This week, House Committee on Natural Resources Chairman Bruce Westerman (R-Ark.) led a letter to New York Stock Exchange (NYSE) Chair Sharon Bowen and President Lynn Martin, seeking further information regarding their now-withdrawn Natural Asset Companies (NAC) proposal. In part, the members wrote:

"On September 27, 2023, the NYSE filed notice of a proposed rule change with the Securities and Exchange Commission (SEC) to list NACs as publicly traded companies on the NYSE. On September 29, 2023, the SEC issued notice of the NYSE proposal and, on October 4, 2023, published it for comment in the Federal Register. The NYSE proposal described NACs as a new type of company that would 'hold the rights to the ecological performance' of prescribed areas—including 'national reserves' and 'public lands'—for 'conservation, restoration, or sustainable management.'...

"Overall, it is clear that NYSE’s proposal to list NACs, IEG’s [Intrinsic Exchange Group] ongoing efforts to bring NACs to the market, and the larger effort to develop a national standard for natural capital accounting and ecosystem service valuation, would have widespread impacts on America’s public lands and waters. Indeed, in 2022, a sympathetic profile of IEG explained how NACs would obtain rights over 'public lands' where 'natural asset owners are typically the local and national government entities.' Likewise, the Department of the Interior has declared that a national system of natural capital accounting will provide information that may 'fundamentally change' policy decisions on public land management and the environment.  

"Yet the full implications of NYSE’s proposal to bring NACs to the market are unknown. The Committee is deeply concerned that the NYSE—which partnered with IEG and initiated the proposed rule change with the SEC to allow NACs to obtain rights over public lands—failed to consult with impacted stakeholders, including, but not limited to, Congress, states and local governments, tribes, and adjacent landowners."

Read the full letter here.

Background

On Oct. 4, 2023, the Securities and Exchange Commission (SEC) published notice of a proposed rule change to allow the NYSE to list NACs, a new type of public company that would hold rights over prescribed areas such as national parks, federal lands, and private land. However, unlike other companies that are created to provide services or produce items of value, a NAC is "a corporation whose primary purpose is to actively manage, maintain, restore (as applicable), and grow the value of natural assets and their production of ecosystem services."

In short, NACs would obtain rights to U.S. land and could then prevent that land from being used for the production of natural resources, including fossil fuel development, mining, most forestry and large-scale farming, all of which are specifically prohibited by NACs. Hence, NACs would allow shareholders, including foreign interests, to buy shares of companies whose express purpose is to lock up land and prevent productive natural resource development, including on America’s public lands.

A week after the committee's Jan. 11 oversight letter to SEC Chair Gary Gensler and Director Haoxiang Zhu, on Jan. 17, 2024, the SEC announced a notice of withdrawal of the proposed rule change.