August 21, 2017 / 9:01 PM / a month ago

Breakingviews-Icahn and Trump both look bad in biofuels fight

Billionaire activist-investor Carl Icahn gives an interview on FOX Business Network's Neil Cavuto show in New York February 11, 2014. Icahn has backed off from his campaign urging Apple to increase its stock buybacks, citing the company's recent repurchases as well as an influential proxy adviser's call against his proposal. REUTERS/Brendan McDermid (UNITED STATES) - RTX18MUV

WASHINGTON (Reuters Breakingviews) - Neither Carl Icahn nor Donald Trump is looking good in a fight over biofuels regulations. The billionaire investor wanted rules changed to help CVR Energy, a refiner he controls. Icahn resigned on Friday as the president’s adviser on deregulation just ahead of a New Yorker story detailing these alleged conflicts of interest. The picture gets even murkier because the White House now seems to be saying there was no job for Icahn to quit.

The U.S. president’s transition team last December named Icahn a special adviser for regulatory reform. Even before the appointment, Icahn was helping Trump vet candidates for senior jobs. He met with Jay Clayton, who would become chair of the Securities and Exchange Commission. Trump also sent Scott Pruitt, now head of the Environmental Protection Agency, to see Icahn before he was nominated. Icahn had been lobbying the EPA to change rules requiring refiners like CVR to blend ethanol into gasoline or purchase credits from competitors.

Icahn’s push at one point included a possible executive order that might have helped CVR and other refiners by shifting the responsibility for ethanol blending elsewhere. At the same time, CVR deferred purchases of the biofuels credits it needed to the tune of more than $275 million, effectively betting on a price decline, according to a Reuters review of CVR’s filings. In March, the price of the credits, known as renewable identification numbers or RINs, fell to a year-low of 33.5 cents.

The price of RINs has, however, tripled in the last several months and some investors are now shorting CVR stock, which is down nearly 30 percent this year. The EPA is likely to reject Icahn’s proposal, according to Reuters. Still, the investor quit his advisory position even though his lawyer told the New Yorker that suggestions he had access to inside information were “unequivocally false.”

Trump has distanced himself, with a White House spokeswoman telling the magazine that Icahn is not a special adviser and there was never a formal appointment - even though the president’s transition team issued a release about it and Icahn felt compelled to resign from the role. Either way, Icahn had easy access to the president and the opportunity to influence policy. The two New Yorkers make the Washington swamp even swampier.

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