NACs and the Takings Clause

The SEC is looking at allowing a new class of enterprises, Natural Asset Companies, to be listed on the NYSE. NACs are companies that would raise capital via the Exchange and ultimately purchase land to prevent its use for natural resource extraction. That is, their sole purpose would be not to make money for their owners, vis., by developing that land or any minerals or other wealth in/below that land, but rather by simply sequestering the land and sitting on it, preventing any wealth creation from it.

In response to a broad-based hue and cry, the SEC has reopened and extended the comment period for this proposed action, but the fact remains, the agency is seriously considering such an action. Utah State Treasurer Marlo Oaks is one of a number of State officials from 21 different States who protested the rule and forced the reopening of the comment period, and who object generally to the rule and its underlying concept altogether. His take on this SEC foolishness:

The proposed creation of Natural Asset Companies is one of the greatest threats to rural communities in the history of our country. Under the proposal, private interests, including foreign-controlled sovereign wealth funds, could use their capital to purchase or manage farmland, national and state parks, and other mineral-rich areas and stop essential economic activities like farming, grazing, and energy extraction. Recreating on Utah’s incredible natural lands could also face significant curtailment.

Marlo could speak only for Utah in the particular examples, but the situation is the same in all 21 States, and in the other 29 States and the several territories of our nation.

However, this might be a venue in which the Left’s views of private property, given concreteness in the Supreme Court’s badly misguided decisions in Berman v Parker, Hawaii Housing Authority v Midkiff, and Kelo v City of New London could come back to bite them. In Kelo, especially, the Court ruled that it was perfectly jake for private property, a widow’s home, to be seized by the city of New London, CT, and turned over to a private enterprise, a mall developer, for his benefit, and further that such seizures need not be limited to public use: the developer wanted to build another mall, a private use, on land that included the widow’s home.

Were the SEC to follow through, and its rule to stand, then it could be that suitably situated State governments could then seize the NACs’ land holdings and turn them over to State agencies for public use, per the original text and meaning of our Constitution’s 5th Amendment Takings Clause, or, per Kelo, to private enterprises for private exploitations of the lands.

Here’s that Takings Clause:

…nor shall private property be taken for public use, without just compensation.


Berman, Midkiff, and Kelo can be read here, here, and here, respectively.

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