EXCLUSIVE: Environmental Group Sues Treasury, IRS for Records Behind Cheniere's $370 Million 'Alternative Fuel' Tax Break

An environmental group has sued the Treasury Department and the Internal Revenue Service for records on the tax credit that let natural gas exporter Cheniere Energy claim $370 million, saying the agencies have not turned over a single page in nearly seven months, according to a federal complaint reviewed by The Digital Free Press.

Friends of the Earth filed the Freedom of Information Act lawsuit on Thursday, Oct. 22, in federal court in Washington, D.C. The case is Friends of the Earth v. U.S. Department of the Treasury, No. 1:26-cv-03698.

The fight is over the alternative fuel excise tax credit, a 50-cent-per-gallon incentive first passed in 2005 and extended through Dec. 31, 2024, by the Inflation Reduction Act. The law covers fuels used in vehicles and in a "motorboat."

According to the complaint, Cheniere disclosed in its most recent annual report to the Securities and Exchange Commission that its "use of LNG as transport fuel" on its ships "enabled" it "to claim federal alternative fuel excise tax credits totaling $370 million for the period spanning from 2018 to 2024." The complaint says the IRS decision to approve the credits "raises significant questions" about how the agencies read the law. Cheniere is not a party to the lawsuit.

What the Group Asked For

Friends of the Earth filed its request on March 30, 2026. It asked for legal guidance on the credit, communications between Treasury and members of Congress or their staff about how far the credit reaches, records on how the government defines "motorboat" and "alternative fuel," and the full rulemaking record for 2008 proposed rules.

The complaint describes months of back-and-forth. The IRS closed the request on April 7, saying the rulings it covered were already public, then reopened it on April 29 and called parts of it "overly broad." On Sept. 25, the IRS said it would notify the group if it could not finish by April 21, 2027, more than a year after the request was filed. Treasury, citing a "heavy FOIA workload," gave an estimated completion date of Dec. 19, 2026, and said that date "can change."

"As of the filing of this Complaint, the IRS and the Department have not produced a single responsive record," the lawsuit says.

The group asks the court to declare that the agencies broke the Freedom of Information Act and to order them to process the request and release the records promptly. It is represented by Eubanks & Associates.

Cheniere Tax Credit Draws Questions on Capitol Hill

The credit has drawn questions on Capitol Hill. Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, posted a release titled "Wyden Questions $370M Tax Windfall Trump IRS Granted Major Natural Gas Exporter" on the committee's website.

The allegations in the complaint have not been tested in court, and the government has not yet filed a response.

The Digital Free Press found no news coverage of the lawsuit before publication.

A Treasury spokesperson referred questions to the IRS. The Digital Free Press also reached out to the IRS for comment on Oct. 23; no response was received by publication.

Yossi Schmidt, Founder and Editor-in-Chief, The Digital Free Press

Hold Everyone Accountable.

Sources: Complaint, Friends of the Earth v. U.S. Department of the Treasury, No. 1:26-cv-03698 (D.D.C., filed Oct. 22, 2026): https://storage.courtlistener.com/recap/gov.uscourts.dcd.297904/gov.uscourts.dcd.297904.1.0.pdf Source: Court docket: https://www.courtlistener.com/docket/75006547/friends-of-the-earth-v-us-department-of-treasury/ Source: Senate Finance Committee, Wyden release: https://www.finance.senate.gov/ranking-members-news/wyden-questions-370m-tax-windfall-trump-irs-granted-major-natural-gas-exporter