If finalized, this proposal would open the doors to the biggest transfer of federal land in the history of the country to wealthy special interests—including foreign adversaries—with the effect of forever prohibiting any responsible development from taking place. The cherry on top is that the rule uses a new accounting scheme to value land “assets” (aka things such as “air”) to be moved on to these private NAC balance sheets at about 5 quadrillion dollars. Perhaps not conveniently, this accounting scheme would be regulated by a company in which the NYSE itself invests.
According to the Supreme Court, even the “EPA’s [Environmental Protection Agency] own modeling concluded that the [plan] would entail billions of dollars in compliance costs (to be paid in the form of higher energy prices),” reduce the amount of electricity generated, including by requiring “the retirement of dozens of coal-fired plants, and eliminate tens of thousands of jobs across various sectors.” Other government agencies similarly concluded that the plan would cause retail electricity prices to remain persistently higher in many states and would reduce gross domestic product by at least a trillion 2009 dollars by 2040.
Significantly, Congress had conspicuously and repeatedly declined to enact the very authority that the EPA sought to grant itself. The Supreme Court ruled that federal agencies cannot claim authority to regulate if the regulations have major political or economic significance without Congress’s explicitly granting that authority and that the EPA’s Clean Power Plan improperly usurped this power.
The court’s reaffirmation of the “major questions” doctrine is embodied in Justice Antonin Scalia’s famous line stating that “the Congress does not hide elephants in mouseholes.” Despite the Supreme Court’s clear holding, federal agencies appear to be taking their turns thumbing their noses at this doctrine.
The latest egregious example is the SEC’s proposed NAC rule. One would be right to think that this type of decision should probably be made by the people’s elected officials in Congress, not by unnamed and unaccountable bureaucrats at a financial regulatory agency.
Far from protecting against fraud, the SEC’s stated mission, this proposal empowers these NACs to effectively monetize the nonuse of land and nature. Monetizing air may seem difficult to understand. And it is. These companies produce nothing. The way they amass value is to arbitrarily assign value to air and unusable (only by virtue of being deemed unusable) soil and minerals.
But the rule would create an entirely new type of company that can take over assets belonging to the people and private landowners. That statute could not have contemplated such a significant policy change. Indeed, it was to prevent fraudulent practices. This proposal would be a classic example of the major questions doctrine.
It is telling that NACs themselves invite fraud. Their very existence would require the NYSE to create entirely new accounting standards. The NYSE has a conflict of interest with the company that develops those standards. Further, a company that creates nothing yet profits from the resulting absence of tangible creation establishes an appearance of “manipulative acts and practices.”
To ask that this issue be handed to Congress is a humble one. In the alternative, the SEC subjects itself to a court’s reminding the commission that it does not, in fact, have the authority to hand over U.S. national parks, land, and other natural treasures to environmental special interests through notice and comment.