Carl Icahn is the majority owner of the refiner CVR Energy (NYSE: CVI), and a long-time critic of the biofuel quotas U.S. refiners are forced to meet. Following the election of Donald Trump, he was tapped by Trump for advice on the issue.

President Trump was widely expected to make a change to the program that would be beneficial for refiners. As a result, Icahn essentially bet that the cost of complying with the quotas would drop, and CVR Energy stopped buying Renewable Identification Number, or RIN credits that are required to demonstrate compliance.

These RIN credits are a significant expense for refiners. Valero (NYSE: VLO), for instance, said RIN compliance cost the company $750 million in 2016, with similar expense forecast for this year. Valero reported 2016 adjusted net income attributable to stockholders of $1.7 billion, so RIN compliance consumed just over 30% of the profit by that measure.  

Because Icahn had Trump’s ear on this issue, it was widely expected that he would change the program. CVR shares rallied following the election, and despite a recent sell-off are still up nearly 30% over the past year. 

But last week there were reports that the EPA has decided not to make a change to the compliance program. On top of that, a federal court ruled in July that the EPA erred in a 2015 decision to lower the mandated requirements for 2016, raising the risk that they may be retroactively raised (to the detriment of refiners). 

The bottom line is that Icahn’s bet that Trump would change this policy appears to have failed, and as a result, CVR is running up an escalating tab for its renewable fuel obligations. A CNBC story this week put that tab at $322 million and rising for CVR. 

Although the situation could still go Icahn’s way, it’s not looking too favorable at the moment. It’s also not a chance I am willing to take, given that there are other solid refiners that have not run up such a tab that must still be paid. Further, CVR just paid a $0.50/share dividend last week, and given that the RIN tab is likely to be a drag on CVR for the foreseeable future, I am downgrading CVR to a Sell.

Sell CVR Energy.