September 8, 2011
Dear Commissioner Aguilar, I write in regards to an August 4, 2011 comment submitted by Department of the Interior's Office of Natural Resources Revenue (ONRR) on the proposed rule concerning Disclosure of Payments by Resource Extraction Issuers (File No. S7-42-10). ONRR requested that the SEC consider, among other recommendations, that affected companies should report payment data at a lease-level. I am concerned that the approach advocated by ONRR may conflict with federal provisions covering confidential lease-level oil and gas production information. ONRR's scheme would appear to jeopardize the confidentiality of lease-level production and royalty information that Congress has separately sought to preserve. The Outer Continental Shelf Lands Act, for example, requires ONRR to protect the confidentiality of lease-level oil and gas exploration and production information submitted to the agency by a company operating under a federal lease or permit. 43 U.S.C. §1352. The purpose of the Dodd-Frank disclosure provision is public disclosure of payments to governments, but not of the type of lease-level data contemplated by ONRR's comments. Furthermore, the notion that company data reported to the SEC under the Dodd-Frank amendments would "provide a valuable cross-check" against confidential data reported to ONRR depends on a problematic assumption that financial accounting data used for royalty reporting would be independent of financial data needed to report lease-level royalty payments to the SEC. Presumably, little purpose would be served by cross-checking the same underlying data. Please see the attached article for further information.
Sincerely yours,
Jeff Perry
Jeffrey H. Perry
King & Spalding LLP
1700 Pennsylvania Avenue,
NW Washington, DC 20006-4706