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Sep 13, 7:37 PM EDT

EPA head: No renewable fuel promise made to ex-Trump adviser


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AP Photo/Pablo Martinez Monsivais

DETROIT (AP) -- Environmental Protection Agency chief Scott Pruitt has told a group of senators he never made any promises to billionaire investor Carl Icahn about renewable fuel credits that were costing one of Icahn's companies millions of dollars.

Pruitt was responding to letters from five senators looking into potential conflicts of interest involving Icahn, who resigned in August as a special adviser to President Donald Trump on regulatory reform. The senators, all Democrats, had questions about Icahn's role in shaping policy about obscure rules that require oil refineries to blend ethanol into gasoline.

Icahn resigned shortly before The New Yorker published a story detailing potential conflicts and even possible criminal law violations involving refining rules.

In 2012, Icahn bought an 82 percent stake in CVR Energy, a refinery in Sugar Land, Texas. To comply with regulations designed to promote use of ethanol, refiners must blend the renewable fuel with their gasoline or buy credits from other refiners that are called "Renewable Identification Numbers."

When Icahn bought his stake, the credits were cheap, about 5 cents each. Rather than equip refineries to add ethanol, CVR just purchased credits. But by 2016 CVR was spending $200 million per year on them, and its stock value had dropped 70 percent from the prior year, the magazine wrote.

Icahn unsuccessfully tried to get the Obama administration's EPA to change the rules regarding the "point of obligation," trying to release CVR from the responsibility of blending the ethanol, according to the magazine.

In a letter to Sen. Sheldon Whitehouse, D-R.I., dated Monday, Pruitt wrote that he met with Icahn during Pruitt's confirmation process. "I made no assurances with regard to the point of obligation or any other substantive issue," Pruitt wrote.

Also, a search of EPA email boxes of 39 senior agency leaders turned up no emails to Icahn or CVR energy, Pruitt wrote. The search covered from Feb. 17, Pruitt's first day in office, to Aug. 18, the letter said. But the agency did not search for emails from before that date. Icahn became an unpaid adviser to Trump in December of last year.

Pruitt also pointed out that the EPA hasn't acted on the "point of origin" for blending ethanol into gasoline.

In a statement Wednesday, Rich Davidson, Whitehouse's press secretary, said the senators were reviewing Pruitt's letter for accuracy "and to determine whether additional steps are warranted."

Icahn, in his resignation letter to Trump, wrote that he would step down to prevent "partisan bickering" about his role, which Democrats suggested could benefit him financially. He wrote that he "never had access to nonpublic information or profited from my position, nor do I believe that my role presented conflicts of interest."

Several weeks after Trump's November victory, Icahn agreed to become an adviser to the president, and CVR's stock nearly doubled in value on the expectation that the renewable fuels rule would be changed, The New Yorker wrote.

On Dec. 22, the day after Icahn was formally declared a White House adviser, the price of the credits dropped. Then, on Feb. 27, news leaked that Icahn had struck a deal with the Renewable Fuels Association to change the ethanol blending requirement. That sent the price of credits down more, and it fell further when word leaked that an executive order on ethanol blending was imminent.

Early in the year, CVR was selling renewable fuel credits, the magazine wrote. It was able to buy them later at a discount to meet federal requirements, according to the story.

Icahn's attorney has rejected allegations that Icahn exploited his relationship with Trump to make bets on renewable fuel credits. He said the CVR board, which Icahn chairs, made decisions on when buy or sell credits.

A spokeswoman for CVR Energy would not comment on the magazine's story after it was published in August.

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