22 states take aim at SEC over climate regulations creating new type of company
FIRST ON FOX: A coalition of 23 state financial officers representing 22 states is taking aim at the Securities and Exchange Commission (SEC) over regulations enabling the formation of a new type of climate-focused company.
The officials, led by Utah Treasurer Marlo Oaks, wrote a letter to SEC Chair Gary Gensler, arguing his agency's proposed rule allowing for natural asset companies (NAC) could have significant implications for their states and consumers. In their letter, the officials requested the SEC extend the public comment period by 60 days so they and other stakeholders can provide feedback about the rule's potential impacts.
"We have many concerns regarding the substance of the rule and the implications it would have on the markets and the lands of states we represent," Oaks and the other officials wrote to Gensler.
"We would appreciate the opportunity to address them through a reasonable public comment process. The SEC’s stated role is to protect investors and promote capital formation. We believe this rule, if adopted, would act in direct opposition to the stated goals of the SEC."
The letter added that the state financial officers are aware of stakeholders who would have provided public comment on the rule "if given sufficient time to prepare and submit their comments." The SEC proposed the rule change Sept. 29, then gave the public 21 days to respond with feedback.
Under the proposed rule, the SEC would allow the New York Stock Exchange (NYSE) for the first time to list NACs, a new type of company that is chartered to "protect, restore and grow the natural assets under their management to foster healthy ecosystems," according to the Intrinsic Exchange Group, which collaborated with the NYSE to develop the new corporate taxonomy. If finalized, the rule would allow NACs to be traded publicly.
"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. Examples of natural assets that could benefit from the NAC structure include natural landscapes such as forests, wetlands and coral reefs, as well as working lands such as farms," the NYSE states on its website.
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However, while the proposal hasn't received widespread attention, Republicans and industry groups have sounded an alarm on the proposal, saying it would provide a pathway for locking up natural resources, like fossil fuels or minerals, harming local communities reliant on those activities.
In a letter to Gensler last month, senators Pete Ricketts, R-Neb.; Mike Crapo, R-Idaho; and James Risch, R-Idaho, said the proposal "raises significant questions about asset valuation, investment risk, and corporate accountability."
"The proposed rule would allow for federal lands, including national parks and other publicly owned lands, to be included in private investment portfolios," the GOP lawmakers wrote. "The proposed rule also allows for NACs to have management authority over assets held in the portfolio, including our public lands. In the proposed rule, the SEC is creating a new incentive for non-government corporate control over our publicly shared lands.
"We are concerned that corporate involvement in the stewardship and control of our federal lands would create unintended consequences," they added. "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 added that the rule would open the possibility for foreign investment in U.S. natural resources at a time when the nation is working to repel foreign adversaries from domestic influence.
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"The SEC's proposed rule creating natural asset companies will not only upend the accepted standards of value by which businesses are judged, it would pave the way for ESG fanatics to remake the American landscape. NACs would lock away vital resources that have underwritten America's prosperity, sacrificing them on the altar of climate alarmism," Derek Kreifels, the CEO of the State Financial Officers Foundation, told FOX Business.
"That the SEC would weigh such a decision after such a ridiculously short comment period could only suggest they are trying to sneak this measure through without necessary scrutiny," he continued. "The SEC must reopen the comment period to allow concerned parties to weigh in."
The SEC didn't respond to a request for comment.