The U.S. Environmental Protection Agency has granted a financial hardship waiver to an oil refinery owned by billionaire Carl Icahn, a former adviser to President Donald Trump, exempting the Oklahoma facility from requirements under a federal biofuels law, according to two industry sources briefed on the matter.
The waiver enables Icahn's CVR Energy to avoid tens of millions of dollars in costs related to the U.S. Renewable Fuel Standard (RFS) program. The regulation is meant to cut air pollution, reduce petroleum imports and support corn farmers by requiring refiners to mix billions of gallons of biofuels into the nation's gasoline and diesel each year.
The Small Refiners Coalition, which represents companies that operate small refining facilities, has defended the EPA's waiver program, saying the EPA is required by law to help small refineries struggling with the RFS and that the exemptions are crucial to their financial well-being.
But the exemption for CVR's Wynnewood, Oklahoma, plant prompted fresh criticism from the powerful corn lobby, which already has accused Trump's EPA of over-using the hardship waiver program in a way that hurts demand for ethanol.
"This one's going to be hard for (Scott) Pruitt to explain," Brooke Coleman, head of the Advanced Biofuels Business Council industry group, said in an email on Friday, referring to the EPA administrator.
CVR spokeswoman Brandee Stephens declined to comment regarding the waiver. EPA spokeswoman Liz Bowman did not respond to repeated requests by telephone and email for comment. Efforts to reach Icahn and his attorney for comment were not successful.
An early supporter of Trump's 2016 presidential run and a key supporter on Wall Street, Icahn had met with Pruitt when Pruitt was being vetted in late 2016 for the EPA administrator job, according to news reports at the time.
Icahn stepped down from his position as special regulatory adviser to the Republican president last August after lawmakers cited potential ethical problems in his dual role as an adviser and an investor.
Currently, Icahn is under investigation by the U.S. Department of Justice for his role in influencing biofuels policy while serving as Trump's adviser. Some U.S. lawmakers have expressed concern that Icahn may have used his presidential access to benefit his investments, a charge Icahn has rejected.
CVR acknowledged the Justice Department probe in an earnings statement on Friday, but noted that "the U.S. Attorney's office has not made any claims or allegations against CVR Refining or Mr. Icahn." The Justice Department did not respond to a request for comment on Friday, and has a policy of not discussing ongoing investigations.
To prove RFS compliance, refiners must earn or purchase tradable blending credits — awarded by the government for each blended gallon of fuel — and hand them in to the EPA yearly.
The EPA has the authority to exempt small refineries of under 75,000 barrels per day from the requirement under the hardship waiver program if they can prove that compliance would cause them "disproportionate financial hardship."
With the exemption, CVR would not have to turn over the credits related to the Wynnewood facility for 2017, according to the two sources, who spoke on condition of anonymity.
The waiver was granted in recent months but the sources did not say precisely when.
The refinery had been denied the exemptions by Democratic former President Barack Obama's administration, federal filings showed.