Utah's Attorney General, Sean D. Reyes, has led a comment letter on behalf of 25 states to the U.S. Securities and Exchange Commission (SEC) regarding a recent proposed rule change. This change would permit the New York Stock Exchange (NYSE) to list "Natural Asset Companies" (NACs) on the exchange for public interest. The letter was published on January 9, following the SEC's decision to reopen the comment period on the proposed rule change.
According to Reyes' statement on his website, "Of all the objectionable and extreme policies in the ESG menagerie, NACs are among the most egregious and least defensible legally." He further elaborates that "NACs rely on unproven models focused not on returns and value for investors but rather restrictions of legal and productive use of natural resources, with dollars deployed in amorphous and undefined categories such as 'natural assets' and 'ecosystem services'."
Reyes goes on to criticize NACs by stating, "While masquerading as a novel tool for the public good, NACs are a brutish vehicle to accomplish an activist political agenda." He concludes his argument by claiming that "They deprive public use of land in multiple ways that will further jeopardize US energy independence and grid stability while illegally opening management, use and ownership of these lands to private parties, including hostile countries or entities."
The SEC's proposal was made in collaboration with the Intrinsic Exchange Group (IEG) and in partnership with NYSE. The proposal came forward on October 4, 2023 according to Federal Newswire. The new investment vehicles known as NACs would allow federal lands - including national parks - to become part of NACs. These companies would be granted substantial "management authority," while also enabling foreign interests, including China, to establish and invest in NACs.
The coalition of attorneys general opposes the proposed rule change, urging the SEC to reject it in their letter. They argue that the proposal contradicts established law, exceeds the SEC’s legal mandate, breaches the major questions doctrine, and represents unfavorable policy.
The letter was co-led by the State of Kansas and joined by 23 other states including Alabama, Alaska, Arkansas, Florida, Idaho, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia and Wyoming.
In his letter to the SEC Reyes cites Stacey Cunningham - former president of NYSE Group - stating "With the introduction of Natural Asset Companies (NACs), the NYSE will provide investors an innovative mechanism to financially support sustainability initiatives they deem critical to our future." Cunningham also describes the proposed rule change as "another example of NYSE tapping into our community to drive meaningful progress on ESG issues with a solutions-based approach."
Since the extension of comment period on this proposed rule change for NACs - which was initially set to end on January 2 but extended until January 18 - hundreds of opposition comments have been filed.
Sean D. Reyes was appointed as Utah’s 21st attorney general in 2013 by Governor Gary Herbert (R-Utah).
