Natural Asset Company Prohibition Act

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Summary

In 2023, the Securities and Exchange Commission (SEC) considered allowing “Natural Asset Companies” (NACs) to be bought and sold on the New York Stock Exchange. A massive public backlash ensued when it was uncovered that NACs might be employed to lock up vast areas of our public lands without offering any tangible benefits to the economy or environment. Thankfully, the SEC withdrew its recommendation, but NAC proponents vowed to press onward. This model policy disincentivizes efforts to revisit the formation of NACs.

Natural Asset Company Prohibition Act

Natural Asset Company Prohibition Act.

Sec. 1. Definition;

(1) For purposes of the Natural Asset Company Prohibition Act, natural asset company has the same meaning set forth in the rules and regulations issued and promulgated by the Securities and Exchange Commission and for listing on the New York Stock Exchange or any other stock exchanges. Natural asset company includes any company affiliated with any natural asset company, controlled by any natural asset company, or under common control with any natural asset company. Natural asset company also includes any company, including, but not limited to, corporations and limited liability companies whose primary purpose is to actively manage, maintain, restore, and grow the value of natural assets and the production of ecosystem services. Any entity which is listed by the Securities and Exchange Commission as a natural asset company is considered a natural asset company, regardless of its legal form.

Sec. 2. The state or any political subdivision of the state shall not;

(1) sell, lease, license, or grant liens, or otherwise encumber land or resources owned, leased, or otherwise controlled by the state, or the rights to such land or resources including land, resources, or the rights to such land or resources owned by any state retirement system, to a natural asset company or

(2) otherwise do business directly or indirectly with a natural asset company in a way that would grant a natural asset company a direct or indirect interest in or right to such land or resources.

Sec. 3. Investing public funds;

(1) The investment of public funds, including state funds, funds controlled by an entity owned or controlled by the state, funds of any state retirement system, and funds managed by, controlled by, or allocated to any political subdivision of the state, or entity owned or controlled by a political subdivision of the state in a natural asset company is prohibited.

(2) No funds managed by, controlled by, or allocated to an entity listed in this subsection shall be invested in:

(a) Securities of or other interests in natural asset companies;

(b) Mutual funds or other funds invested in natural asset companies or the securities of natural asset funds; or

(c) Private placements, partnerships, or other public or private investments in natural asset companies.

Sec. 4. Bond offerings;

(1) The state and any political subdivision of the state shall not issue, approve, sponsor, guarantee, or otherwise engage with any bond offering involving a natural asset company or any project in which a natural asset company holds an interest or can exercise control.

Sec. 5. Assets, including land and other interests;

(1) Assets, including land and other interests, including, but not limited to, easements, liens, and other encumbrances, shall not be used for the benefit of, transferred or promised to, or created for later transfer to or use by, a natural asset company.

(2) As the State does not consent to the acquisition of land or any rights to such land or the encumbrance of land or any rights thereto by a natural asset company if a natural asset company acquires any land or rights or interest to or in such land, the ownership of such land shall revert back to the state and any easement, lien, or other encumbrance in violation of the Natural Asset Company Prohibition Act or any other state law shall be null and void.

(3) The Governor, the Attorney General, any agency of this state, any member of the Legislature, any municipality within this state, and any private citizen who is adversely affected by a violation of the Natural Asset Company Prohibition Act, may file an action in the district court in the county in which the land affected by the violation of the act is located. If the court finds that the act has been violated, ownership of the land affected by the violation of the act shall revert back to [STATE NAME] and any encumbrance in violation of the act, including liens, easements, or other encumbrances shall be null and void.

(4) If the court finds that a violation of the Natural Asset Company Prohibition Act has occurred, the court may award attorney’s fees and costs to the plaintiff.

Sec. 6. Requirements;

(1) Natural asset companies are not permitted to operate, conduct business, or acquire assets, easements, or other asset interests in this state.

Sec. 7. Granting authority;

(1) The Secretary of State shall not accept for filing any corporate charter or articles of incorporation by or grant authority to transact business in this state to, any natural asset company.

(2) The Secretary of State shall not accept amendments of any existing (STATE NAME) company’s corporate charter or articles of incorporation to convert any existing (STATE NAME) company into a natural asset company.

(3) The Secretary of State shall rescind the authority of any company doing business in this state to continue to transact business in this state if such company becomes a natural asset company.

(4) The Secretary of State shall not accept filing fees from any natural asset company and shall not permit a natural asset company to enjoy good standing, transact business, or otherwise operate in this state.

(5) The Secretary of State shall not issue a certificate of authority to a foreign natural asset company.

(6) The Secretary of State shall revoke any certificate of authority already issued to any foreign natural asset company.

Sec. 8. Violations;

(1) Any company that violates the Natural Asset Company Prohibition Act shall lose authorization to do business in this state for as long as the company continues to violate the act.

(2) Any contract with a natural asset company entered into by the state, by any political subdivisions of this state, or by any entity in violation of the Natural Asset Company Act shall be null and void and unenforceable.

(3) Any investment manager or government official overseeing management or bonding that violates the Natural Asset Company Prohibition Act shall immediately arrange for the disposition of any prohibited investment or use of funds.