline in Washington. Photographer: Andrew Harrer/Bloomberg

Susan Rice’s holdings in an energy company seeking State Department approval for an oil pipeline from Canada may pose a conflict of interest if she is nominated to become U.S. secretary of state.

Rice, the U.S. ambassador to the United Nations, and her husband own stock in TransCanada Corp. (TRP) valued at $300,002 to $600,000, according to her most recent financial disclosure report. The company has filed for a State Department permit to build Keystone XL, a pipeline that would carry crude oil from Alberta’s oil sands to refineries on the U.S. Gulf coast.

Rice also holds stock worth $1.25 million to $1.5 million in Imperial Oil Ltd. (IMO), the second-largest Canadian oil producer. Imperial is 70 percent owned by Exxon Mobil Corp. (XOM:US) Her portfolio includes Canadian companies Cenovus Energy Inc. (CVE), Suncor Energy Inc. (SU) and Canadian Natural Resources Ltd. (CNQ), all of which operate in Western Canada’s oil sands region.

“She’s qualified to be secretary of state but she’s not qualified to make an unbiased decision on the Keystone pipeline,” Jane Kleeb, director of Bold Nebraska, a group that opposes the pipeline, said in an interview. “You can’t be a department staff person and not be influenced by her holdings. You can say that you are but I find that difficult and I think the American public would find that difficult to believe.”

Rice’s holdings were reported this week on the OnEarth website of the Natural Resources Defense Council, which opposes the pipeline.

“Ambassador Rice is in full compliance with all financial disclosure requirements related to her service in the U.S. government and is committed to continuing to meet these obligations,” her spokeswoman, Erin Pelton, said in an e-mail.

Environmental Issues

President Barack Obama rejected Keystone XL in January amid protests over the project’s potential impact on an aquifer in Nebraska’s environmentally sensitive Sand Hills region. Critics also said oil from Western Canada produces more heat-trapping carbon dioxide than conventional crude. TransCanada has offered a new route to avoid the Sand Hills.

The State Department has jurisdiction because the pipeline would cross an international border. In 2011, an environmental study by the department found that the project poses “no significant impacts to most resources” along its route.

If Rice is nominated and confirmed as secretary of state, Obama should reassign responsibility for the pipeline review to another federal agency, Kleeb said.

Susan Casey-Lefkowitz, director of international programs at the Natural Resources Defense Council, said Rice should divest herself of holdings in TransCanada and other oil sands related companies if she becomes the nation’s top diplomat.

Rigorous Review

“We expect that she would do that,” Casey-Lefkowitz said in an interview. “U.S. law actually requires a pretty rigorous conflict of interest check and we would expect that she would be getting rid of holdings that are in conflict with a decision on a project like the Keystone XL tar sands pipeline.”

Rice has been criticized by Republicans including Sen, John McCain of Arizona over what they said were misleading statements on television after the Sept. 11 attack on the U.S. mission in Benghazi, Libya. Republican Senator Susan Collins of Maine said she couldn’t back Rice without more information about her comments on the attack that killed U.S. Ambassador Chris Stevens and three other Americans.

Obama defended Rice in a news conference Nov. 14, saying she has done “exemplary work” and represented the U.S. “with skill and professionalism and toughness and grace.” If he decides Rice is the best candidate for secretary of state, Obama said, “then I will nominate her.”

Asked about whether the stock holding poses a conflict of interests, White House spokesman Jay Carney said today, “I’m not going to speculate” about an appointment the president has not made.

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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