Ahead of its January 18th deadline, the Securities and Exchange Commission accepted the request to remove its proposed rule to list natural asset companies (NACs) on the New York Stock Exchange (NYSE).  

In a statement dated January 17th, SEC Assistant Secretary Sherry H. Raywood wrote “the Exchange withdrew the proposed rule change (SR-NYSE-2023-09)” without adding any reasoning. 

Utah Treasurer Marlo Oaks, who led efforts with his fellow financial officers, applauded the notice of withdrawal, saying, “I am pleased by the NYSE’s decision to withdraw this dangerous proposal. I appreciate the efforts of so many to provide input to the SEC, NYSE, and their elected representatives. This news illustrates the impact of public engagement on important issues.”

There were many issues with this proposed rule. 

First, the SEC had no authority to create these enterprises as they can’t oversee activities, including management and access, on private and public lands, since their mission is to “protect investors and maintain efficient markets”—not manage or conserve private and public lands. And NACs would have licensed water, air, and land rights to foreign adversaries and financial asset managers like BlackRock.

Second, 25 Attorneys General wrote to the SEC that the NAC rule will act as a “funding mechanism” for the Bureau of Land Management’s proposed “Conservation and Landscape Health” rule to permit “conservation leases” on public lands to stop productive economic uses. The BLM rule, they argue, “is an astonishing attempt to create agency authority where none exists.”

Third, NACs would have enrolled federal lands, including National Parks, under its proposed “hybrid area” use case–an egregious affront to public lands access and multiple-use, sustained-yield management of federal lands. The Constitution clearly states only Congress–not the SEC– has the exclusive power to “dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States…”  and delegate management and protection of federal lands to the Department of Interior and related agencies. 

Fourth, the NAC rule would have permitted “sustainable revenue-generating operations” including the sale of carbon credits:

“Under the proposal, all NACs would be prohibited from directly or indirectly conducting unsustainable activities, such as mining, that lead to the degradation of the ecosystems it is trying to protect. In conducting its revenue-generating operations, a NAC could monetize ecosystem services that have markets (e.g., through the sale of carbon credits).”

Carbon credits and the carbon offsetting process have both come under increased scrutiny in recent years. 

The practice of carbon offsetting often invites greenwashing, unethical behavior, and does little to bolster the environment. One recent scandal involved the carbon offsetting firm South Pole. It sold over three million “environmentally worthless credits” to major companies so they can declare their products and services “carbon neutral.” Another investigation found 94% of rainforest carbon offsets were “phantom credits” that did little to reduce carbon emissions. As a result, there’s little confidence in voluntary carbon credit markets going forward.  

This is a major victory for property rights and true conservation efforts. But we suspect the White House will find another workaround to monetize “ecosystem services” using its new guidance on cost-benefit analysis pertaining to government spending and rulemaking. 

Our Center for Energy and Conservation heavily engaged with American Stewardship of Liberty and other partners to oppose these so-called “sustainable” enterprises. The center also presented before the Congressional Western Caucus on this issue. 

Learn more about Natural Asset Companies HERE.