Officials Beg Biden Admin to Reject Rule Implicating Rural America

( – Dozens of state officials are asking the Biden administration’s Securities and Exchange Commission (SEC) to drop a proposed new land transfer law. If the rule is passed it will turn publicly owned land into the backing for a new kind of financial product. The officials say this could be a threat to national security — and a bad financial product, too.

What Is the SEC Proposing?

On December 21, 2023, the SEC announced that the New York Stock Exchange was proposing a change to the rules that would allow it to list Natural Asset Companies (NACs) on the exchange. Under the proposal, NACs would be companies whose main aim is to “actively manage, maintain, restore (as applicable), and grow the value of natural assets and their production of ecosystem services.” The proposal defines “ecosystem services” as things like biodiversity, clean water, and the capture of carbon from the atmosphere, for example by growing trees.

Thirty state officials have now written to the SEC urging them to refuse the proposal. The officials, who include state auditors, treasurers, and comptrollers, say they have many concerns, but the main one is that it’s an attempt to make money from “processes not backed by economic activity.” Put simply, this means that if an NAC owns a forest, that is capturing carbon as its trees grow, it would be carrying out its “ecosystem service” — but it wouldn’t be buying or selling anything, or making money in any other way. If its stock price on the NYSE went up, creating more value, there would be no reason for that rise in value. In short, it’s the sort of idea financial bubbles are made of.

National Security in Danger

The officials also pointed out that by selling stock in NACs, the proposal would allow foreign investors — including those from hostile nations — to damage the US economy. If land was bought by an NAC it wouldn’t be available for productive uses, like for example growing food. As an example, the Chinese government could harm US energy security by buying land in oil-rich areas and turning it into an NAC, which would prevent drilling.

Alaska Department of Revenue Commissioner Adam Crum, who signed the letter to the SEC, says it could be “absolutely catastrophic” for rural Americans. The House Committee on Natural Resources is now on the case; in its own letter to the SEC, it said it was “deeply concerned” about the implications of the proposal. It seems many of our officials and elected representatives can already see how damaging this proposal could be. The only problem now is getting the Biden administration to put aside its obsession with green issues and take these concerns seriously.

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