(Adds background, CFTC saying it will advise EPA on how to minimize abuse in biofuel credit market)
WASHINGTON, June 5 (Reuters) - The U.S. Commodity Futures Trading Commission informed eight Democratic U.S. senators last month that it is not investigating biofuels credits after the lawmakers had urged it to probe billionaire Carl Icahn's activity in that market, according to a copy of a letter seen by Reuters on Monday.
The Democratic senators, including Elizabeth Warren and Sherrod Brown, had urged the CFTC and other regulators to investigate whether Icahn, an adviser to President Donald Trump, had violated insider trading laws, or anti-market manipulation laws in so-called Renewable Identification Numbers, or RINs markets. The CFTC said in the letter dated May 19 that RINS are not traded on futures markets.
For months, Democratic lawmakers and liberal watchdog groups have voiced concerns that Icahn's dual role as a high-powered investor and a presidential adviser could lead to conflicts of interest.
Icahn owns a majority stake in oil refining company CVR Energy Inc. In February, he submitted a proposal to the White House to change the U.S. biofuels credit program in a way that would ease the burden on oil refiners.
A Reuters review of securities filings in April showed that CVR had accumulated a large short position in RINs, which many refiners are required to purchase under a biofuels law. That meant the company would have been in a strong position to profit if RIN prices fell.
In their letter dated May 9 to the CFTC, the Environmental Protection Agency and the Securities and Exchange Commission, the senators said that RINs prices dropped sharply in late February after Icahn's proposal was reported.
The EPA, which oversees the RINs cash market, signed an agreement in March to share information on that market with the CFTC. In the letter to the senators, the CFTC said it will advise the EPA on minimizing fraud and market abuses, subject to the agency's budget priorities. (Reporting by Timothy Gardner; Editing by Jonathan Oatis)