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Arkansas Senate Bill SB79

Arkansas 2024 Regular Session

Arkansas Senate Bill SB79 Compare Versions

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11 Stricken language would be deleted from and underlined language would be added to present law.
2-Act 174 of the Fiscal Session
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5-State of Arkansas As Engrossed: S4/24/24 1
4+State of Arkansas 1
65 94th General Assembly A Bill 2
76 Fiscal Session, 2024 SENATE BILL 79 3
87 4
9-By: Senators Irvin, J. Bryant 5
8+By: Senator Irvin 5
109 By: Representative J. Moore 6
1110 7
1211 For An Act To Be Entitled 8
1312 TO AMEND ARKANSAS LA W CONCERNING DIGITAL ASSET MINING 9
1413 BUSINESSES; TO AMEND THE ARKANSAS DATA CE NTERS ACT OF 10
1514 2023; TO AMEND ARKAN SAS LAW TO PROVIDE F OR THE 11
16-PERMITTING AND REGUL ATION OF DIGITAL ASSET MINING 12
17-BUSINESSES; TO DECLA RE AN EMERGENCY; AND FOR OTHER 13
18-PURPOSES. 14
19- 15
15+LICENSURE, PERMITTIN G, AND REGULATION OF DIGITAL 12
16+ASSET MINING BUSINES SES AND BUSINESSES U TILIZING A 13
17+BLOCKCHAIN NETWORK; T O DECLARE AN EMERGEN CY; AND FOR 14
18+OTHER PURPOSES. 15
2019 16
21-Subtitle 17
22-TO AMEND THE ARKANSAS DATA CENTERS ACT OF 18
23-2023; TO PROVIDE FOR THE REGULATION OF 19
24-DIGITAL ASSET MINING BUSINESSES; AND TO 20
25-DECLARE AN EMERGENCY. 21
26- 22
27- 23
28-BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 24
20+ 17
21+Subtitle 18
22+TO AMEND THE ARKANSAS DATA CENTERS ACTS 19
23+OF 2023; TO PROVIDE FOR THE REGULATION OF 20
24+DIGITAL ASSET MINING BUSINESSES AND 21
25+BUSINESSES UTILIZING A BLOCKCHAIN 22
26+NETWORK; AND TO DECLAR E AN EMERGENCY. 23
27+ 24
2928 25
30- SECTION 1. Arkansas Code § 14 -1-602(b), concerning legislative intent 26
31-and findings for the Arkansas Data Centers Act of 2023, is amended to read as 27
32-follows: 28
33- (b) Through the enactment of this subchapter, th e General Assembly 29
34-intends to: 30
35- (1) Recognize recognize that data centers create jobs, pay 31
36-taxes, and provide general economic value to local communities and this 32
37-state; and 33
38- (2) Clarify the guidelines needed to protect data asset miners 34
39-from discriminatory industry-specific regulations and taxes . 35
40- 36 As Engrossed: S4/24/24 SB79
29+BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 26
30+ 27
31+ SECTION 1. Arkansas Code § 14 -1-602(b), concerning legislative intent 28
32+and findings for the Arkansas Data Centers Act of 2023, is amended to read as 29
33+follows: 30
34+ (b) Through the enactment of this subchapter, the General Assembly 31
35+intends to: 32
36+ (1) Recognize recognize that data centers create jobs, pay taxes, 33
37+and provide general economic value to local communities and this state ; and 34
38+ (2) Clarify the guidelines needed t o protect data asset miners 35
39+from discriminatory industry -specific regulations and taxes . 36 SB79
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4443
45- SECTION 2. Arkansas Code § 14 -1-605(a), concerning prohibiting a local 1
46-government from imposing ordinances or zoning regulations on a digital asset 2
47-mining business with the intent to discriminate against the digital asset 3
48-mining business, is amended to read as follows: 4
49- (a) Except as provided by subsection (d) of this section, a local 5
50-government shall not : 6
51- (1) Enact or adopt an ordinance, policy, or action that limits 7
52-the sound decibels generated from home digital asset mining other than the 8
53-limits set for sound pollution generally; 9
54- (2) Impose a different requirement for a digital asset mining 10
55-business than is applicable to any requirement for a data center; 11
56- (3) Rezone rezone an area in which a di gital asset mining 12
57-business is located without complying with applicable state law and local 13
58-zoning ordinances; or 14
59- (4) Rezone an area with the intent or effect of discriminating 15
60-against a digital asset mining business . 16
61- 17
62- SECTION 3. Arkansas Code Titl e 14, Chapter 1, Subchapter 6, is amended 18
63-to add an additional section to read as follows: 19
64- 14-1-606. Ownership of digital asset mining business by prohibited 20
65-foreign-party-controlled business prohibited — Definitions — Penalty — 21
66-Reporting. 22
67- (a) As used in this section: 23
68- (1) "Interest" means an ownership interest of greater than zero 24
69-percent (0%); 25
70- (2) "Prohibited foreign -party-controlled business" means a 26
71-digital asset mining business in which a prohibited foreign party owns an 27
72-interest; and 28
73- (3) “Prohibited foreign party” means: 29
74- (A) A citizen, resident, or agent of a country subject to 30
75-§ 126.1 of the International Traffic in Arms Regulations, 22 C.F.R. § 120.1 31
76-et seq., as existing on January 1, 2024; 32
77- (B) A foreign government formed wit hin a country subject 33
78-to § 126.1 of the International Traffic in Arms Regulations, 22 C.F.R. § 34
79-120.1 et seq., as existing on January 1, 2024; 35
80- (C) A party other than an individual or a government that 36 As Engrossed: S4/24/24 SB79
44+ 1
45+ SECTION 2. Arkansas Code § 14 -1-604(a), concerning digital asset 2
46+mining, is amended to read as follows: 3
47+ (a) A digital asset mining business may operate in this state if the 4
48+digital asset mining business complies with: 5
49+ (1) State law concerning business guidelines and tax policies; 6
50+ (2) Any ordinance concerning operations and safety; 7
51+ (3) Any rule or rate for utility service provided by or on 8
52+behalf of a public entity; and 9
53+ (4) State and federal employment laws, including without 10
54+limitation employment laws . 11
55+ 12
56+ SECTION 3. Arkansas Code § 14 -1-605(a), concerning discrimination 13
57+against digital asset mining businesses, is amended to read as follows: 14
58+ (a) Except as provided by subsection (d) of this section, a local 15
59+government shall not: 16
60+ (1) Enact or adopt an ordinance, policy, or action that limits 17
61+the sound decibels generated from home digital asset mining other than the 18
62+limits set for sound pollution ge nerally; 19
63+ (2) Impose a different requirement for a digital asset mining 20
64+business than is applicable to any requirement for a data center; 21
65+ (3)(2) Rezone an area in which a digital asset mining business 22
66+is located without complying with applicable state law and local zoning 23
67+ordinances; or 24
68+ (4)(3) Rezone an area with the intent or effect of 25
69+discriminating against a digital asset mining business. 26
70+ 27
71+ SECTION 4. Arkansas Code Title 14, Chapter 1, Subchapter 6, is amended 28
72+to add additional sections to read as follows: 29
73+ 14-1-606. Operation of digital asset mining business or business 30
74+utilizing blockchain network. 31
75+ (a)(1) The sound emitted by a digital asset mining business or a 32
76+business utilizing a blockchain network shall not exceed sixty (60) decibels. 33
77+ (2) A digital asset mining business or a business utilizing a 34
78+blockchain network shall utilize a soundpro ofing enclosure to ensure that the 35
79+sound emitted by the digital asset mining business or the business utilizing 36 SB79
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85-is created or organized under the laws of a foreign government within a 1
86-country subject to § 126.1 of the International Traffic in Arms Regulations, 2
87-22 C.F.R. § 120.1 et seq., as existing on January 1, 2024; 3
88- (D) Any party other than an individual or a government: 4
89- (i) That is created or organized under the laws of 5
90-any state; and 6
91- (ii) In which a significant interest or substantial 7
92-control is directly or indirectly held or is capable of being exercised by: 8
93- (a) An individual referred to in subdivision 9
94-(a)(3)(A) of this section; 10
95- (b) A foreign government referred to in 11
96-subdivision (a)(3)(B) of this section; 12
97- (c) A party referred to in subdivision 13
98-(a)(3)(C) of this section; or 14
99- (d) A combination of the individuals, parties, 15
100-or governments referred to in this subdivision (a)(3)(D )(ii); 16
101- (E) An Entity of Particular Concern designated by the 17
102-United States Department of State; or 18
103- (F) An agent, trustee, or other fiduciary of a person or 19
104-entity enumerated in subdivisions (a)(3)(A) -(E) of this section. 20
105- (b)(1) A prohibited forei gn party shall not acquire or hold by grant, 21
106-purchase, devise, descent, or otherwise any interest in a digital asset 22
107-mining business in this state. 23
108- (2) A person shall not acquire or hold a digital asset mining 24
109-business as an agent, trustee, or other fid uciary for a prohibited foreign -25
110-party-controlled business. 26
111- (c)(1) A prohibited foreign -party-controlled business in operation 27
112-before the effective date of this act shall have three hundred sixty -five 28
113-(365) calendar days from the effective date of this ac t for the prohibited 29
114-foreign party to divest all interest in the digital asset mining business. 30
115- (2) If a prohibited foreign party fails to divest all interest 31
116-in the digital asset mining business under subdivision (c)(1) of this 32
117-section, the Attorney General may commence an action in a circuit court with 33
118-proper jurisdiction under subsection (e) of t his section. 34
119- (d) Upon request of a person or upon receipt of information that leads 35
120-the Attorney General to believe that a violation of this section may exist, 36 As Engrossed: S4/24/24 SB79
84+a blockchain network does not exceed forty (40) decibels. 1
85+ (b)(1) A digital asset mining business or a business utilizing a 2
86+blockchain network beginning operations on and after the effective date of 3
87+this act shall not utilize water to cool any equipment used as part of the 4
88+operations of the digital asset mining business or the business utilizing a 5
89+blockchain network. 6
90+ (2)(A)(i) Subdivision (b )(1) of this section does not prohibit a 7
91+digital asset mining business or a business utilizing a blockchain network 8
92+operating before the effective date of this act from utilizing water to cool 9
93+any equipment used as part of the operations of the digital ass et mining 10
94+business or the business utilizing a blockchain network for no longer than 11
95+twenty-four (24) months from the effective date of this act. 12
96+ (B) For the purposes of subdivision (b)(2)(A) of this 13
97+section, a digital asset mining business or a busi ness utilizing a blockchain 14
98+network that is connected to an electrical network and consuming electrical 15
99+energy no later than thirty (30) days after the effective date of this act 16
100+shall be considered as operating before the effective date of this act. 17
101+ 18
102+ 14-1-607. Ownership of or investment in digital asset mining business 19
103+located in this state by certain foreign nationals prohibited — Definition. 20
104+ (a) It is the intent of the General Assembly that this act shall be 21
105+used to protect our state's security from foreign individuals or countries 22
106+that may use large amounts of computing power on Arkansas soil to disrupt and 23
107+attack Arkansas interests through ransomware, computer hacking, or an attack 24
108+on Arkansas's electrical grid. 25
109+ (b)(1) As used in this section, "fo reign national" means a citizen of 26
110+a prohibited foreign party who is subject to § 126.1 of the International 27
111+Traffic in Arms Regulations, 22 C.F.R. §§ 120.1 — 130.17, as it existed on 28
112+January 1, 2023. 29
113+ (2) As used in this section, "foreign national" does not include 30
114+an individual who is a citizen of the United States. 31
115+ (c) Notwithstanding any other law, a foreign national shall not own or 32
116+operate a digital asset mining business in this state. 33
117+ (d) An ownership interest in or investment in a digital asse t mining 34
118+business in violation of this section is subject to divestiture as provided 35
119+in this section. 36 SB79
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124123
125-the Attorney General may conduct an investigation that includes without 1
126-limitation: 2
127- (1) Receiving sworn statements; and 3
128- (2) Issuing subpoenas to compel the: 4
129- (A) Testimony of witnesses subpoenaed before him or her; 5
130-and 6
131- (B) Production of records and other documents under § 25 -7
132-16-705. 8
133- (e)(1) If as a result of an investigation under s ubsection (d) of this 9
134-section the Attorney General concludes that a violation of this section has 10
135-occurred, the Attorney General may order a prohibited foreign party to divest 11
136-all interest in the digital asset mining business within three hundred sixty -12
137-five (365) calendar days. 13
138- (2) If the prohibited foreign party fails to divest all interest 14
139-in the digital asset mining business within three hundred sixty five (365) 15
140-calendar days, the Attorney General may commence an action in a circuit court 16
141-with proper jurisdiction over the digital asset mining business. 17
142- (3)(A) If the circuit court finds that a violation of this 18
143-section has occurred, the circuit court shall issue an order for the digital 19
144-asset mining business to be sold through judicial foreclosure. 20
145- (B) The proceeds of the sale under subdivision (e)(3)(A) 21
146-of this section shall be disbursed to the lienholders, in order of priority, 22
147-except for liens that under the terms of the sale are to remain. 23
148- (C) If the assets of the digital asset mining bu siness 24
149-include real property, the Attorney General shall promptly record a copy of 25
150-the following in the local land records: 26
151- (i) Upon commencement, notice of the pendency of the 27
152-action under subdivision (c)(2) or subdivision (e)(2) of this section; and 28
153- (ii) The order for the sale of the digital asset 29
154-mining business under subdivision (e)(3)(A) of this section. 30
155- (3) The Attorney General may pursue other remedies in an action 31
156-brought under subdivision (c)(2) or subdivision (e)(2) of this section, 32
157-including without limitation: 33
158- (A) A civil penalty not to exceed up to one million 34
159-dollars ($1,000,000) or twenty -five percent (25%) of the fair market value, 35
160-on the date of the assessment of the civil penalty, of the prohibited foreign 36 As Engrossed: S4/24/24 SB79
124+ (e) Upon request of a person or upon receipt of information that leads 1
125+the Attorney General to believe that a violation of this section may exist, 2
126+the Attorney General may issue subpoenas requiring the: 3
127+ (1) Appearance of witnesses; 4
128+ (2) Production of relevant records; and 5
129+ (3) Giving of relevant testimony. 6
130+ (f)(1) If as a result of the investigation under subsection (e) of 7
131+this section the Attorne y General concludes that a violation of this section 8
132+has occurred, the Attorney General may order the foreign national to divest 9
133+himself, herself, or itself of all interest in the digital asset mining 10
134+business within one hundred twenty (120) days. 11
135+ (2) If the foreign national under subdivision (f)(1) of this 12
136+section fails to divest himself, herself, or itself of all interest in the 13
137+digital asset mining business, the Attorney General may commence an action in 14
138+a circuit court within the jurisdiction of the location of the digital asset 15
139+mining business. 16
140+ (3)(A) Except in the case of dismissal, the circuit court under 17
141+subdivision (f)(2) of this section may order that the digital asset mining 18
142+business be sold. 19
143+ (B) The Attorney General may pursue other rem edies in an 20
144+action brought under subdivision (f)(2) of this section, including without 21
145+limitation: 22
146+ (i) A civil penalty not to exceed twenty -five 23
147+percent (25%) of the fair market value, on the date of the assessment of the 24
148+penalty, of the foreign natio nal's interest in the digital asset mining 25
149+business for the failure to divest himself, herself, or itself of all 26
150+interest in the digital asset mining business within one hundred twenty (120) 27
151+days as required under subdivision (f)(1) of this section; 28
152+ (ii) Court costs; and 29
153+ (iii) Reasonable attorney's fees. 30
154+ (C)(i) Proceeds of the sale under subdivision (f)(3)(A) of 31
155+this section shall first be disbursed to lien holders in the order of 32
156+priority. 33
157+ (ii) The owners of the digital asset mining business 34
158+shall receive the remaining proceeds of the sale under subdivision (f)(3)(A) 35
159+of this section. 36 SB79
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164163
165-party’s interest in the digital asset mining business for the failure to 1
166-divest of all interest in the digital asset mining business within three 2
167-hundred sixty-five (365) calendar days as required under this section; 3
168- (B) Court costs; 4
169- (C) Prejudgment interest and p ostjudgment interest at the 5
170-maximum rates permitted by law; and 6
171- (D) Reasonable attorney's fees. 7
172- (4) In addition to the remedies under subdivision (e)(3) of this 8
173-section, the Attorney General may pursue treble damages against a digital 9
174-asset mining business if the digital asset mining business: 10
175- (A) Is held in violation of this section; 11
176- (B) Is ordered to pay a civil penalty under subdivision 12
177-(e)(3)(A) of this section; and 13
178- (C) Fails to pay a civil penalty under subdivision 14
179-(e)(3)(A) of this section within the scope of the order of the circuit court. 15
180- (5) The approval of a digital asset mining business by a local 16
181-government or the receipt by a digital asset mining business of a permit or 17
182-other authorization from the state to operate shall n ot be a defense to a 18
183-cause of action brought under subdivision (c)(2) or subdivision (e)(2) of 19
184-this section. 20
185- (f) Civil penalties and damages received by the Attorney General under 21
186-this section shall be distributed as follows: 22
187- (1) Fifty percent (50%) to the Oil and Gas Commission Fund, § 23
188-19-6-410; and 24
189- (2) Fifty percent (50%) to the Attorney General to be used in 25
190-the same manner as provided in § 25 -16-718. 26
191- (g) A prohibited foreign -party-controlled business shall report t he 27
192-composition of its ownership to the Attorney General. 28
193- (h) Title to real property is not invalid due to a violation of this 29
194-section by any former owner of the real property. 30
195- 31
196- SECTION 4. Arkansas Code, Title 23, is amended to add an additional 32
197-chapter to read as follows: 33
198- 34
199-CHAPTER 119 - DIGITAL ASSET MINING BUSINESSES 35
200- 36 As Engrossed: S4/24/24 SB79
164+ 1
165+ SECTION 5. Arkansas Code, Title 23, is amended to add an additional 2
166+chapter to read as follows: 3
167+ 23-119-101. Legislative intent – Findings - Purpose. 4
168+ (a) This chapter establishes the standards and criteria for the 5
169+licensure, permitting, and regulation of digital asset mining businesses and 6
170+businesses utilizing a blockchain networks. 7
171+ (b) The General Assembly finds: 8
172+ (1) Digital asset mining businesses and blockchain networks 9
173+represent a new and emerging industry that presents significant challenges 10
174+for the citizens of Arkansas, including without limitation: 11
175+ (A) Significant noise emissi ons; 12
176+ (B) Massive consumption of power that places a strain on 13
177+electrical grids; 14
178+ (C) The usage of vast amounts of water that could 15
179+potentially threaten resources for citizens and future economic development 16
180+opportunities; and 17
181+ (D) Potential issues involving cyber -security. 18
182+ (2) While the State of Arkansas welcomes new businesses and 19
183+economic growth, the General Assembly likewise has a responsibility to ensure 20
184+that the operations of new industries do not negatively impact the public 21
185+peace, health, and safety or otherwise damage the well -being of the citizens 22
186+of the state; 23
187+ (3) When an industry presents harm to the public peace, health 24
188+and safety, it has been the practice of the General Assembly to provide for 25
189+regulation of that industry to ensure that the industry operates successfully 26
190+while not harming the citizens of the state and its natural resources; and 27
191+ (4) Based upon the challenges presented by digital asset mining 28
192+businesses and blockchain networks that have become evident, it is necessary 29
193+to regulate digital asset mining businesses and businesses utilizing a 30
194+blockchain network as provided in this chapter to provide a regulatory 31
195+framework for the safe operation of this new, emerging industry. 32
196+ (c) The purpose of this chapter is to: 33
197+ (1) Promote, preserve, and protect the public peace, health, and 34
198+safety through effective licensure, permitting, and regulation of digital 35
199+asset mining businesses and businesses utilizing a blockchain network; 36 SB79
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204203
205- 23-119-101. Legislative intent – Findings - Purpose. 1
206- (a) This chapter establishes the standards and criteria for the 2
207-permitting and regulation of digital asset mining businesses. 3
208- (b) The General Assembly finds: 4
209- (1) Digital asset mining businesses represent a new and emerging 5
210-industry that presents significant challenges for the citizens of Arkansas, 6
211-including without limitation: 7
212- (A) Significant noise emissions; 8
213- (B) Massive consumption of power; 9
214- (C) The usage of large quantities of water that could 10
215-potentially threaten resources for citizens and future economic development 11
216-opportunities; and 12
217- (D) Potential issues involving cybersecurity. 13
218- (2) While the State of Arkansas welcomes new businesses and 14
219-economic growth, the General Assembly likewise has a responsibility to ensure 15
220-that the operations of new industries do not negatively impact the public 16
221-peace, health, and safety or otherwise dama ge the well-being of the citizens 17
222-of the state; 18
223- (3) When an industry presents harm to the public peace, health, 19
224-and safety, it has been the practice of the General Assembly to provide for 20
225-regulation of that industry to ensure that the industry operates successfully 21
226-while not harming the citizens of the state and its natural resources; and 22
227- (4) Based upon the challenges presented by digital asset mining 23
228-businesses, it is necessary to regulate digital asset mining businesses as 24
229-provided in this chapter to provide a regulatory framework for the safe 25
230-operation of this new, emerging industry. 26
231- (c) The purpose of this chapter is to: 27
232- (1) Promote, preserve, and protect the public peace, health, and 28
233-safety through effective permitting and regulation of digital asset mining 29
234-businesses; 30
235- (2) Provide for the powers and duties of the Oil and Gas 31
236-Commission relating to the permitting and regulation of digital asset mining 32
237-businesses; and 33
238- (3) Prescribe penalties for violations of this chapter. 34
239- 35
240- 23-119-102. Definitions. 36 As Engrossed: S4/24/24 SB79
204+ (2) Provide for the powers and d uties of the Department of 1
205+Energy and Environment relating to the licensure, permitting, and regulation 2
206+of digital asset mining businesses and businesses utilizing a blockchain 3
207+network; and 4
208+ (3) Prescribe penalties and fines for violations of this 5
209+chapter. 6
210+ 7
211+ 23-119-102. Definitions. 8
212+ As used in this chapter: 9
213+ (1) “Blockchain network” means a group of computers operating and 10
214+processing together to execute a consensus mechanism to agree upon and verify 11
215+data in a digital record; 12
216+ (2) “Digital asset” means cryptocurrency, virtual currency, and 13
217+natively electronic assets, including without limitation stable coins, 14
218+nonfungible tokens, and other digital -only assets, that confer economic, 15
219+proprietary, or access rights or powers; 16
220+ (3) “Digital asset mini ng” means the use of electricity to power 17
221+a computer for the purpose of securing or validating a blockchain network; 18
222+and 19
223+ (4) “Digital asset mining business” means a group of computers 20
224+working at a single site that consumes more than one megawatt (1 MW) of 21
225+electrical energy on an average annual basis for the purpose of generating 22
226+digital assets by securing a blockchain network. 23
227+ 24
228+ 23-119-103. License – Application – Fees. 25
229+ (a)(1)(A) An individual or a legal entity shall not operate one (1) or 26
230+more digital asset mining businesses or businesses utilizing a blockchain 27
231+networks in Arkansas without first obtaining a license from the Department of 28
232+Energy and Environment under this chapter. 29
233+ (B) The department may delegate its duties under this 30
234+chapter to a state entity within the department. 31
235+ (2) When considering whether to issue a license under 32
236+subdivision (a)(1) of this section, the factors evaluated by the department 33
237+shall include without limitation the: 34
238+ (A) Financial condition and responsi bility of the 35
239+applicant; 36 SB79
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244243
245- As used in this chapter: 1
246- (1) “Blockchain network” means a group of computers operating 2
247-and processing toget her to execute a consensus mechanism to agree upon and 3
248-verify data in a digital record for the purpose of generating digital assets; 4
249- (2) “Digital assets” means cryptocurrency, virtual currency, and 5
250-natively electronic assets, including without limitatio n stable coins, 6
251-nonfungible tokens, and other digital -only assets, that confer economic 7
252-rights or powers; 8
253- (3) “Digital asset mining business” means a group of computers 9
254-working at a single site that consumes more than one megawatt (1 MW) of 10
255-electrical energy on an average annual basis for the purpose of generating 11
256-digital assets by securing a blockchain network; and 12
257- (4) "Local government" means a county, a city of the first 13
258-class, a city of the second class, or an incorporated town. 14
259- 15
260- 23-119-103. Permit – Application. 16
261- (a) A digital asset mining business shall not operate in Arkansas 17
262-without a valid permit from the Oil and Gas Commission under this chapter. 18
263- (b) The commission shall establish the application for a permit for a 19
264-digital asset mining businesses to operate. 20
265- (c) The issuance of a digital asset mining business permit shall be 21
266-contingent upon compliance with all applicable state laws, including without 22
267-limitation the Arkansas Data Centers Act of 2023, § 14 -1-601 et seq. 23
268- 24
269- 23-119-104. Rules. 25
270- The Oil and Gas Commission shall promulgate rules to implement this 26
271-chapter, including without limitation rules establishing requirements for: 27
272- (1) Permitting; 28
273- (2) Application for a permit; 29
274- (3) Renewal of a perm it; 30
275- (4) The requirements and terms for a permit; and 31
276- (5) The establishment and operation of a digital asset mining 32
277-business. 33
278- 34
279- 23-119-105. Enforcement. 35
280- (a) The Oil and Gas Commission shall have jurisdiction of and 36 As Engrossed: S4/24/24 SB79
244+ (B) Financial and business experience of the applicant; 1
245+and 2
246+ (C) Character and general fitness of the applicant. 3
247+ (b) Each digital asset mining business or business utilizing a 4
248+blockchain network operated by an individual licensed under subsection (a) of 5
249+this section shall obtain a permit from the department under this section. 6
250+ (c) The department shall establish the application for a: 7
251+ (1) License to operate one (1) or more digital asset mining 8
252+businesses or businesses utilizing a blockchain network in Arkansas; and 9
253+ (2) Permit for a digital asset mining business or business 10
254+utilizing a blockchain network to be operated by an individual or legal 11
255+entity licensed under subsection (a) of this section. 12
256+ (d)(1) The department shall charge application fees and renewal fees 13
257+as established by rule. 14
258+ (2) The application fee for a license to operate one (1) or more 15
259+digital asset mining businesses or businesses utilizing a blockchain network 16
260+in Arkansas shall not exceed five thousand dollars ($5,000). 17
261+ (3) The application fee for a permit for a digital asset mining 18
262+business or business utilizing a blockchain network shall not exceed five 19
263+thousand dollars ($5,000). 20
264+ 21
265+ 23-119-104. Rules 22
266+ The Department of Energy and Environment shall promulgate rules to 23
267+implement this chapter, including without limitation rules establishing 24
268+requirements for: 25
269+ (1) Licensing; 26
270+ (2) Permitting; 27
271+ (3) Fees; 28
272+ (4) Application for a license; 29
273+ (5) Renewal of a license ; 30
274+ (6) The establishment and operation of a digital asset mining 31
275+business or business utilziing a blockchain network, including without 32
276+limitation rules pertaining to the location of digital asset mining 33
277+businesses and businesses utilizing a blockchain n etwork; 34
278+ (7) Compliance with and enforcement of relevant laws and the 35
279+rules of the department; and 36 SB79
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284283
285-authority over all person s and property necessary to administer and enforce 1
286-effectively: 2
287- (1) This chapter; and 3
288- (2) The Arkansas Data Centers Act of 2023, § 14 -1-601 et seq. 4
289- (b) Upon receipt of a complaint under subsection (d) of this section, 5
290-the commission may make i nquiries it deems proper relating to its duties to 6
291-administer and enforce this chapter and the Arkansas Data Centers Act of 7
292-2023, § 14-1-601 et seq., including without limitation: 8
293- (1) Making reasonable investigations and inspections; 9
294- (2) Examining properties, leases, papers, books, and records; 10
295- (3) Holding hearings; 11
296- (4) Requiring the keeping of records and the making of reports; 12
297-and 13
298- (5) Taking such action as may be reasonably necessary to enforce 14
299-this chapter. 15
300- (c) Upon receipt of a complaint under subsection (d) of this section, 16
301-the commission may make, after hearing and notice, such reasonable orders as 17
302-necessary from time to time in the proper administration and enforcement of 18
303-this chapter and the Arkansas Data Centers Act of 2023, § 14-1-601 et seq. 19
304- (d)(1) An individual or legal entity may file a complaint with the 20
305-commission relating to the compliance of digital asset mining businesses with 21
306-state law, the requirements and terms of a permit, or the rules of the 22
307-commission. 23
308- (2) Upon receipt of a complaint, the commission may: 24
309- (A) Investigate the complaint; and 25
310- (B) Assess penalties in response to any identified 26
311-noncompliance. 27
312- (e) The commission shall promulgate rules establishing: 28
313- (1) The procedures for ensuring compliance with state law, the 29
314-requirements and terms of a permit, and rules of the commission; and 30
315- (2)(A) Penalties for failure to comply with state law, the 31
316-requirements and terms of a permit, or rules of the commissi on, including 32
317-without limitation: 33
318- (i) Financial penalties; and 34
319- (ii) The suspension or revocation of a permit issued 35
320-under this chapter. 36 As Engrossed: S4/24/24 SB79
284+ (8)(A) Penalties for failure to comply with the requirements and 1
285+terms of a license or permit, including without limitation: 2
286+ (i) Penalties for the late payment or nonpayment of 3
287+fees due to the department; and 4
288+ (ii) The suspension or revocation of a license or 5
289+permit issued under this chapter. 6
290+ (B) Financial penalties for failure to comply with the 7
291+requirements and terms of a license shall not exceed five thousand dollars 8
292+($5,000) per violation. 9
293+ 10
294+ SECTION 6. DO NOT CODIFY – TEMPORARY LANGUAGE. ADOPTION OF INITIAL 11
295+RULES. 12
296+ (a)(1) The provisions of this section regarding the promulgation of 13
297+the initial rules required under § 23 -119-104 are supplemental to the 14
298+Arkansas Administrative Procedure Act, § 25 -15-201 et seq. 15
299+ (2) If the Department of Energy and Environment delegates its 16
300+duties to a state entity within the department that is not subject to the 17
301+Arkansas Administrative Proc edure Act, § 25-15-201 et seq., the state entity 18
302+shall comply with the Arkansas Administrative Procedure Act, § 25 -15-201 et 19
303+seq. and the supplemental provisions of this section when promulgating the 20
304+initial rules in lieu of following the administrative pr ocedures provided for 21
305+that state entity. 22
306+ (b)(1) Before promulgating the initial rules required under § 23 -119-23
307+104, the department shall: 24
308+ (A)(i) Study the methods and means used to regulate 25
309+digital asset mining businesses and businesses utilizing a blockchain network 26
310+in other states, including without limitation the application processes, 27
311+application fees, and penalties utilized by other states and restrictions on 28
312+operations utilized by other states to preserve the public peace, health, and 29
313+safety. 30
314+ (ii) The department may consult with other state 31
315+agencies whose input would be relevant to the study; and 32
316+ (B) Submit a report to the following committees of the 33
317+General Assembly summarizing the methods and means used to regulate digital 34
318+asset mining businesses and businesses utilizing a blockchain network in 35
319+other states and identifying the department’s recommendations on the best 36 SB79
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323322
324323
325- (B) Financial penalties under this subdivision (e)(2) 1
326-shall not exceed five thousand dollars ($5,000) per day of a violation. 2
327- (f) This chapter does not: 3
328- (1) Prohibit a local government from adopting one (1) or more 4
329-ordinances, resolutions, or other appropriate legislative enactments to 5
330-regulate digital asset mining businesses that: 6
331- (A) Address areas of regulation that are not otherwise 7
332-addressed by federal law, state law, or the rules of the commission; and 8
333- (B) Are not inconsistent with federal law, state law, or 9
334-the rules of the commission; and 10
335- (2) Prevent a local government from en forcing an ordinance, 11
336-resolution, or other appropriate legislative enactment regulating digital 12
337-asset mining businesses that is not inconsistent with federal law, state law, 13
338-or the rules of the commission. 14
339- 15
340- SECTION 5. Arkansas Code § 19 -6-140 is amended to read as follows: 16
341- 19-6-410. Oil and Gas Commission Fund. 17
342- The Oil and Gas Commission Fund shall consist of those special revenues 18
343-as specified in § 19 -6-301(62), and (111), and (275) and § 14-1-606, there to 19
344-be used for: 20
345- (1) The maintenance, oper ation, and improvement required by the 21
346-Oil and Gas Commission in carrying out the functions, powers, and duties as 22
347-set out in § 15-72-101 et seq. and § 23-119-101 et seq.; 23
348- (2) Payment of expenses of the Office of the State Geologist 24
349-under § 15-71-107(b)(2)(B); or 25
350- (3) Other duties imposed by law upon the commission. 26
351- 27
352- SECTION 6. Arkansas Code § 19 -6-301 is amended to add an additional 28
353-subdivision to read as follows: 29
354- (275) Digital asset mining business penalties under § 23 -119-101 30
355-et seq.; 31
356- 32
357- SECTION 7. DO NOT CODIFY. TEMPORARY LANGUAGE. APPLICATION FOR 33
358-INITIAL PERMITS. 34
359- (a) Within ninety (90) days of the effective date of the initial rules 35
360-promulgated under § 23 -119-104, an individual or legal entity operating one 36 As Engrossed: S4/24/24 SB79
324+manner to regulate digital asset mining businesses and businesses utilizing a 1
325+blockchain network in Arkansas: 2
326+ (i) The House Committee on City, County, and Local 3
327+Affairs; 4
328+ (ii) The Senate Committee on City, County, and Local 5
329+Affairs; 6
330+ (iii) The House Committee on Public Health, Welfare, 7
331+and Labor; 8
332+ (iv) The Senate Committee on Public Health, Welfare, 9
333+and Labor; and 10
334+ (v) The Joint Committee on Advanced Communications 11
335+and Information Technology. 12
336+ (2) The committees under subdivision (b)(1)(B)(i) -(v) of this 13
337+section shall meet jointly to review the report submitted by the department 14
338+under subdivision (b)(1)(B) of this section. 15
339+ (3) The department shall not promulgate the initial rules 16
340+required under § 23-119-104 until the committees have met jointly under 17
341+subdivision (b)(2) of this section and reviewed the report. 18
342+ (c)(1) After the committees under subdivision (b)(1)(B)(i) -(v) of this 19
343+section have met jointly to review the report submitted by the department 20
344+under subdivision (b)(1)(B) of this section, the department shall promulgate 21
345+the initial rules required under § 23 -119-104 under the Arkansas 22
346+Administrative Procedure Act, § 25 -15-201 et seq. 23
347+ (2)(A) The department shall: 24
348+ (i) Give at least one hundred twenty (120) days 25
349+notice of its intended action; and 26
350+ (ii) Accept both oral and written public comments 27
351+during the one hundred twenty-day period. 28
352+ (B) The one hundred twenty -day period shall begin on the 29
353+first day of the publication of the notice under § 25 -15-204 et seq. 30
354+ (C) In addition to the publication of the notice required 31
355+under § 25-15-204, the department shal l file the notice with the quorum court 32
356+of each county. 33
357+ (D) During the one hundred twenty -day period, the 34
358+department shall hold at least three (3) in -person public hearings to afford 35
359+interested persons a reasonable opportunity to submit data, views , or 36 SB79
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364363
365-(1) or more digital min ing asset businesses in Arkansas shall apply for a 1
366-permit for each digital asset mining business operated by the individual or 2
367-legal entity in Arkansas. 3
368- (b) This act does not prohibit a digital asset mining business from 4
369-operating: 5
370- (1) Before the effe ctive date of the initial rules promulgated 6
371-under § 23-119-104; 7
372- (2) During the ninety -day period to apply for a permit under 8
373-subsection (a) of this section; and 9
374- (3) While the Oil and Gas Commission is considering the digital 10
375-asset mining business's application for a permit. 11
376- (c) A digital asset mining business shall cease operations if: 12
377- (1) The digital asset mining business is operating on the 13
378-effective date of the initial rules promulgated under § 23 -119-104 and fails 14
379-to apply for a permit in the ninety-day period to apply for a permit under 15
380-subsection (a) of this section; or 16
381- (2) The digital asset mining business's application for a permit 17
382-under subsection (a) of this section is denied. 18
383- 19
384- SECTION 8. EMERGENCY CLAUSE. It is foun d and determined by the 20
385-General Assembly of the State of Arkansas that digital asset mining 21
386-businesses present significant threats to the public peace, health, and 22
387-safety, including without limitation significant noise emissions, massive 23
388-power consumption, the use of large quantities of water that potentially 24
389-threatens water resources, and potential issues with cybersecurity; that the 25
390-continuous noise emitted by digital asset mining businesses threatens the 26
391-public peace, health, and safety as it risks poten tial damage to the hearing 27
392-and quality of life of the citizens of this state; that in light of these 28
393-threats it is imperative that the General Assembly regulate by permit digital 29
394-asset mining businesses to protect the public peace, health, and safety; and 30
395-that this act should become effective at the earliest opportunity to begin 31
396-the regulatory process and protect the citizens of the state from any harmful 32
397-actions related to digital asset mining businesses. Therefore, an emergency 33
398-is declared to exist, and this act being immediately necessary for the 34
399-preservation of the public peace, health, and safety shall become effective 35
400-on: 36 As Engrossed: S4/24/24 SB79
364+arguments. 1
365+ (E) If an in-person public hearing is requested in a 2
366+county by at least one hundred (100) persons residing within the county or by 3
367+the quorum court of the county, the department shall hold an in -person public 4
368+hearing within the county regarding the proposed rule during the one hundred 5
369+twenty-day period. 6
370+ (d)(1) At the conclusion of the one hundred twenty -day period, the 7
371+department shall fully consider all written and oral submissions concerning 8
372+the proposed rule before finalizing the language of the proposed rule. 9
373+ (2) After finalizing the language of the proposed rule but 10
374+before the proposed rule is considered for approval by the Legislative 11
375+Council or the Joint Budget Committee under § 10 -3-309, the following 12
376+committees shall mee t jointly to review the rule: 13
377+ (A) The House Committee on City, County, and Local 14
378+Affairs; 15
379+ (B) The Senate Committee on City, County, and Local 16
380+Affairs; 17
381+ (C) The House Committee on Public Health, Welfare, and 18
382+Labor; 19
383+ (D) The Senate Committ ee on Public Health, Welfare, and 20
384+Labor; and 21
385+ (E) The Joint Committee on Advanced Communications and 22
386+Information Technology. 23
387+ (3) The committees meeting jointly under subdivision (d)(2)(A) -24
388+(E) of this section shall submit a report to the Legislative Council, the 25
389+Joint Budget Committee, or a subcommittee of those committees concerning the 26
390+committees' review of the proposed rule that includes without limitation the 27
391+opinion of the committees on whether the Legislative Council or Joint Budget 28
392+Committee should approve the proposed rule. 29
393+ (4) The Legislative Council, the Joint Budget Committee, or a 30
394+subcommittee of those committees shall not consider the proposed rule for 31
395+approval before receiving the report of the committees under subdivision 32
396+(d)(3) of this section. 33
397+ (e) The department shall not promulgate an emergency rule under § 25 -34
398+15-204 to adopt the initial rules required under § 23 -119-104. 35
399+ (f) A person may not petition the department under § 25 -15-204(d) for 36 SB79
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403402
404403
405- (1) The date of its approval by the Governor; 1
406- (2) If the bill is neither approved nor vetoed by the Governor, 2
407-the expiration of the period of time during which the Governor may veto the 3
408-bill; or 4
409- (3) If the bill is vetoed by the Governor and the veto is 5
410-overridden, the date the last house overrides the veto. 6
411- 7
412-/s/Irvin 8
413- 9
414- 10
415-APPROVED: 5/3/24 11
416- 12
417- 13
418- 14
419- 15
420- 16
421- 17
422- 18
423- 19
404+the issuance of the initial rul es required under § 23 -1119-104 1
405+ 2
406+ SECTION 7. DO NOT CODIFY – TEMPORARY LANGUAGE. ISSUANCE OF INITIAL 3
407+LICENSES AND PERMITS. 4
408+ (a) On and after the effective date of this section, an individual or 5
409+legal entity shall not establish or operate a new digital asset mining 6
410+business or business utilizing a blockchain network in Arkansas unless: 7
411+ (1) The operator of the digital asset mining business or 8
412+business utilizing a blockchain network has been issued a license under § 23 -9
413+19-103; and 10
414+ (2) The digital asset mining business or business utilizing a 11
415+blockchain network has been issued a permit under § 25 -19-103. 12
416+ (b)(1)(A) Subsection (a) of this section does not prohibit a digital 13
417+asset mining business or business utilizing a blockchain network operating 14
418+before the effective date of this section from continued operation. 15
419+ (B) For purposes of subdivision (b)(1)(A) of this section, 16
420+a digital asset mining business or business utilizing a blockchain network 17
421+that is connected to an electrical network and c onsuming electrical energy no 18
422+later than thirty (30) days after the effective date of this section shall be 19
423+considered as operating before the effective date of this section. 20
424+ (2) Within ninety (90) days of the effective date of the initial 21
425+rules promulgated under § 23-19-104, an individual or legal entity operating 22
426+one (1) or more digital mining asset businesses or businesses utilizing a 23
427+blockchain network in Arkansas shall apply for a: 24
428+ (A) License to operate one (1) or more digital asset 25
429+mining businesses or businesses utilizing a blockchain network under § 23 -26
430+119-103; and 27
431+ (B) Permit for each digital asset mining business and 28
432+business utilizing a blockchain network operated by the individual or legal 29
433+entity under § 23-119-103. 30
434+ 31
435+ SECTION 8. DO NOT CODIFY. TEMPORARY LANGUAGE. IMPLEMENTATION OF ACT. 32
436+ (a)(1)(A) If a digital asset mining business or a business utilizing a 33
437+blockchain network is operating before the effective date of this act, the 34
438+digital asset mining business or business utilizi ng a blockchain network 35
439+shall utilize a soundproofing enclosure to ensure that the sound emitted by 36 SB79
440+
441+ 12 4/16/2024 3:51:12 PM MBM258
442+
443+
444+the digital asset mining business or the business utilizing a blockchain 1
445+network does not exceed forty (40) decibels under § 14 -1-606(a)(2) within 2
446+twenty-four (24) months of the effective date of this act. 3
447+ (B) For the purposes of subdivision (a)(1)(A) of this 4
448+section, a digital asset mining business or a business utilizing a blockchain 5
449+network that is connected to an electrical network and consuming elec trical 6
450+energy no later than thirty (30) days after the effective date of this act 7
451+shall be considered as operating before the effective date of this act. 8
452+ (2) A digital asset mining business or a business utilizing a 9
453+blockchain network beginning operat ions on or after the effective date of 10
454+this act shall not commence operations without utilizing a soundproofing 11
455+enclosure under § 14 -1-606(a)(2). 12
456+ (b) A digital asset mining business or a business utilizing a 13
457+blockchain network operating before the eff ective date of this act shall 14
458+utilize its best efforts to ensure that the sound emitted by the digital 15
459+asset mining business or the business utilizing a blockchain network does not 16
460+exceed forty (40) decibels before utilizing a soundproofing enclosure under 17
461+subdivision (a)(1)(A) of this section. 18
462+ ( 19
463+ SECTION 9. DO NOT CODIFY. TEMPORARY LANGUAGE. EFFECT OF ACT ON 20
464+ORDINANCES. This act shall not be interpreted as superseding any ordinances 21
465+adopted by a local government regulating digital asset mining bu sinesses or 22
466+businesses utilizing a blockchain network before the initial rules under § 23
467+23-119-104 are effective. 24
468+ 25
469+ SECTION 10. EMERGENCY CLAUSE. It is found and determined by the 26
470+General Assembly of the State of Arkansas that digital asset mining 27
471+businesses and businesses utilizing blockchain networks present significant 28
472+threats to the public peace, health, and safety, including without limitation 29
473+significant noise emissions, massive power consumption that imposes a strain 30
474+on resources, the use of vast amounts of water that threatens water 31
475+resources, and potential issues with cybersecurity; that the continuous noise 32
476+emitted by digital asset mining businesses and businesses utilizing a 33
477+blockchain network threaten the public peace, health, and safety as t hey risk 34
478+potential damage to the hearing and quality of life of the citizens of this 35
479+state; the large volumes of water used by digital asset mining businesses and 36 SB79
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481+ 13 4/16/2024 3:51:12 PM MBM258
482+
483+
484+businesses utilizing a blockchain network threaten the public peace, health, 1
485+and safety as the large volumes of water used diminish the water supply and 2
486+potentially lessen the amount of water available to the agriculture industry 3
487+in this state, which is critical to the state's economic well -being; 4
488+that in light of these threats it is imperative t hat the General Assembly 5
489+regulate digital asset mining businesses and businesses utilizing blockchain 6
490+networks to protect the public peace, health, and safety; and that this act 7
491+should become effective at the earliest opportunity to begin the regulatory 8
492+process and protect the citizens of the state from any harmful actions 9
493+related to digital asset mining businesses and businesses utilizing 10
494+blockchain networks. Therefore, an emergency is declared to exist, and this 11
495+act being immediately necessary for the pr eservation of the public peace, 12
496+health, and safety shall become effective on: 13
497+ (1) The date of its approval by the Governor; 14
498+ (2) If the bill is neither approved nor vetoed by the Governor, 15
499+the expiration of the period of time during which the Governor may veto the 16
500+bill; or 17
501+ (3) If the bill is vetoed by the Governor and the veto is 18
502+overridden, the date the last house overrides the veto. 19
424503 20
425504 21
426505 22
427506 23
428507 24
429508 25
430509 26
431510 27
432511 28
433512 29
434513 30
435514 31
436515 32
437516 33
438517 34
439518 35
440519 36