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Sean D. Reyes
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AG Reyes Writes SEC to Oppose “Natural Asset Companies” on the Exchange

SALT LAKE CITY, UTAH – Attorney General Sean D. Reyes led a comment letter on behalf of 25 States to the U.S. Securities and Exchange Commission (SEC) over a recent proposed rule change that would allow the New York Stock Exchange to list “Natural Asset Companies” (NACs) on the exchange. NACs are a novel corporate structure designed to take land off the market to prohibit productive economic uses.  

General Reyes issued the following statement:

Of all the objectionable and extreme policies in the ESG menagerie, NACs are among the most egregious and least defensible legally. NACs rely on unproven models focused not on returns and value for investors but rather restrictions of legal and productive use of natural resources, with dollars deployed in amorphous and undefined categories such as “natural assets” and “ecosystem services.” While masquerading as a novel tool for the public good, NACs are a brutish vehicle to accomplish an activist political agenda. They deprive public use of land in multiple ways that will further jeopardize US energy independence and grid stability while illegally opening management, use and ownership of these lands to private parties, including hostile countries or entities.

NACs are a new, untested corporate structure created to lease so-called “ecological performance rights” from landowners, including the federal government. NACs manage “natural assets” in lieu of generating revenue. Any “revenue-generating operations” a NAC engages in must be both “sustainable” and consistent with” its “primary purpose” of protecting nature. The intent of NACs is to lock up lands from productive economic uses such as agriculture, logging, or mining. If the proposed rule change is adopted, NACs will be able to raise capital through listing stock on the NYSE. 

The creation of NACs and proposal to list them on the NYSE is a new front in the effort to promote ESG policies at the expense of economic growth. According to the NYSE Group’s former president, Stacey Cunningham, “[w]ith the introduction of Natural Asset Companies, the NYSE will provide investors an innovative mechanism to financially support the sustainability initiatives they deem critical to our future.” Cunningham characterizes the proposed rule change as “another example of the NYSE tapping into our community to drive meaningful progress on ESG issues with a solutions-based approach.” 

In their letter, the coalition of attorneys general express their strong opposition to the proposed rule change and urge the SEC to disapprove it. They explain that the proposal runs contrary to law, exceeds the SEC’s statutory authority, violates the major questions doctrine, and is bad policy.  

The letter was co-led by the State of Kansas and joined by the States of Alabama, Alaska, Arkansas, Florida, Idaho, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wyoming.   

Read the letter here.