Cheniere Energy disclosed this week that it got a $370 million tax break from the US Government for burning liquefied natural gas in its massive tankers, a credit critics said was meant for far smaller boats.
The company said on Thursday in financial disclosures that it had won the alternative fuels tax break from the IRS. The tax credit was in a law signed by former President George W Bush in 2005 that was designed to subsidize an array of alternative fuels derived from sources including biomass, coal and natural gas.
The credit was designed to be claimed by parties operating motor vehicles or motorboats. The IRS does not define the size of a motorboat, but other federal regulations define them as smaller than 65 feet long (20 metres), tiny compared to LNG tankers.
"Cheniere took a very aggressive position" on the tax credit, said William Henck, a former IRS lawyer. "Does a tanker sound like a motorboat?"
Lukas Shankar-Ross, a deputy director at the environmental activist non-profit group Friends of the Earth, called Cheniere's claiming of the credit, "a new kind of fabulous and incredulous interpretation of the tax code that has been rubber-stamped by an IRS whose independence is increasingly in question."
Cheniere declined to comment. The IRS did not immediately respond to a request for comment. Cheniere, which exported the first LNG cargo from the lower 48 states 10 years ago, told Reuters earlier that it has invested $50 billion in growing its two export facilities in Texas and Louisiana over the decade and aims to double output to 100 million tons per annum by the mid-2030s.
(Reporting by Timothy Gardner; Editing by Mark Porter)
