{"id":297111,"date":"2024-01-19T12:34:27","date_gmt":"2024-01-19T11:34:27","guid":{"rendered":"https:\/\/climatescience.press\/?p=297111"},"modified":"2024-01-19T12:34:30","modified_gmt":"2024-01-19T11:34:30","slug":"victory-sec-drops-natural-asset-companies-read-our-official-submission","status":"publish","type":"post","link":"https:\/\/climatescience.press\/?p=297111","title":{"rendered":"Victory! SEC drops \u201cnatural asset companies.\u201d Read our official submission"},"content":{"rendered":"\n
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From CFACT<\/a><\/p>\n\n\n\n

By Bonner Cohen, Ph. D.<\/a><\/p>\n\n\n\n

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Victory!  SEC drops its plan for \u201cNatural Asset Companies<\/a>.\u201d<\/em><\/p>\n\n\n\n

Read CFACT\u2019s official Submission to SEC: \u201cNatural asset companies\u201d are a ploy by the anti-development crowd to thwart safe and constructive land use.  The SEC should not sanction non-use over optimal use of resources.<\/em><\/p>\n\n\n

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To: Securities and Exchange Commission<\/strong><\/p>\n\n\n\n

From: Committee for a Constructive Tomorrow<\/strong><\/p>\n\n\n\n

Re: Order Instituting Proceedings: \u201cSelf-Regulatory Organizations; New York Stock Exchange LLC; Order Instituting Proceedings to Determine Whether to Approve or Disapprove a Proposed Rule Change to Amend the NYSE Manual to Adopt Listing Standards for Natural Asset Companies\u201d<\/strong><\/p>\n\n\n\n

File No.: SR-NYSE-2023-09<\/strong><\/p>\n\n\n\n

The Committee for a Constructive Tomorrow (CFACT), a 501(c)(3) nonprofit organization, is pleased to submit comments to the Securities and Exchange Commission (SEC) on a proposed rule change by the New York Stock Exchange (NYSE) creating Natural Asset Companies (NACs), which would be traded on the NYSE. The SEC is seeking comments on whether to approve or disapprove the proposed rule change. CFACT has grave concerns about this proposal, and they are explained below.<\/p>\n\n\n\n

The SEC was created in the aftermath of the stock market crash of October 24, 1929. Two landmark statutes, the Securities Act of 1933 and the Securities Exchange Act of 1934, set the parameters of the SEC. At its inception, the new federal entity had a mission statement that is worth bearing in mind:<\/p>\n\n\n\n

\u201cThe Securities and Exchange Commission oversees securities exchanges, securities brokers, investment advisors, and mutual funds in an effort to promote fair dealing, the disclosure of important market information, and to prevent fraud.\u201d<\/p>\n\n\n\n

Under the proposed rule, the NYSE would add to its Listed Company Manual the listing of common equity securities of National Asset Companies, or NACs. According to the proposed rule, this would be \u201ca corporation The SEC should not sanction non-use over optimal use of resources.whose primary purpose would be to actively manage, maintain, restore (as applicable), and grow the values of natural assets and their production of ecosystem services.\u201d Notably, the proposed rule characterizes \u201cthe distinct purpose of a NAC\u201d as \u201cprotect[ing] and grow[ing] the natural assets under its management.\u201d The proposed rule also specifically defines the term \u201cNatural Asset Companies (NACs)\u201d as \u201c[c]orporations that hold the rights to the ecological performance of a defined area and have the authority to manage the areas for conservation, restoration, or sustainable management.\u201d<\/p>\n\n\n\n

Origins Rooted in Cronyism<\/strong><\/p>\n\n\n\n

NACs as a concept owe their existence to Intrinsic Exchange Group Inc. (IEG). According to a September 2021 press release by the Rockefeller Foundation, \u201cIEG was founded in 2017 entrepreneur and environmentalist, Douglas Eger. IEG received critical funding from IDB Lab, Inter-American Development Bank, The Rockefeller Foundation, and Aberdare Ventures and Intrinsic Entertaining Ideas.\u201d It is worth noting that The Rockefeller Foundation alone donated $750,000 to IEG in 2019 and $1 million to IEG in 2021, according to comments on the proposed rule already submitted to the SEC.<\/p>\n\n\n\n

The Rockefeller Foundation\u2019s press release indicates that NACs are a joint project of the NYSE and IEG. The release quotes Eger as follows:<\/p>\n\n\n\n

\u201cThis new asset class on the NYSE will create a virtuous cycle of investment in nature that will help finance sustainable development for communities, companies, and countries[.] \u2026 Together, IEG and the<\/strong> NYSE<\/strong> will enable investors to access nature\u2019s store of wealth and transform our industrial our industrial economy into one that is more equitable.\u201d (emphasis added)<\/p>\n\n\n\n

The release goes on to quote NYSE\u2019s then-president Stacy Cunningham as follows:<\/p>\n\n\n\n

\u201cWith the introduction of Natural Asset Companies, the NYSE will provide investors with an innovative mechanism to financially support the sustainability initiatives they deem critical to our future. Our<\/strong> partnership with Intrinsic Exchange Group<\/strong> is another example of the NYSE tapping into our community to drive meaningful progress on ESG [environmental, social, and governance) issues with a solutions-based approach[.]\u201d (emphasis added)<\/p>\n\n\n\n

In addition to the open acknowledgement of cozy relationships between the NYSE and other entities supporting the creation of NACs, key terms or phrases like \u201ccommunity,\u201d \u201ccommunities,\u201d \u201cequitable,\u201d \u201cour future,\u201d \u201cvirtuous,\u201d \u201csustainable,\u201d \u201csustainability,\u201d \u201csustainable development,\u201d and transform\u201d are conspicuously left undefined in in both the Rockefeller Foundation press release and in the proposed rule. Furthermore, the release admits that \u201cthe value created by NACS is not fully captured by traditional economic metrics.\u201d This is another way of saying that NACs will not and cannot make a profit. NACs will invest in \u201cnature\u201d where the only value created is the purported protection of nature.<\/p>\n\n\n\n

In other words, NACs would not be investment vehicles into which ordinary Americans can put their money with a reasonable expectation of receiving a good return. Instead, they would be state-sanctioned instruments of environmental policy as favored by narrow, if powerful, elites ensconced in wealthy foundations, the United Nations, and the NYSE, and corporations well-positioned bureaucrats in federal agencies<\/p>\n\n\n\n

Nowhere is this more obvious than in the role NACs would play in serving as a funding mechanism the Bureau of Land Management\u2019s (BLM\u2019s) recent proposed rule, \u201cConservation and Landscape Health,\u201d which would authorize BLM to grant \u201cconservation leases\u201d on public lands. BLM assures the public that such leases would be \u201cfor the purpose of ensuring ecosystem resilience through protecting, managing, or restoring natural environments, cultural or historic resources, and ecological communities, including species and their habitats.\u201d The proposed BLM rule provides that \u201conce the BLM has issued a conservation lease, the BLM shall not authorize any other uses of the leased lands<\/em> that are inconsistent with the authorized conservation use.\u201d (emphasis added)<\/p>\n\n\n\n

This means that once BLM issues a conservation lease, productive economic uses such as grazing, logging, or mining will no longer be allowed unless they are deemed \u201cconsistent\u201d with the lease\u2019s environmental purposes.<\/p>\n\n\n\n

In short, the NYSE\u2019s rule is an effort to circumvent federal laws governing how public lands are to be managed, not least the 1976 Federal Land Policy and Management Act (FLMPA). FLPMA mandates that BLM manage public lands \u201con the basis of multiple use and sustained yield.\u201d This means that BLM must provide for a \u201ccombination of balanced and diverse uses,\u201d of which the \u201cprinciple or major uses\u201d include, \u201cand are limited to, domestic livestock grazing, fish and wildlife development and utilization, mineral exploration and production, rights-of-way, outdoor recreation, and timber production.\u201d Nothing in FLMPA authorizes the granting of \u201cconservation leases,\u201d and the BLM rule\u2019s restrictions on productive economic uses of lands under such a lease put it at odds of congressional intent as clearly laid out in FLPMA.<\/p>\n\n\n\n

By violating the clear language of FLPMA, the proposed BLM rule is illegal, and is destined to be overturned by the courts. Yet its provision creating \u201cconservation leases\u201d is inextricably linked to the NACs rule currently before the SEC. Such leases will not provide financial returns to the leaseholders. On the contrary, they are specifically designed to lock up lands to prohibit any economic use thereof. So which entities would sink money into the unprofitable leases?<\/p>\n\n\n\n

The answer is NACs. Like conservation leases, NACs are not designed to make money. NACs are strictly limited in their ability to conduct \u201crevenue-generating\u201d operations, and can only do so if those operations are \u201cconsistent with\u201d the NAC\u2019s \u201cprimary purpose\u201d under which the operation will \u201cwill not cause any material adverse impact on the natural assets\u201d under the NAC\u2019s control.<\/p>\n\n\n\n

\u201cNot in Accordance with Law\u201d<\/strong><\/p>\n\n\n\n

As the Attorney Generals from 25 states noted in comments<\/a> submitted to the SEC on January 9, 2024:<\/p>\n\n\n\n

\u201cThe BLM rule authorizes BLM to issue leases that limit public lands to no use or to extremely limited uses. The NYSE\u2019s proposed rule change in turn provides the mechanism by which companies can obtain the funding necessary to pay for those money-losing leases. In this way, the proposed rule is part of an interlocking scheme designed to facilitate another agency\u2019s violation of the law \u2013 namely, BLM\u2019s issuance of illegal \u2018conservation leases.\u2019 Facilitating another agency\u2019s violations is a textbook example of ultra vires<\/em> agency action \u2018not in accordance with law.\u2019\u201d<\/p>\n\n\n\n

Furthermore, FLPMA does not define conservation as a principle or major use of public lands. The NAC rule cannot categorically dismiss these clear multiple-use and sustained yield FLPMA directives. The NAC rule unlawfully proposes to substitute non-use for multiple use on public lands. Under the proposed NAC listing rules before the SEC, NACs would be prohibited from permitting mining, logging, fossil-fuel development, and industrial-scale agriculture on NAC-held lands because these because these activities are explicitly and categorically defined as \u201cunsustainable.\u201d<\/p>\n\n\n\n

Given the shaky legal ground on which the NYSE proposed NACs rule stands, it has little chance of surviving what promises to be a multitude of court challenges. Additionally, the economic and social harm to everyday Americans the scheme\u2019s plan to lock up so much of the nation\u2019s natural resources in perpetuity is incalculable. For these reasons, CFACT urges the SEC to reject the proposed NAC rule in toto<\/em>. Only in this way can the SEC remain true to its mission statement cited above.<\/p>\n\n\n\n

Thank you very much.<\/p>\n\n\n\n

Bonner Russell Cohen, Ph. D.<\/p>\n\n\n\n

Senior Policy Analyst<\/p>\n\n\n\n

Committee for a Constructive Tomorrow<\/p>\n\n\n\n

Washington, D.C.<\/p>\n\n\n\n