WASHINGTON, May 10, 2017 - Eight Senate Democrats are calling for an investigation into whether or not Carl Icahn violated market protection laws through his dealings in the Renewable Identification Numbers market.
Icahn, a special adviser to President Trump on regulatory reform issues, owns a majority share in CVR Energy, a refinery that regularly purchases RINs to be compliant with requirements under the law that created the Renewable Fuel Standard. In a letter to heads of the Commodity Futures Trading Commission, the Securities and Exchange Commission and the EPA, the lawmakers ask the agencies to investigate “whether Carl Icahn violated insider trading laws, anti-market manipulation laws, or any other relevant laws based on his recent actions in the market for renewable fuel credits.”
The letter was signed by Elizabeth Warren of Massachusetts, Sherrod Brown of Ohio, Sheldon Whitehouse of Rhode Island, Tammy Baldwin of Wisconsin, Tammy Duckworth of Illinois, Amy Klobuchar of Minnesota, Ag Committee Ranking Member Debbie Stabenow of Michigan, and Environment and Public Works Committee Ranking Member Tom Carper.
The letter comes after a Reuters report that detailed a RINs selloff toward the end of 2016 by CVR, a perplexing move by a company that typically has to purchase RINs. The report describes this move as a “massive bet” that the cost of those credits – awarded to companies that produce renewable fuel – could be purchased later at a lower price.
The senators say Icahn’s RINs trading resulted in a “$50 million windfall” that an analyst described as “impossible.”
“We have no way of knowing at this time whether Mr. Icahn made any of his renewable fuel credit trades or decisions about trades based on material, non-public information or otherwise manipulated the market,” the letter reads. “But the publicly available evidence is troubling, and based on this evidence, we ask that your agencies investigate whether Mr. Icahn's conduct violated any laws under your jurisdiction.”
A spokesperson for CVR said the company would have no comment on the senators’ letter, adding that the company also does not speak for Icahn. Icahn has previously denied that his proposal to switch the point of obligation was self-serving, as the change would also have helped other refiners, including competitors.
Specifically, the senators request a look into Icahn’s communications with officials in the Trump transition team, the extent of Icahn’s influence with the Trump administration, the rationale behind CVR’s RINs market activity, Icahn’s access to critical materials, and whether or not CVR’s quarterly and annual SEC reports “appropriately disclosed” relevant information. The letter also asks if EPA Administrator Scott Pruitt and SEC Chairman Jay Clayton would recuse themselves in any potential investigation due to Icahn’s reported role in their selection.
Earlier this year, rumors swirled that Icahn was working behind the scenes to secure a switch to the RFS point of obligation from refiners to a larger group of position holders. Those private rumors led to a public spat between renewable fuels groups over the merits of such a switch and the role that Icahn and Bob Dinneen, the president and CEO of the Renewable Fuels Association, played in such a discussion.
Dinneen said he was approached and was told the switch was going to happen with or without his participation, so he tried – and reportedly succeeded – to include language in the deal that would allow for year-round sale of E15, a major priority for the industry. But the White House squelched those rumors, and the point of obligation switch didn’t happen.
“It appears that what I was told was not actually as imminent as what I was told, and so I think that’s a good thing,” Dinneen said. “Hopefully, if and when they get around to resolving that one issue, it is done in a way that is beneficial to the industry.”
EPA is still considering changing the point of obligation from refiners to blenders. Comments on that matter closed in February, and renewable fuel groups are hopeful EPA will leave the provision alone.
“We believe the system as it is today is working,” Chris Bliley with Growth Energy told Agri-Pulse.