Stricken language would be deleted from and underlined language would be added to present law.
Act 173 of the Fiscal Session
1 State of Arkansas As Engrossed: S4/23/24
2 94th General Assembly A Bill
3 Fiscal Session, 2024 SENATE BILL 78
4
5 By: Senators J. Bryant, Irvin
6 By: Representative McClure
7
8 For An Act To Be Entitled
9 AN ACT TO AMEND THE ARKANSAS DATA CENTERS ACT OF
10 2023; TO CREATE REQUIREMENTS FOR NOISE REDUCTION IN
11 THE OPERATION OF A DIGITAL ASSET MINING BUSINESS; TO
12 CLARIFY THE ABILITY OF AN ARKANSAS RESIDENT TO ENGAGE
13 IN HOME DIGITAL ASSET MINING; TO PROHIBIT FOREIGN-
14 PARTY-CONTROLLED OWNERSHIP OF A DIGITAL ASSET MINING
15 BUSINESS IN ARKANSAS; TO DECLARE AN EMERGENCY; AND
16 FOR OTHER PURPOSES.
17
18
19 Subtitle
20 TO AMEND THE ARKANSAS DATA CENTERS ACT OF
21 2023; TO PROHIBIT FOREIGN-PARTY-
22 CONTROLLED OWNERSHIP OF A DIGITAL ASSET
23 MINING BUSINESS; AND TO DECLARE AN
24 EMERGENCY.
25
26
27 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
28
29 SECTION 1. Arkansas Code § 14-1-603(10), concerning the definition of
30 "ordinance" under the Arkansas Data Centers Act of 2023, is amended to read
31 as follows:
32 (10) "Ordinance" means an ordinance, resolution, or other
33 appropriate legislative enactment of a legislative body that:
34 (A) Prohibits an individual from operating a business from
35 a residence; or
36 (B) Requires an individual to obtain approval before
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1 operating a business from a residence;
2
3 SECTION 2. Arkansas Code § 14-1-604(a), concerning requirements that a
4 digital asset mining business shall comply with to operate in Arkansas, is
5 amended to read as follows:
6 (a) A digital asset mining business may operate in this state if the
7 digital asset mining business complies with:
8 (1) State law concerning business guidelines and tax policies;
9 (2)(1) Any ordinance concerning operations and safety ordinance;
10 (3)(2) Any rule or rate for utility service provided by or on
11 behalf of a public entity; and
12 (4)(3) State and federal employment laws law.
13
14 SECTION 3. Arkansas Code § 14-1-604(b), concerning requirements that a
15 digital asset mining business shall comply with, is amended to add additional
16 subdivisions to read as follows:
17 (3) Apply noise-reduction techniques, including without
18 limitation:
19 (A) Using liquid cooling or submerged cooling;
20 (B)(i) Fully enclosing the envelope.
21 (ii)(a) As used in subdivision (b)(3)(B)(i) of this
22 section, "fully enclosing the envelope" means enfolding the envelope where
23 noise from the operation of a digital asset mining business is directly
24 produced around all sides, including above and below the equipment producing
25 the noise, with material that is reasonably calculated by industry standards
26 to reduce noise emissions to a level that is acceptable to a reasonable
27 person under similar circumstances.
28 (b) Except as provided in subdivision
29 (b)(3)(B)(ii)(c) of this section, "fully enclosing the envelope" does not
30 include utilizing a passively cooled premanufactured container without
31 additionally enclosing the system in a complete envelope.
32 (c) A digital asset mining business may use a
33 passively cooled premanufactured container without additionally enclosing the
34 system in a complete envelope if the digital asset mining business locates or
35 relocates under subdivision (b)(3)(C) of this section; or
36 (C) Upon approval by the local government, locating or
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1 relocating to:
2 (i) A minimum of two thousand feet (2,000') from the
3 nearest residential or commercial use structure; or
4 (ii) An area zoned for industrial use or an
5 otherwise approved use.
6 (4)(A) A person who owns land within two thousand feet (2,000')
7 of the nearest property line of a digital asset mining business may commence
8 an action in a circuit court with proper jurisdiction over the digital asset
9 mining business to enforce the noise reduction techniques required under
10 subdivision (b)(3) of this section.
11 (B) A person who prevails in an action commenced under
12 subdivision (b)(4)(A) of this section may be awarded reasonable attorney's
13 fees and costs.
14
15 SECTION 4. Arkansas Code § 14-1-604, concerning requirements that a
16 digital asset mining business shall comply with, is amended to add an
17 additional subsection to read as follows:
18 (f) A local government shall not pass an ordinance that:
19 (1) Prohibits an individual from engaging in home digital asset
20 mining; or
21 (2) Requires an individual to obtain approval from a local
22 government before engaging in home digital asset mining.
23
24 SECTION 5. Arkansas Code § 14-1-605(a), concerning prohibiting a local
25 government from imposing ordinances or zoning regulations on a digital asset
26 mining business with the intent to discriminate against the digital asset
27 mining business, is amended to read as follows:
28 (a) Except as provided by subsection (d) of this section, a local
29 government shall not:
30 (1) Enact or adopt an ordinance, policy, or action that limits
31 the sound decibels generated from home digital asset mining other than the
32 limits set for sound pollution generally;
33 (2) Impose a different requirement for a digital asset mining
34 business than is applicable to any requirement for a data center;
35 (3) Rezone rezone an area in which a digital asset mining
36 business is located without complying with applicable state law and local
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1 zoning ordinances; or
2 (4) Rezone an area with the intent or effect of discriminating
3 against a digital asset mining business.
4
5 SECTION 6. Arkansas Code Title 14, Chapter 1, Subchapter 6, is amended
6 to add an additional section to read as follows:
7 14-1-606. Ownership of digital asset mining business by prohibited
8 foreign-party-controlled business prohibited — Definitions — Penalty —
9 Reporting.
10 (a) As used in this section:
11 (1) "Interest" means an ownership interest of greater than zero
12 percent (0%);
13 (2) "Prohibited foreign-party-controlled business" means a
14 digital asset mining business in which a prohibited foreign party owns an
15 interest; and
16 (3) “Prohibited foreign party” means:
17 (A) A citizen, resident, or agent of a country subject to
18 § 126.1 of the International Traffic in Arms Regulations, 22 C.F.R. § 120.1
19 et seq., as existing on January 1, 2024;
20 (B) A foreign government formed within a country subject
21 to § 126.1 of the International Traffic in Arms Regulations, 22 C.F.R. §
22 120.1 et seq., as existing on January 1, 2024;
23 (C) A party other than an individual or a government that
24 is created or organized under the laws of a foreign government within a
25 country subject to § 126.1 of the International Traffic in Arms Regulations,
26 22 C.F.R. § 120.1 et seq., as existing on January 1, 2024;
27 (D) Any party other than an individual or a government:
28 (i) That is created or organized under the laws of
29 any state; and
30 (ii) In which a significant interest or substantial
31 control is directly or indirectly held or is capable of being exercised by:
32 (a) An individual referred to in subdivision
33 (a)(3)(A) of this section;
34 (b) A foreign government referred to in
35 subdivision (a)(3)(B) of this section;
36 (c) A party referred to in subdivision
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1 (a)(3)(C) of this section; or
2 (d) A combination of the individuals, parties,
3 or governments referred to in this subdivision (a)(3)(D)(ii);
4 (E) An Entity of Particular Concern designated by the
5 United States Department of State; or
6 (F) An agent, trustee, or other fiduciary of a person or
7 entity enumerated in subdivisions (a)(3)(A)-(E) of this section.
8 (b)(1) A prohibited foreign party shall not acquire or hold by grant,
9 purchase, devise, descent, or otherwise any interest in a digital asset
10 mining business in this state.
11 (2) A person shall not acquire or hold a digital asset mining
12 business as an agent, trustee, or other fiduciary for a prohibited foreign-
13 party-controlled business.
14 (c)(1) A prohibited foreign-party-controlled business in operation
15 before the effective date of this act shall have three hundred sixty-five
16 (365) calendar days from the effective date of this act for the prohibited
17 foreign party to divest all interest in the digital asset mining business.
18 (2) If a prohibited foreign party fails to divest all interest
19 in the digital asset mining business under subdivision (c)(1) of this
20 section, the Attorney General may commence an action in a circuit court with
21 proper jurisdiction under subsection (e) of this section.
22 (d) Upon request of a person or upon receipt of information that leads
23 the Attorney General to believe that a violation of this section may exist,
24 the Attorney General may conduct an investigation that includes without
25 limitation:
26 (1) Receiving sworn statements; and
27 (2) Issuing subpoenas to compel the:
28 (A) Testimony of witnesses subpoenaed before him or her;
29 and
30 (B) Production of records and other documents under § 25-
31 16-705.
32 (e)(1) If as a result of an investigation under subsection (d) of this
33 section the Attorney General concludes that a violation of this section has
34 occurred, the Attorney General may order a prohibited foreign party to divest
35 all interest in the digital asset mining business within three hundred sixty-
36 five (365) calendar days.
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1 (2) If the prohibited foreign party fails to divest all interest
2 in the digital asset mining business within three hundred sixty five (365)
3 calendar days, the Attorney General may commence an action in a circuit court
4 with proper jurisdiction over the digital asset mining business.
5 (3)(A) If the circuit court finds that a violation of this
6 section has occurred, the circuit court shall issue an order for the digital
7 asset mining business to be sold through judicial foreclosure.
8 (B) The proceeds of the sale under subdivision (e)(3)(A)
9 of this section shall be disbursed to the lienholders, in order of priority,
10 except for liens that under the terms of the sale are to remain.
11 (C) If the assets of the digital asset mining business
12 include real property, the Attorney General shall promptly record a copy of
13 the following in the local land records:
14 (i) Upon commencement, notice of the pendency of the
15 action under subdivision (c)(2) or subdivision (e)(2) of this section; and
16 (ii) The order for the sale of the digital asset
17 mining business under subdivision (e)(3)(A) of this section.
18 (3) The Attorney General may pursue other remedies in an action
19 brought under subdivision (c)(2) or subdivision (e)(2) of this section,
20 including without limitation:
21 (A) A civil penalty not to exceed up to one million
22 dollars ($1,000,000) or twenty-five percent (25%) of the fair market value,
23 on the date of the assessment of the civil penalty, of the prohibited foreign
24 party’s interest in the digital asset mining business for the failure to
25 divest of all interest in the digital asset mining business within three
26 hundred sixty-five (365) calendar days as required under this section;
27 (B) Court costs;
28 (C) Prejudgment interest and postjudgment interest at the
29 maximum rates permitted by law; and
30 (D) Reasonable attorney's fees.
31 (4) In addition to the remedies under subdivision (e)(3) of this
32 section, the Attorney General may pursue treble damages against a digital
33 asset mining business if the digital asset mining business:
34 (A) Is held in violation of this section;
35 (B) Is ordered to pay a civil penalty under subdivision
36 (e)(3)(A) of this section; and
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1 (C) Fails to pay a civil penalty under subdivision
2 (e)(3)(A) of this section within the scope of the order of the circuit court.
3 (5) The approval of a digital asset mining business by a local
4 government or the receipt by a digital asset mining business of a permit or
5 other authorization from the state to operate shall not be a defense to a
6 cause of action brought under subdivision (c)(2) or subdivision (e)(2) of
7 this section.
8 (f) Civil penalties and damages received by the Attorney General under
9 this section shall be distributed as follows:
10 (1) Fifty percent (50%) to the Oil and Gas Commission Fund, §
11 19-6-410; and
12 (2) Fifty percent (50%) to the Attorney General to be used in
13 the same manner as provided in § 25-16-718.
14 (g) A prohibited foreign-party-controlled business shall report the
15 composition of its ownership to the Attorney General.
16 (h) Title to real property is not invalid due to a violation of this
17 section by any former owner of the real property.
18
19 SECTION 7. Arkansas Code § 19-6-410 is amended to read as follows:
20 19-6-410. Oil and Gas Commission Fund.
21 The Oil and Gas Commission Fund shall consist of those special revenues
22 as specified in § 19-6-301(62) and (111),and § 14-1-606, there to be used
23 for:
24 (1) The maintenance, operation, and improvement required by the
25 Oil and Gas Commission in carrying out the functions, powers, and duties as
26 set out in § 15-72-101 et seq. and other applicable law;
27 (2) Payment of expenses of the Office of the State Geologist
28 under § 15-71-107(b)(2)(B); or
29 (3) Other duties imposed by law upon the commission.
30
31 SECTION 8. DO NOT CODIFY. Applicability.
32 A digital asset mining business in operation before the effective date
33 of this act shall be in full compliance with § 14-1-604(b)(3) no later than
34 ninety (90) days following the effective date of this act.
35
36 SECTION 9. EMERGENCY CLAUSE. It is found and determined by the
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1 General Assembly of the State of Arkansas that increased circulation of
2 digital currency and adoption of digital transformation have led to an influx
3 of digital asset mining businesses in Arkansas in recent years; that digital
4 asset mining businesses have potential to generate excessive noise and that
5 without adequate regulation, digital asset mining businesses can place a
6 strain on, and reduce the quality of life of, residents and communities near
7 them; and that growth of this business sector has been capitalized upon by
8 foreign corporations and other foreign entities and aliens that pose