Natural Asset Companies latest in land schemes

A proposed rule by the U.S. Securities Exchange Commission would allow a new type of company with the rights to manage public and private lands to be listed on the New York Stock Exchange. Shares of these companies could then potentially be purchased and controlled by anti-agriculture interests or foreign adversaries.

“To address the large and complex challenges of climate change and the transition to a more sustainable economy, NYSE and Intrinsic Exchange Group (IEG) are pioneering a new class of listed company based on nature and the benefits that nature provides (termed ecosystem services).” the New York Stock Exchange said on its website, announcing Natural Asset Companies (NAC).

“NACs will capture the intrinsic and productive value of nature and provide a store of value based on the vital assets that underpin our entire economy and make life on earth possible,” NYSE wrote.

As publicly tradable securities, NACs hold rights and management of forests, wetlands, and coral reefs, as well as farm and rangelands. Instead of being focused on traditional accounting practices and returning profits to the shareholder, NACs would instead be rated based on “natural processes,” and prioritizing conservation and “sustainable practices.”

Under the proposed SEC rule, “sustainable practices” are defined using the United Nations System of Environmental and Economic Accounting Ecosystem Accounting Framework (SEEA EA). However the UN standards may not be in line with the U.S. Generally Accepted Accounting Principles (GAAP) or U.S. law.

Similar to the Biden Administration’s “30×30” agenda — which would place 30 percent of U.S. land and coastal waters into permanent conservation by 2030 — NACs pose a major threat to rural economies by removing working lands from production or by severely limiting what kinds of uses those lands are available for. The runoff impact to land valuations could also handicap local governments that rely on tax revenues to fund essential services like hospitals, roads, schools, and emergency services.

The SEC quietly introduced the rule in September 2023, with an unusually short 21-day public comment period. However, on Dec. 28, 2023, the Securities and Exchange Commission published a notice in the Federal Register reopening comments on the NAC proposed rule. The new comment deadline is January 18. Comments can be submitted at to the SEC website at https://www.sec.gov/rules/sro/sr-nyse-2023-09.

This is the second time the SEC has delayed approving NACs, and in addition to extending the comment period, the SEC has also instituted proceedings requiring The New York Stock Exchange and Intrinsic Exchange Group to show that NACs do not violate securities law.

CONGRESS PUSHES BACK
Nebraska Senator Pete Ricketts and Idaho Senators Mike Crapo and James Risch sent a letter to the SEC on Nov. 2, 2023, expressing their concerns.

“The proposed rule would allow for federal lands, including national parks and other publicly owned lands, to be included in private investment portfolios,” the senators wrote. “[It] also allows for NACs to have management authority over assets held in the portfolio, including our public lands.”

The senators argued that the SEC is creating incentives for non-government corporate control over public lands, which could create unintended consequences.

“The proposed rule could lead to a preservationist-only approach to federal land management instead of an ‘all-of-the-above’ working lands approach as intended by the creation of our federal land programs,” they wrote. “We are also alarmed by the SEC’s allowance under the proposed rule of foreign investment in these uniquely U.S. assets. At a time in which we are actively working to deter our adversaries, we should not be open our federal lands up to investment from the same adversaries.”

Thirty-one House Representatives, many of them from majority public lands states, also sent a letter to the SEC on Dec. 15, 2023, encouraging the SEC to reopen the comment period and requesting information, including how the SEC has the right to confer “management authority” over federal lands.

“This proposal is complex and based on a novel, non-traditional investing mechanism that would seemingly allow for the buying and selling of certain undefined ‘rights’ to certain private and public lands, including foreign nations and noncitizens, to terminate and prevent all economic activities on such properties,” the representatives wrote.

The creation of Natural Asset Companies dovetails with a recent Bureau of Land Management rule proposal that prioritizes conservation over the multiple-uses (mining, grazing, and recreation) that Congress authorized under the Federal Land Policy and Management Act.

In alignment with the ’30×30′ agenda, The U.S. Fish and Wildlife Service have sought to leverage conservation easements on private lands surrounding its existing National Wildlife Refuges to extend the amount of lands placed in permanent conservation. Those easements could then be purchased and included in an NAC portfolio.

Such an arrangements would provide multiple avenues for adversarial outside interests to end grazing on federal lands and conservation easements, as well as prohibiting oil and gas exploration during a time of increased tension and uncertainty in the Middle East.

CONSERVATION EASEMENT ISSUES
Margaret Byfield with property rights non-profit American Stewards of Liberty said that beyond public lands, owners of existing permanent conservation easements are under threat from Natural Asset Companies.

Most landowners don’t think to include language in an easement contract that says that their easement cannot be transferred to a different owner, Byfield said, much less a provision that says their land cannot be enrolled in a financial product.

“You cannot write an easement contract that benefits the landowner in the long run,” she said.

Byfield said that Wyoming Congresswoman Harriet Hageman, who has long been an outspoken opponent of permanent conservation easements, has introduced language to the next Farm Bill that would provide sunsets for easements, allowing landowners the opportunity to buy back their easement and to negotiate better tax incentives for multi-generational landowners beyond the traditional one-time tax benefit. Hageman also led the 31 House Representatives who signed the letter to the SEC encouraging it to reopen comments on the NAC rule.

Byfield said that other proposals include counties and states placing a 10 percent cap on total conservation easements or other conservation vehicles in a given county in order to protect the revenues that counties rely on to support local essential services.

“Conservation easements make the counties more beholden to Federal and State Dollars,” Byfield said.

More information about Natural Asset Companies is available at https://americanstewards.us/natural-asset-companies/