Critics are charging that billionaire investor Carl Icahn has used his position as Donald Trump’s deregulatory czar to strong-arm the ethanol lobby into agreeing to a change that will save one of Icahn’s companies $200 million a year.
If so, this would be the most obvious example yet of crony capitalism in the Trump era.
Trump named Icahn as deregulatory czar in December, saying he would be “a leader in helping American entrepreneurs shed job-killing regulations that stifle economic growth.” But because Icahn was a “special advisor” to the president with no formal White House position, the administration said he did not have to divest from any of his prodigious financial holdings. At the time, observers noted that Icahn would have a perfect opportunity to advise on deregulatory actions that would line his own pockets.
Tyson Slocum, director of the Energy Program at Public Citizen, said that is exactly what has come to pass. “There’s no question that Icahn is playing a very big role here,” he said. “People need to call it what it is, the Administration manipulating the system.”
The backdrop for this drama is the government’s renewable fuel standard, which requires all gasoline sold in America to contain a minimum volume of renewable sources — generally corn-based ethanol.
One of the more arcane elements of the current rule is that oil refiners are responsible to make sure the rule is followed – not the gasoline wholesalers (or “blenders”).
Icahn is the majority owner of CVR Energy, a refiner which does not have the infrastructure to blend ethanol. As a result, CVR must buy renewable fuel credits to comply with their obligation.
In its most recent SEC filing, CVR stated it spent $205.9 million last year on renewable fuel credits. Shifting the point of obligation to blenders would relieve CVR of that expense. “That’s big money, even to a billionaire,” Slocum told The Intercept.
Not surprisingly, Icahn has long wanted the renewable-fuels industry to agree that the obligation should belong to the wholesalers, not the refiners.