Bill Summary – FastDemocracy

 State of Arkansas
 94th General Assembly
 Fiscal Session, 2024                                                           HR 1009
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 By: Representative McClure
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                                     HOUSE RESOLUTION
                TO AUTHORIZE THE INTRODUCTION OF A NONAPPROPRIATION
                BILL TO AMEND THE ARKANSAS DATA CENTERS ACT OF 2023,
                TO CREATE REQUIREMENTS FOR NOISE REDUCTION IN THE
                OPERATION OF A DIGITAL ASSET MINING BUSINESS, TO
                CLARIFY THE ABILITY OF AN ARKANSAS RESIDENT TO ENGAGE
                IN HOME DIGITAL ASSET MINING, AND TO PROHIBIT
                FOREIGN-PARTY-CONTROLLED OWNERSHIP OF A DIGITAL ASSET
                MINING BUSINESS IN ARKANSAS.
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                                          Subtitle
                         TO AUTHORIZE THE INTRODUCTION OF A
                         NONAPPROPRIATION BILL TO AMEND THE
                         ARKANSAS DATA CENTERS ACT OF 2023 AND TO
                         PROHIBIT FOREIGN-PARTY-CONTROLLED
                         OWNERSHIP OF A DIGITAL ASSET MINING
                         BUSINESS.
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 BE IT RESOLVED BY THE HOUSE OF REPRESENTATIVES OF THE NINETY-FOURTH GENERAL
 ASSEMBLY OF THE STATE OF ARKANSAS:
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          THAT Senator Bryant is authorized to introduce a bill which as
 introduced will read substantially as follows:
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 “Title
 AN ACT TO AMEND THE ARKANSAS DATA CENTERS ACT OF 2023; TO CREATE REQUIREMENTS
 FOR NOISE REDUCTION IN THE OPERATION OF A DIGITAL ASSET MINING BUSINESS; TO
 CLARIFY THE ABILITY OF AN ARKANSAS RESIDENT TO ENGAGE IN HOME DIGITAL ASSET
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 MINING; TO PROHIBIT FOREIGN-PARTY-CONTROLLED OWNERSHIP OF A DIGITAL ASSET
 MINING BUSINESS IN ARKANSAS; TO DECLARE AN EMERGENCY; AND FOR OTHER PURPOSES.
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 Subtitle
 TO AMEND THE ARKANSAS DATA CENTERS ACT OF 2023; TO PROHIBIT FOREIGN-PARTY-
 CONTROLLED OWNERSHIP OF A DIGITAL ASSET MINING BUSINESS; AND TO DECLARE AN
 EMERGENCY.
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 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF
 ARKANSAS:
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       SECTION 1.       Arkansas Code § 14-1-603(10), concerning the definition of
 "ordinance" under the Arkansas Data Centers Act of 2023, is amended to read
 as follows:
               (10)     "Ordinance" means an ordinance, resolution, or other
 appropriate legislative enactment of a legislative body that:
                        (A)   Prohibits an individual from operating a business from
 a residence; or
                        (B)   Requires an individual to obtain approval before
 operating a business from a residence;
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       SECTION 2.       Arkansas Code § 14-1-604(a), concerning requirements that a
 digital asset mining business shall comply with to operate in Arkansas, is
 amended to read as follows:
       (a)    A digital asset mining business may operate in this state if the
 digital asset mining business complies with:
               (1)    State law concerning business guidelines and tax policies;
               (2)(1)     Any ordinance concerning operations and safety ordinance;
               (3)(2)     Any rule or rate for utility service provided by or on
 behalf of a public entity; and
               (4)(3)     State and federal employment laws law.
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       SECTION 3.       Arkansas Code § 14-1-604(b), concerning requirements that a
 digital asset mining business shall comply with, is amended to add an
 additional subdivision to read as follows:
               (3)    Apply noise-reduction techniques, including without
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 limitation:
                      (A)   Using liquid cooling or submerged cooling;
                      (B)(i)     Fully enclosing the envelope.
                               (ii) As used in subdivision (b)(3)(B)(i) of this
 section, "fully enclosing the envelope" means enfolding the envelope where
 noise from the operation of a digital asset mining business is directly
 produced around all sides, including above and below the equipment producing
 the noise, with material that is reasonably calculated by industry standards
 to reduce noise emissions to a level that is acceptable to a reasonable
 person under similar circumstances; or
                      (C)   Upon approval by the local government, locating or
 relocating to:
                               (i)    A minimum of two thousand feet (2,000') from the
 nearest residential or commercial use structure; or
                               (ii)   An area zoned for industrial use.
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      SECTION 4.      Arkansas Code § 14-1-604, concerning requirements that a
 digital asset mining business shall comply with, is amended to add an
 additional subsection to read as follows:
      (f)     A local government shall not pass an ordinance that:
               (1)   Prohibits an individual from engaging in home digital asset
 mining; or
               (2)   Requires an individual to obtain approval from a local
 government before engaging in home digital asset mining.
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      SECTION 5.      Arkansas Code § 14-1-605(a), concerning prohibiting a local
 government from imposing ordinances or zoning regulations on a digital asset
 mining business with the intent to discriminate against the digital asset
 mining business, is amended to read as follows:
      (a)     Except as provided by subsection (d) of this section, a local
 government shall not:
               (1)   Enact or adopt an ordinance, policy, or action that limits
 the sound decibels generated from home digital asset mining other than the
 limits set for sound pollution generally;
               (2)   Impose a different requirement for a digital asset mining
 business than is applicable to any requirement for a data center;
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              (3)   Rezone rezone an area in which a digital asset mining
 business is located without complying with applicable state law and local
 zoning ordinances; or
              (4)   Rezone an area with the intent or effect of discriminating
 against a digital asset mining business.
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      SECTION 6.     Arkansas Code Title 14, Chapter 1, Subchapter 6, is amended
 to add an additional section to read as follows:
      14-1-606.     Ownership of digital asset mining business by prohibited
 foreign-party-controlled business prohibited — Definitions — Penalty —
 Reporting.
      (a)     As used in this section:
              (1)   "Controlling interest" means an ownership interest of
 fifteen percent (15%) or more, in the aggregate;
              (2)   "Prohibited foreign-party-controlled business" means a
 corporation, company, association, firm, partnership, society, joint-stock
 company, trust, estate, or other legal entity whose controlling interest is
 owned by a prohibited foreign party; and
              (3)   “Prohibited foreign party” means:
                     (A)   A citizen, resident, or agent of a country subject to
 § 126.1 of the International Traffic in Arms Regulations, 22 C.F.R. § 120.1
 et seq.;
                     (B)   A foreign government formed within a country subject
 to § 126.1 of the International Traffic in Arms Regulations, 22 C.F.R. §
 120.1 et seq.;
                     (C)   A party other than an individual or a government that
 is created or organized under the laws of a foreign government within a
 country subject to § 126.1 of the International Traffic in Arms Regulations,
 22 C.F.R. § 120.1 et seq.;
                     (D)   Any party other than an individual or a government:
                           (i)    That is created or organized under the laws of
 any state; and
                           (ii)   In which a significant interest or substantial
 control is directly or indirectly held or is capable of being exercised by:
                                  (a)   An individual referred to in subdivision
 (a)(3)(A) of this section;
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                                     (b)   A foreign government referred to in
 subdivision (a)(3)(B) of this section;
                                     (c)   A party referred to in subdivision
 (a)(3)(C) of this section; or
                                     (d)   A combination of the individuals, parties,
 or governments referred to in this subdivision (a)(3)(D)(ii);
                        (E)   An Entity of Particular Concern designated by the
 United States Department of State; or
                        (F)   An agent, trustee, or other fiduciary of a person or
 entity enumerated in subdivisions (a)(3)(A)-(E) of this section.
      (b)(1)     A prohibited foreign-party-controlled business shall not
 acquire or hold by grant, purchase, devise, descent, or otherwise any
 interest in a digital asset mining business in this state.
               (2)   A person shall not acquire or hold a digital asset mining
 business as an agent, trustee, or other fiduciary for a prohibited foreign-
 party-controlled business.
      (c)(1)     A prohibited foreign-party-controlled business in operation
 before the effective date of this act shall have six (6) months from the
 effective date of this act to divest itself of the digital asset mining
 business.
               (2)(A)     If the Office of Agricultural Intelligence determines
 that a prohibited foreign party has acquired or may be holding a digital
 asset mining business with assets in Arkansas in violation of this section,
 the office shall report the potential violation to the Attorney General.
                        (B)   If the Attorney General has received notice under
 subdivision (c)(2)(A) of this section, the Attorney General may:
                              (i)    Receive sworn statements; and
                              (ii)   Issue subpoenas to compel the:
                                     (a)   Testimony of witnesses subpoenaed before
 him or her; and
                                     (b)   Production of records and other documents
 under § 25-16-705.
      (d)(1)     If as a result of the investigation under subdivision (c)(2) of
 this section the Attorney General concludes that a violation of this section
 has occurred, the Attorney General may commence an action in a circuit court
 with proper jurisdiction over the digital asset mining business.
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               (2)(A)     If the digital asset mining business is held to be in
 violation of this section, the circuit court shall issue an order for the
 digital asset mining business to be sold through judicial foreclosure.
                        (B)   The proceeds of the sale under subdivision (d)(2)(A)
 of this section shall be disbursed to the lienholders, in order of priority,
 except for liens that under the terms of the sale are to remain.
                        (C)   If the assets of the digital asset mining business
 include real property, the Attorney General shall promptly record a copy of
 the following in the local land records:
                              (i)    Upon commencement, notice of the pendency of the
 action under subdivision (d)(1) of this section; and
                              (ii)   The order for the sale of the digital asset
 mining business under subdivision (d)(2)(A) of this section.
               (3)   The Attorney General may pursue other remedies in an action
 brought under subdivision (d)(1) of this section, including without
 limitation:
                        (A)   A civil penalty of fifteen thousand dollars ($15,000);
                        (B)   Prejudgment interest and postjudgment interest at the
 maximum rates permitted by law; and
                        (C)   Reasonable attorney's fees.
               (4)   In addition to the remedies under subdivision (d)(3) of this
 section, the Attorney General may pursue treble damages against a digital
 asset mining business if the digital asset mining business:
                        (A)   Is held in violation of this section;
                        (B)   Is ordered to pay a civil penalty under subdivision
 (d)(3)(A) of this section; and
                        (C)   Fails to pay a civil penalty under subdivision
 (d)(3)(A) of this section within the scope of the order of the circuit court.
               (5)   The approval of a digital asset mining business by a local
 government shall not be a defense to a cause of action brought under
 subdivision (d)(1) of this section.
      (e)   A digital asset mining business that is composed of greater than
 fifteen-percent ownership by a prohibited foreign-party-controlled business
 shall report the composition of its ownership to the Attorney General.
      (f)   Title to real property is not invalid due to a violation of this
 section by any former owner of the real property.
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      SECTION 7.   EMERGENCY CLAUSE.       It is found and determined by the
 General Assembly of the State of Arkansas that increased circulation of
 digital currency and adoption of digital transformation have led to an influx
 of digital asset mining businesses in Arkansas in recent years; that digital
 asset mining businesses have potential to generate excessive noise and that
 without adequate regulation, digital asset mining businesses can place a
 strain on, and reduce the quality of life of, residents and communities near
 them; and that growth of this business sector has been capitalized upon by
 foreign corporations and other foreign entities and aliens that pose
 potential threats to the welfare and safety of Arkansas and its residents.
 Therefore, an emergency is declared to exist, and this act being necessary
 for the preservation of the public peace, health, and safety shall become
 effective thirty (30) days after:
      (1)   The date of its approval by the Governor;
      (2)   If the bill is neither approved nor vetoed by the Governor, the
 expiration of the period of time during which the Governor may veto the bill;
 or
      (3)   If the bill is vetoed by the Governor and the veto is overridden,
 the date the last house overrides the veto."
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Statutes affected: 
HR 1009: 14-1-603(10), 14-1-604(a), 14-1-604(b), 14-1-604, 14-1-605(a)