FOLLOW US

The U.S. government is pressing a Texas federal judge to reject Exxon Mobil Corp.'s bid to keep its documents concealed in a contentious case involving $1.8 billion in disputed tax benefits linked to a joint venture with Qatar. In a move on Thursday, authorities argued that Exxon's insistence on secrecy could needlessly complicate proceedings.

Exxon Docs In $1.8B Case Should Be Unsealed : Exxon's Tax Battle with the U.S.

Exxon asserts that it was unjustly denied tax benefits tied to a partnership with Qatar for natural gas production. Previously, the energy behemoth sought to seal courtroom proceedings, citing potential harm to its relationship with Qatar if certain testimony became public.

"The approach by ExxonMobil suggests a desire to control the narrative, potentially at the expense of transparency and public scrutiny," the government stated.

Call for Transparency and Order

To ensure an efficient trial and uphold public access, the government urges Exxon to disclose its confidentiality concerns before the trial begins. They propose Exxon outlines specific documents for sealing in pretrial submissions and summary judgment records.

Rather than proactively identifying sensitive materials, Exxon seems inclined to request closures ad hoc, according to the government's filing.

Exxon Docs In $1.8B Case Should Be Unsealed : Concerns Over Exxon's Strategy

The government expressed concern over Exxon's apparent readiness to interrupt proceedings to seek courtroom closures, raising questions about its commitment to transparency.

Exxon is yet to articulate reasons for sealing records, which include contract terms, economic models, and tax information, all central to its case.

Disputed Tax Deduction

Exxon's lawsuit, revised in July, seeks $1.8 billion in damages related to refund claims for taxes, penalties, and interest for 2010 and 2011. At the heart of the dispute is a deduction denied by the IRS, pertaining to interest on production payments made to Qatar under a revised partnership agreement.

While Exxon contends it's entitled to the deduction under IRS Code Section 636(a), the government argues the payments constitute lease royalties, not deductible interest.

Response and Legal Representation

Exxon representatives and the government declined immediate comments. Legal representation for Exxon includes attorneys from Davis Polk & Wardwell LLP and Holland & Knight LLP. The government is represented by attorneys from the U.S. Department of Justice, Tax Division.