Bill Summary – FastDemocracy

 State of Arkansas
 94th General Assembly
 Fiscal Session, 2024                                                                 SR 16
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 By: Senator B. King
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                                 SENATE RESOLUTION
                TO AUTHORIZE THE INTRODUCTION OF A NONAPPROPRIATION
                BILL TO AMEND THE ARKANSAS DATA CENTERS ACT OF 2023,
                TO AMEND THE REQUIREMENTS THAT A DIGITAL ASSET MINING
                BUSINESS OR BUSINESS UTILIZING A BLOCKCHAIN NETWORK
                MUST COMPLY WITH, TO AMEND THE AUTHORITY OF A LOCAL
                GOVERNMENT WITH RESPECT TO A DIGITAL ASSET MINING
                BUSINESS OR INDIVIDUAL ENGAGING IN HOME DIGITAL ASSET
                MINING, AND TO PROHIBIT CERTAIN FOREIGN NATIONALS
                FROM OWNING OR INVESTING IN 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
                         AMEND THE REQUIREMENTS FOR A DIGITAL
                         ASSET MINING BUSINESS OR BUSINESS USING A
                         BLOCKCHAIN NETWORK.
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 BE IT RESOLVED BY THE SENATE OF THE NINETY-FOURTH GENERAL ASSEMBLY OF THE
 STATE OF ARKANSAS:
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          THAT Senator King 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 AMEND THE
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 REQUIREMENTS THAT A DIGITAL ASSET MINING BUSINESS OR BUSINESS UTILIZING A
 BLOCKCHAIN NETWORK MUST COMPLY WITH; TO AMEND THE AUTHORITY OF A LOCAL
 GOVERNMENT WITH RESPECT TO A DIGITAL ASSET MINING BUSINESS OR INDIVIDUAL
 ENGAGING IN HOME DIGITAL ASSET MINING; TO PROHIBIT CERTAIN FOREIGN NATIONALS
 FROM OWNING OR INVESTING IN A DIGITAL ASSET MINING BUSINESS IN ARKANSAS; AND
 FOR OTHER PURPOSES.
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 Subtitle
 TO AMEND THE ARKANSAS DATA CENTERS ACT OF 2023; AND TO AMEND THE REQUIREMENTS
 THAT A DIGITAL ASSET MINING BUSINESS OR BUSINESS UTILIZING A BLOCKCHAIN
 NETWORK MUST COMPLY WITH.
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 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
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      SECTION 1.      Arkansas Code § 14-1-601 is amended to read as follows:
      14-1-601. Title.
      This subchapter shall be known and may be cited as the “Arkansas Data
 Centers Act of 2023 Digital Asset Mining Act".
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      SECTION 2.      Arkansas Code § 14-1-602 is repealed.
      14-1-602. Legislative findings and intent.
      (a)   The General Assembly finds that:
               (1)   The data centers industry began its modern version in the
 1980s, and the industry has seen accelerated growth since 2008;
               (2)   Data centers have seen global growth with the expansion of
 bandwidth, the need for analytical data research, and digital currency;
               (3)   Data centers, digital currency, and blockchain technology
 are legal in all fifty (50) states; and
               (4)   Guidance for future industry growth is needed in Arkansas to
 protect Arkansans from fraudulent business practices.
      (b)   Through the enactment of this subchapter, the General Assembly
 intends to:
               (1)   Recognize that data centers create jobs, pay taxes, and
 provide general economic value to local communities and this state; and
               (2)   Clarify the guidelines needed to protect data asset miners
 from discriminatory industry-specific regulations and taxes.
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      SECTION 3.     Arkansas Code § 14-1-603(10), concerning the definition of
 "ordinance" under the Arkansas Data Centers Act of 2023, is repealed.
      (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 4.     Arkansas Code § 14-1-604 is amended to read as follows:
      14-1-604. Digital asset mining — Operations.
      (a)     A digital asset mining business or business utilizing a blockchain
 network may operate in this state Arkansas if the digital asset mining
 business or business utilizing a blockchain network: complies with:
              (1)   State law concerning business guidelines and tax policies;
 Complies with:
                     (2)(A)   Any ordinance concerning operations and safety;
                     (3)(B)   Any rule or rate for utility service provided by or
 on behalf of a public entity; and
                     (4)(C)   State and federal employment laws; and
              (2)   Pays all applicable state, county, city, and government
 taxes and fees in acceptable forms of currency by those entities.
      (b)     A digital asset miner shall:
              (1)   Pay applicable taxes and government fees in acceptable forms
 of currency; and
              (2)   Operate operate in a manner that causes no stress on an
 electric public utility's or water system's generation capabilities or
 transmission network.
      (c)     An individual may utilize a node in this state for the purpose of
 operating:
              (1)   Operating home digital asset mining at the individual's
 residence according to applicable utility rules and rates; and
              (2)   Permitting requirements set forth by a local government
 under § 14-1-605.
      (d)     A person may have a digital asset mining business in an area that
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 is zoned for industrial use that has not been designated by the local
 government for other uses.
      (e)     A person that is engaged in home digital asset mining or that has
 a digital asset mining business shall not be considered a money transmitter
 under the Uniform Money Services Act, § 23-55-101 et seq.
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      SECTION 5.     Arkansas Code § 14-1-605 is amended to read as follows:
      14-1-605. Discrimination against digital asset mining business
 prohibited Digital asset mining — Regulation by public entities.
      (a)     Except as provided by subsection (d) of this section, a A local
 government shall not may:
              (1)   Enact or adopt an ordinance, policy, or action that limits
 the sound decibels generated from:
                     (A)   Digital asset mining; or home
                     (B)   Home digital asset mining other than the limits set
 for sound pollution generally;
              (2)   Impose a different requirement for a digital asset mining
 business or business utilizing a blockchain network than is applicable to any
 requirement for a data center;
              (3)   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 Require an individual to obtain a
 permit to engage in home digital asset mining.
      (b)     A digital asset mining business may appeal a change in zoning of
 an area by a local government under any applicable state law or local zoning
 ordinance.
      (c)     If consistent with applicable state and federal statutes, orders,
 rules, and regulations, including without limitation §§ 23-3-114 and 23-4-
 103, the Arkansas Public Service Commission shall not may establish an
 unreasonably discriminatory a rate for a digital asset mining business
 customer utilizing a blockchain network.
      (d)     The prohibitions under subsection (a) of this section do not apply
 to any rule or rate for utility service provided by or on behalf of a public
 entity The Arkansas Public Service Commission shall promulgate rules to
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 implement this section.
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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 or investment in digital asset mining business
 located in this state by certain foreign nationals prohibited — Definition.
      (a)(1)     As used in this section, "foreign national" means a citizen of
 a prohibited foreign party who is subject to § 126.1 of the International
 Traffic in Arms Regulations, 22 C.F.R. §§ 120.1 — 130.17, as it existed on
 January 1, 2023.
               (2)   As used in this section, "foreign national" does not include
 an individual who is a citizen of the United States.
      (b)   Notwithstanding any other law, a foreign national shall not own or
 operate a digital asset mining business in this state.
      (c)   An ownership interest in or investment in a digital asset mining
 business in violation of this section is subject to divestiture as provided
 in this section.
      (d)   Upon request of a person or upon receipt of information that leads
 the Attorney General to believe that a violation of this section may exist,
 the Attorney General may issue subpoenas requiring the:
               (1)   Appearance of witnesses;
               (2)   Production of relevant records; and
               (3)   Giving of relevant testimony.
      (e)(1)     If as a result of the investigation under subsection (d) of
 this section the Attorney General concludes that a violation of this section
 has occurred, the Attorney General may order the foreign national to divest
 himself, herself, or itself of all interest in the digital asset mining
 business within thirty (30) days.
               (2)   If the foreign national under subdivision (e)(1) of this
 section fails to divest himself, herself, or itself of all interest in the
 digital asset mining business, the Attorney General may commence an action in
 a circuit court within the jurisdiction of the location of the digital asset
 mining business.
               (3)(A)    Except in the case of dismissal, the circuit court under
 subdivision (e)(2) of this section may order that the digital asset mining
 business be sold.
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                      (B)   Proceeds of the sale under subdivision (e)(3)(A) of
 this section shall be disbursed to lien holders in the order of priority.
             (4)(A)     A civil penalty of twenty-five thousand dollars ($25,000)
 may be assessed against the foreign national under subdivision (e)(1) of this
 section for the failure to divest himself, herself, or itself of all interest
 in the digital asset mining business within thirty (30) days as required
 under subdivision (e)(1) of this section.
                      (B)   A civil penalty of fifty thousand dollars ($50,000)
 may be assessed against the foreign national under subdivision (e)(1) of this
 section for the failure to divest himself, herself, or itself of all interest
 in the digital asset mining business after an additional thirty (30) days
 beyond the requirement under subdivision (e)(1) of this section.
      (f)    The proceeds from the civil penalty collected under subdivision
 (e)(4) of this section shall be disbursed as follows:
             (1)   One-third (1/3) to the State Securities Department, to a
 cash fund deposited into the State Treasury as determined by the Chief Fiscal
 Officer of the State, to be used exclusively for:
                      (A)   Personal services and operating expenses; and
                      (B)   Investigating or auditing, or both, for proof of
 ownership of the digital asset mining business in accordance with this
 section;
             (2)   One-third (1/3) to the Office of the Attorney General, to a
 cash fund deposited into the State Treasury as determined by the Chief Fiscal
 Officer of the State, to be used exclusively for:
                      (A)   Personal services and operating expenses; and
                      (B)   Investigating or auditing, or both, for proof of
 ownership of the digital asset mining business in accordance with this
 section; and
             (3)   One-third (1/3) to the Department of Energy and Environment,
 to a cash fund deposited into the State Treasury as determined by the Chief
 Fiscal Officer of the State, to be used exclusively for:
                      (A)   Personal services and operating expenses; and
                      (B)   Investigating or auditing, or both, for proof of
 ownership of the digital asset mining business in accordance with this
 section."
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Statutes affected: 
SR 16: 14-1-601, 14-1-602, 14-1-603(10), 14-1-604, 14-1-605, 23-55-101, 23-3-114