03.16.17

After a Month of Waiting, Senators Want Answers on Icahn

Washington, D.C. – It has been over a month since a group of Senators wrote to the Trump Administration asking what role Carl Icahn is playing in shaping policy.  Having received no response by the February 15 deadline, today Senators Elizabeth Warren (D-MA), Sheldon Whitehouse (D-RI), Debbie Stabenow (D-MI), Sherrod Brown (D-OH), Al Franken (D-MN), and Tammy Baldwin (D-WI) are pushing for answers in two letters sent to White House Counsel Don McGahn and Environmental Protection Agency (EPA) Administrator Scott Pruitt. 

In their letter to McGahn, the Senators note troubling developments since they first wrote the White House that suggest Icahn is exerting outsized influence over the Administration’s work on the Renewable Fuel Standard (RFS)—a rule Icahn says costs his refining business hundreds of millions of dollars. 

“On February 27, 2017, Mr. Icahn and the Renewable Fuels Association (RFA), reportedly presented the White House with draft language that would direct the EPA to ‘shift the burden for complying with the biofuel quotas from refiners to fuel blenders,’” the Senators write.  “The RFA had previously opposed such a shift, but its President and CEO recently stated that he was told ‘in no uncertain terms that the point of obligation was going to be’ shifted from the refiners to blenders, and that the ‘executive order was not negotiable.’   As a result of this pressure, it appears that the RFA swapped sides, trading their opposition to the policy change for other concessions in the proposal.”

The Senators continue, “Mr. Icahn, as the majority owner of fuel refiner CVR Energy, Inc., appears to have been a significant beneficiary of this proposal.  According to the Wall Street Journal, Mr. Icahn claimed that, if not modified, the biofuel quota obligations would cost his company $200 million over the course of this year alone.   If the President follows the advice of his special advisor, then Mr. Icahn will rake in hundreds of millions of dollars as he profits from his role in the Trump Administration.  The day that Mr. Icahn’s proposal was sent to the White House, CVR Energy’s stock value increased by 3.5%, representing a single-day, multi-million dollar windfall for Mr. Icahn.   An ethics watchdog has described this process as ‘the purest definition of a conflict of interest that you can get.’” 

In a letter sent to White House Counsel Don McGahn February 13, Senators asked what role Icahn is playing in President Donald Trump’s White House, whether any steps have been taken to address his financial conflicts of interest, and if Icahn is pressing for changes to the RFS that would benefit one of his holdings, CVR Energy.  Having not received a response by their letter’s February 15 deadline, on February 21 the Senators lodged their letter with the EPA as part of the RFS notice and comment process.

The RFS, a program administered by the EPA, requires oil refiners and importers to blend renewable biofuels, like corn-based ethanol, with their gasoline and diesel.  Citing the compliance cost burden on the industry, some oil refiners have filed petitions with the EPA to reform its regulations to relieve their responsibilities under the RFS. 

Full text of the letters is below.  PDF copies are available here and here.

March 16, 2017

Donald F. McGahn II

White House Counsel

The White House

1600 Pennsylvania Avenue NW

Washington, D.C. 20500

Dear Mr. McGahn:

We are writing to follow up on last month's unanswered request for information regarding Carl Icahn’s role in the Trump Administration and the significant conflicts of interest caused by his refusal to divest from his private sector interests while serving as a close advisor to President Trump.  In light of new information released last month indicating that Mr. Icahn has been intimately involved with the proposal and advancement of an executive order that would overhaul burdens under the Renewable Fuel Standard – and make Mr. Icahn millions of dollars in the process – we, again, request that you provide us with information regarding his role with the Administration and his numerous conflicts.

On February 13, 2017, we sent your office a letter requesting information about Mr. Icahn’s classification as a government employee; his access to confidential information and agency officials; his financial disclosures and conflicts of interest; and any limitations on his role with the Administration and his capacity to advise the President.[1]  We are concerned that his substantial and widespread private-sector investments present perverse incentives for Mr. Icahn in his role as a special advisor to the President.  We are particularly concerned about Mr. Icahn’s involvement with an upcoming decision on a potential rule impacting the EPA Renewable Fuel Standard because of Mr. Icahn's 82% ownership interest in the fuel refiner CVR Energy (CVR), his reported role in the selection of Scott Pruitt to lead the Environmental Protection Agency (EPA), and his prior statements on the issue.  As of March 16, 2017, we have not received any response to these concerns.

Subsequent actions have deepened our concerns.  On February 27, 2017, Mr. Icahn and the Renewable Fuels Association (RFA), reportedly presented the White House with draft language that would direct the EPA to “shift the burden for complying with the biofuel quotas from refiners to fuel blenders.”[2]  The RFA had previously opposed such a shift, but its President and CEO recently stated that he was told “in no uncertain terms that the point of obligation was going to be” shifted from the refiners to blenders, and that the “executive order was not negotiable.”[3]  As a result of this pressure, it appears that the RFA swapped sides, trading their opposition to the policy change for other concessions in the proposal.[4]

Mr. Icahn, as the majority owner of fuel refiner CVR Energy, Inc., appears to have been a significant beneficiary of this proposal.  According to the Wall Street Journal, Mr. Icahn claimed that, if not modified, the biofuel quota obligations would cost his company $200 million over the course of this year alone.[5]  If the President follows the advice of his special advisor, then Mr. Icahn will rake in hundreds of millions of dollars as he profits from his role in the Trump Administration.  The day that Mr. Icahn's proposal was sent to the White House, CVR Energy's stock value increased by 3.5%, representing a single-day, multi-million dollar windfall for Mr. Icahn.[6]  An ethics watchdog has described this process as “the purest definition of a conflict of interest that you can get.”[7]

We are not aware of any efforts from either the Trump Administration or Mr. Icahn to address these serious conflicts of interest.  Mr. Icahn has made no discernable effort to separate his extensive business holdings from his broad mandate to address “strangling regulations” as special advisor to the President.[8]  Instead, he has taken the first opportunity to leverage his newfound political power for his own personal gain.

Given these concerns, we request answers to the questions below, in addition to the questions in our February 13th letter, by March 23, 2017:

  • Is the White House preparing executive action language to direct the EPA to modify the RFS?
  • Has Mr. Icahn provided advice or input to the President or any other White House or EPA officials about the RFS policy?
  • Is Mr. Icahn authorized to negotiate with outside entities – including the RFA – on behalf of the President and the White House?
  • What ethics requirements apply to Mr. Icahn in his role as special advisor to the President?  Has he been required to divest himself of any holdings or recuse himself from the deliberations of any decisions in this role?  Has he received any waivers from ethics requirements?
  • On February 22, 2017, the EPA concluded an open comment period regarding a proposed shift of the RFS obligation from refiners to blenders.  Did Mr. Icahn take these comments, and any EPA responses, into consideration when crafting the aforementioned draft RFS modification language submitted to the White House?
  • Has Mr. Icahn been provided access to a government phone line or used any other government resources relevant to his “special advisor” role?
  • Has Mr. Icahn obtained an official government email address?

We look forward to your timely response to the questions above, including those in our original letter.  Please do not hesitate to contact Brian Cohen of Senator Warren’s staff (202-224-4543) or Joe Gaeta of Senator Whitehouse’s staff (202-224-2921) with any questions or concerns.

Sincerely,

March 16, 2017

Scott Pruitt

Administrator

Environmental Protection Agency

1200 Pennsylvania Avenue NW

Washington, D.C. 20460

Dear Administrator Pruitt:

We write seeking information regarding Carl Icahn’s role in any concluded or ongoing discussions concerning the Renewable Fuel Standard (RFS) at the Environmental Protection Agency (EPA).  Additionally, this request extends to White House communications with the EPA, given Mr. Icahn’s special advisory role.[9]

President Trump has identified Mr. Icahn as a special advisor for overhauling federal regulations.  Serving in this role, Mr. Icahn recently presented the White House with draft executive language that would direct the EPA to “shift the burden for complying with the biofuel quotas from refiners to fuel blenders.”[10]

Mr. Icahn’s involvement in reshaping the RFS is deeply concerning, given his clear conflict of interest in this area.  Mr. Icahn has claimed his company would save $200 million over the course of a year were it to be relieved of biofuel quota obligations.[11]  Mr. Icahn, through Icahn Enterprises, owns an 82% stake in CVR Energy (CVR), an oil refiner.[12]  Upon news that Mr. Icahn had presented the White House with a proposal to shift the RFS burden away from refineries, refinery stocks skyrocketed.  CVR stock shot up 3.5% that day, representing a single-day, multi-million dollar windfall for Mr. Icahn.

Mr. Icahn appears to have played an important role in your being named as EPA Administrator.  He claimed “he had been consulted” by President-elect Trump regarding your nomination to be Administrator, and, commenting on your nomination, Mr. Icahn said that you feel “strongly about the absurdity of these [RFS] obligations…”[13]  This raises serious concern about your relationship with Mr. Icahn and the role he will play as modifications to RFS policy are developed. 

Given these concerns, we request written responses to the following questions by March 23, 2017:

  • Prior to your confirmation as Administrator of the EPA, were you in communication with Mr. Icahn regarding the RFS?  If yes, please provide the dates and nature of those communications.
  • Since your confirmation as Administrator of the EPA, have you had any communications with Mr. Icahn regarding the RFS?  If yes, please provide the dates and nature of those communications.
  • Have representatives of CVR or Icahn Enterprises had communications with you or your staff regarding the RFS?  If yes, please provide the dates and nature of those communications.
  • Have you or members of your staff – either before or after your nomination – discussed an executive action relating to the RFS with White House staff?  If yes, please provide the dates of these conversations, the persons involved in the conversation, and the nature of the discussion.
  • Have you consulted ethics counsel regarding your involvement in reviewing the RFS or Mr. Icahn’s involvement with RFS policy modifications?  If yes, please provide dates of when that advice was sought and any guidance offered by ethics counsel.
  • Has Mr. Icahn been in contact with any employee of the EPA regarding the RFS?  If yes, please provide the dates of these conversations, the persons involved in the conversation, and the nature of the discussion.
  • Has Mr. Icahn been given access to any non-public EPA data or reports on the RFS, where the consideration of “non-public” shall be determined by the document status at the time access was granted?
  • On February 22, 2017, the EPA concluded an open comment period regarding a proposed shift of the RFS obligation from oil refiners to blenders.  Have the assembled comments been addressed by the EPA?  Was Mr. Icahn given access to these comments, and any EPA responses, such that he could incorporate them into the aforementioned draft RFS modification language submitted to the White House?

Additionally, please provide all relevant documentation pertaining to communications between the EPA and Mr. Icahn and the EPA and the White House concerning the RFS since January 20, 2017.  This request includes, but is not limited to, documentation of scheduled meetings, email correspondence, advice from ethics counsel, and memorandums pertaining to the RFS.

Thank you for your attention to these issues.  We look forward to working with the EPA to further understand the decision processes regarding any modifications to the RFS.

Please do not hesitate to contact Brian Cohen of Senator Warren’s staff (202-224-4543) or Joe Gaeta of Senator Whitehouse’s staff (202-224-2921) with any questions or concerns.

Sincerely,

###