Thirty state officials have urged the Securities and Exchange Commission (SEC) to reject a rule proposal that would allow the privatization of public lands, according to a copy of their comment letter obtained exclusively by the Daily Caller News Foundation.
The SEC is considering whether to allow “Natural Asset Companies” (NACs) to be traded on the New York Stock Exchange (NYSE), a move which would allow American lands and ecosystem services to serve as the basis for a brand new financial product. Thirty state level officers, including auditors, treasurers, commissioners and comptrollers, signed onto the letter, outlining their specific concerns about the novel accounting practices and potential national security threats that the NYSE’s proposed rule would allow if the SEC allows it to become final.
Under the proposed rule, NACs would be a new type of company that strives to improve ecosystems and ecosystem services of public or private lands, according to the NYSE’s proposal. Those ecosystems and their services would be the underlying value for NAC equity that would be tradable on the NYSE. (RELATED: Green Firm That Advised SEC On Proposed Emissions Rule Sold Carbon Credits From Chinese Region Known For Slave Labor)
NAC Financial Officer Comment by Nick Pope on Scribd
“Natural assets produce an estimated $125 trillion annually in global ecosystem services, such as carbon sequestration, biodiversity and clean water,” according to the NYSE. By comparison, global gross domestic product in 2022 was approximately $100 trillion, according to Statista.
“Our concerns with this proposal are many. However, the fatal flaw underlying the concept under consideration is the attempt to create economic value from processes not backed by economic activity,” the officials wrote. “First, NACs are private entities which make a business out of reducing economic activity. Second, NACs rely on untested methods of accounting which we do not believe have any place in the public markets. Third, NACs present serious national security concerns.”
The fact that NACs “cannot make money through productive use of the lands they will manage” is of concern to the officials, and they contend that the alternative accounting system used to value NACs – standards that deviate from Generally Accepted Accounting Principles (GAAP) – “are not suitable for use in the US capital markets.”
The officials are also concerned that the proposal’s lack of stringent controls on foreign investment in NACs could allow adversarial nations or interests to use NACs as a means of “hampering” the American economy by effectively taking otherwise productive lands off the table for activities like mining, ranching and drilling, according to the letter’s text.
The headquarters of the Securities and Exchange Commission is seen in Washington, D.C., on January 28, 2021. (Photo by Saul Loeb/AFP via Getty Images)
“NACs could be absolutely catastrophic in rural communities, particularly in states like Alaska, where more than 60% of the state is owned by the U.S. government,” Adam Crum, the commissioner of the Alaska Department of Revenue and a signatory to the letter, told the DCNF. “Alaska’s focus on food security will be hampered if farmers can’t access lands and waters for crops and livestock. Access to Mining districts for critical minerals could be cut off, and petroleum industry workers could find themselves shut out of large swaths of productive lands. This shift, influenced by the administration’s environmental priorities, could lead to increased dependence on external sources for critical minerals and energy, as resources within the US become restricted under NACs.”
DELAVAN, WI – JUNE 29: Hank Keizer selects cattle to bring into the milk barn on his farm June 29, 2005 near Delavan, Wisconsin. Keizer works the farm with his father and two brothers where they raise grain and milk over 100 head of dairy cattle twice daily. (Photo by Scott Olson/Getty Images)
Farm workers harvest Pinot Noir wine grapes at the Byron Vineyard and Winery in Santa Maria, California. (Photo: ROBYN BECK/AFP via Getty Images)
A man and his son pick out a pumpkin as they walk through a pumpkin patch on October 22, 2009 in Easton, MD. The annual holiday celebrated on October 31, Halloween has its roots in the Gaelic festival of Samhain and the Christian holy day of All Saints. Many families that celebrate Halloween carve a pumpkin into a frightening or comical face and place it on their doorstep after dark. The American tradition of carving pumpkins preceded the Great Famine period of Irish immigration and was originally associated with harvest time in general, not becoming specifically associated with Halloween until the mid-to-late 1800s. (Photo: JIM WATSON/AFP via Getty Images)
The SEC’s NAC rule has already attracted the scrutiny of Republican lawmakers. The House Natural Resources Committee is currently probing the policy, citing concerns about productive land use and management as well as private interests potentially taking control of public lands.
“NACs aren’t about prudent, responsible use of resources, they are about denying Americans access to the resources with which God blessed this country,” Derek Kreifels, CEO of the State Financial Officers Foundation, an organization which counts all of the letter’s signatories among its members, told the DCNF. “They’re anti-growth and anti-prosperity. State financial officers have thankfully raised the alarm on the harm posed by NACs and spearheaded opposition to this pernicious rule.”
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