Federal ethics regulators have ordered Joe Biden’s top domestic policy adviser, Susan Rice, to divest her multimillion-dollar holdings in a fossil fuel giant weeks after the Biden administration boosted the company’s controversial pipeline, according to government documents we obtained.
The pipeline decision — backing a Trump administration policy over the objections of environmental groups — came as the company’s stock price has skyrocketed. That has created a potential financial jackpot for Rice, who, as Domestic Policy Council chief, will now be able to delay capital gains taxes on any windfall made off her sale of thousands of shares of Enbridge.
In all, Rice has been instructed by the US Office of Government Ethics to divest stock worth nearly $32 million from more than three dozen companies and one index fund that she and her family own.
Among the holdings are approximately $2.7 million worth of shares of Enbridge, the Canadian oil and gas pipeline company constructing the controversial Line 3 pipeline through indigenous lands in Minnesota.
While the Biden administration recently revoked the permit for the Keystone XL pipeline project, Biden Justice Department officials last month backed the permit for the Line 3 pipeline in court, allowing the tar sands oil pipeline project to move forward amid the intensifying climate crisis. Enbridge shares are currently up about 13 percent since Biden took office, and earlier disclosures show Rice has previously raked in hundreds of thousands of dollars of dividend payments from the company.
Rice’s decision to retain stakes in Enbridge and other corporations with business before the government she helps lead has not only generated questions about conflicts of interest, it has also created a potentially lucrative tax shelter for herself and her family, thanks to a law allowing federal officials to defer capital gains levies when facing divestment orders from ethics regulators.
Past beneficiaries of this tax break have included former Treasury secretary Henry “Hank” Paulson, who sold $500 million in Goldman Sachs stock after joining the Bush administration, and former ExxonMobil CEO Rex Tillerson, who unloaded $54 million worth of company stock after becoming secretary of state in the Trump administration. Biden energy secretary Jen Granholm recently made $1.6 million when she divested from an electric vehicle company.
“There is no perfect way to handle divestitures, especially slow-motion ones involving substantial conflicts of interest,” said Jeff Hauser, director of the Revolving Door Project. “That’s why ethics policies focusing on divestitures and recusals and the like are less effective than simply choosing people without significant conflicts between their personal investments and the policy commitments of the president they serve.”
The Office of Government Ethics is also ordering Rice and her family to sell off nearly $1.1 million worth of shares of Johnson & Johnson, the pharmaceutical giant and COVID-19 vaccine maker, housed in a family trust. In April, the Biden administration temporarily halted the use of Johnson & Johnson’s coronavirus vaccine after it was linked to a rare blood clotting disorder. On Monday, the US Food and Drug Administration warned that the Johnson & Johnson vaccine may slightly increase the risk of Guillain-Barré syndrome, a rare autoimmune disorder.