City, County & Local Affairs Committee- House

Senate Bill 78 and Senate Bill 79. If anyone like this, uh, speak today for against those bills, you can sign up. Uh, at this time, we will mov'e forward at this time, we'd ask, uh, Senator Bryant and Representative mcclure to come and present Senate Bill 78. If you would identify yourself for the record and then you May proceed. >> State Representative Rick mcclure District 29. >> State Senator Joshua Bryant district 32. >> We're ready to go. I just want to open by saying this. I want to say thank you to our Attorney General, Tim Griffin and their team, our Bureau of Legislative Research and their team, the Governor Sanders and her legal team. They have all spent time helping in this process. We want to make sure that we have the major issues addressed and that there's no conflict in code. I also want to thank Senator Joshua Bryant, Senator Missy Irvin and Representative Jeremiah Moore, who have helped lead the charge to address the problematic issues that have arose over the last year. So with that, I'm going to turn it over to Senator Bryant and let him present the main points of the Bill and then we'll entertain questions. >> Thank you, rep mcclure. Also thank Representative Carlton Wing who kind of played as the intermediate between the Senate and the House to come to the right conclusion that I hope we can get through here today before I go into the context and contents of Senate Bill 78. I want to take a step back and look at the broad context of what House Bill 1799 we're now act 851 put forth to the citizens of Arkansas. I, I think since this is the Committee that heard it first and then it sailed obviously through the House and then the Senate and then the, um, uh, Senate body. Before they go to the Governor, the, the ask of an industry to have pre-emptive protections is not an unusual ask. The ask was and I'll read, I'll read some of the language. They May operate in this State if they follow the State laws, if they follow ordinances concerning operations, if they follow rules and for utility service, if they follow State employment laws, these were things that they were already doing. These are businesses that were industries that were already existing in the State. Their fears were as an industry that has commonality amongst all states of all industries. If, whether it's Dental Association or Pharmacy Association, they all collectively talk and see what's good for their State and what other states are doing is they were seeing other states and other localities start to creatively ban these facilities based on it, maybe a misunderstanding or something that they didn't like the industry doing. And so they asked for the State of Arkansas was if we're following all the laws and we're doing everything right. Don't just arbitrarily and capriciously push us out of existence after we've spent millions of dollars following your laws to get to this point. I think it was like I said, an ask that was reasonable. But I think what we found out is if you look at a city versus a county, what are the limitations of what each of those organizations or those governments can do. Cities have zoning and planning. And when you buy a property, it is incumbent upon you as the new owner of that property to go to the city and start asking for permits is what I'm going to build in this area, part of the, the planning and zoning of the city. If you're going to build a an industry, you're gonna follow existing ordinances that deal with noise because cities have planning and zoning. Whereas if you go to the county, 7072 out of 75 of our counties do not have that process. When you buy a piece of property, you do not go to the city and ask what can I do on this piece of property? You start to have that contract negotiation with a willing seller as a willing buyer, you go have a contract with a willing general contractor and purchase those goods and services. You go to the utility providers and you ask for those uh access to their utilities and they go through that process and grant it. There's no middleman with the county to solve the problems that crypto mining is known now to create. And so there was no ordinance to follow. In fact, 50 out of 75 of our counties, once act 851 got came into place. And we started realizing what the potential for these issues were. 50 out of our 75 counties passed a very comprehensive ordinance dealing with crypto mines. But when you go to the counties and say, hey, if, if this is impactful for you and we pull back a 51 that fixes your problem and the answer was no, it absolutely does not because counties do not have the resources nor the desire to pass planning and zoning regulations amongst the unincorporated areas of their counties. And so you look at now, what does the State need to do to step in the place of our counties that do not want to take on that task? Because it costs resources, they have to apply. Um Departments permitting departments, planning, departments, planning commissions. It adds a burden to the, to what the Judge needs to deal with. And the counties have plainly said we do not want to deal with this, we would like the State to deal with this. So as we look at Senate Bill 78 what that attempts to do is treat crypto mining in, in, in partnership with Senate Bill 79. Treat crypto mining more is like how we deal with racetracks. In the 19 nineties. This body passed regulations statewide on race tracks because individual counties did not know how to deal with the consumption of land to deal with a racetrack that creates a nuisance for its citizens. Same thing they did with oil and gas whenever the fracking was going on and the compressors were getting out of control that the local counties did not know how to deal with that because they're not in the business of zoning certain things out of, out of the nuisance realm. So the State came in and required regulations on compressors. So looking at the contents of Senate Bill 78 the goal is to make sure that if the county wants to have local control, it can have it whether, whether it goes back ex post facto or not and they choose to go that route which some counties have attempted to and, and not being very successful in that, that the counties have their local control back. So we are taking out and striking any language of act 851 that deals with the inability for a county to change its ordinances or add ordinances that affect the nuisances of crypto minds. So strike that language. But knowing that it now is could be gone, that won't fix the issue of the nuisances that it creates within the counties that do not want to partake in the zoning process. So the second section three of the bill and I know I'm kind of skipping but just getting to the meat of the bill section three of the bill applies noise standards to these facilities and it requires them to use liquid or submerged cooling. So if you look at the industry as a whole and say, what are the, what are the good industry actors doing versus the bad? Many of them are not, most of them are using liquid or submerged cooling. It is an additional expense on the upfront cost but it does not create the nuisance as you see in areas that do not use that technology. If they choose not to do that, they need to fully enclose the envelope. Now, most of these facilities are in like con X box type structures. There's some box structures that are fully insulated and closed with the fans being internal. They do not create that noise. The ones that create the noise are the passively cooled boxes which are technically fully enclosed, but the fans are on exterior, on the side wall which create the noise. So that's, that's the language of saying, hey, you can't use those type of passively cooled equipment unless you go 2000 ft away from the nearest, um, business or residential structure or have a local authority per basically control local use and zoning. If you choose not to use the passively cool, you could place those in the, in next to your neighbors is basically what it's saying or fully enclose them. And of course, um, the last section is there, there's going to be a window of time in between State regulatory control. If we can get Senate Bill 79 through, versus if Senate Bill 78 goes through, there'll be a window while we promulgate rules and get things set up for this industry that really nobody had standing to the nuisance issue that, that section three plays in. So that is um, section four A basically gives standing to anybody within that 2000 ft range. If, if the business or industry does not comply with this within 90 days, giving them that ramp up. If they do not comply, that individual will have standing until we can get regulatory, um, issues in place, regulatory guidelines in place. And then the State will have standing to be able to mitigate and control those nuisances. The, the last section deals with foreign ownership, the reason that both of these are in the bill. Uh Both of these are not only Senate Bill 78 Senate Bill 79 and they are identical originally, they were, they took a little bit of different routes. Senate Bill 78 originally as filed took a broader route. Senate Bill 79 targeted specifically to the individual and the business. We merged these because foreign ownership was a, a common concern across the body. And if Senate Bill 78 passed and 79 did not or vice versa, we wanted to make sure that foreign ownership prohibitions were intact in both bills. What it would require is 0% ownership of the business require divestiture within 365 days if found to be out of compliance and then the courts in A G would investigate and take over um that process to make sure that they are fully divested. I think a lot of questions came on like, you know, why this and why not let just the normal laws and federal laws apply. I will say that a lot of our states have taken a proactive approach to foreign adversarial nations. I believe Texas passed a law that requires no foreign adversary to attach to their grid period. And so if you're a foreign owned business within these standards, you can't even attach to electrical grid. We're not asking for that. We're asking for specifically these type of facilities not only known what they're used for as far as the, the the Bitcoin process, but the potential uses for further A I solving complex algorithms for pharmaceutical research things that these facilities that will be the infrastructure of a, of a data center. Um They will be able to house these components. And so having no foreign ownership will protect our proprietary rights as citizens and business owners alike. Jumping back just real briefly, there's a section that probably brought up some comments or maybe some concerns some language that I felt I did not want to strike. It just got renumbered was local government shall not pass an ordinance that prohibits an individual from engaging in home digital asset mining or requires the approval from local government and engaging in home digital asset mining. If you look at how these businesses behave, there is limitations to what can be achieved out of data mining, especially out of your home. You've got the infrastructure of your home itself. If these things consume power, you're inside the four walls of your castle home, doing a hobby activity, your personal computer has the ability to do this. If you buy some additional equipment, it's not going to be much because you have the limitations of not only the housing infrastructure, the wiring, but also what the local utility will provide to your home and also what the PS AC as, as labeled as residential use of your power. So in the event that you are getting a little out of control, actually, the PSC through the utility company has the ability to shut that activity down. In addition, cities and local governments alike, if they want to, they can pass the same nuisance prohibitions that any other hobby might contain within your, the domicile. And so I felt it was important because we do have local governments that just might decide, um, especially in Norfolk, Arkansas that might just decide they want to try to tackle this. And this is a, a pre-emptive approach to say, hey, what's inside my home? As long as I'm not violating any nuisance and following the laws is a permitted and permittable activity. And so that is in and that show what Senate bill 78 tens to accomplish, um, and clarify and with that, I will turn it over to Representative mcclure if he has anything to that. >> Uh I just want to go back to the homeowners for a second because that has been a question that has come up and just to expand a little bit of what Senator Bryant said, um, the, on the limitations of the home, uh, basically these things do use a lot of power. So you have limited wiring inside of a residential home. You have circuit breakers that are going to trip, if they try to do much, they're going to have to rewire their house, they'll have a main breaker that's going to trip on the main panel. Then they'll have to redo that they're going to have to do their service entrance. If they continue on, they're going to cause a problem on, as he said, the residential grid is much different than the commercial grid and industrial grid. So it's going to trip a confused link or gates on the pole. Then if they start making noise, they'll fall into all the other city ordinances and guidelines that are already in place for creating noise, nuisances, parking, whatever else that might be. So, um the question would become, is this, is there anything perfect? There's absolutely nothing perfect. But hopefully we're taking a major step forward to address those that have not shown respect for their neighbors or shown good respect for our State or for our nation. So >> you're ready for questions. All right, Representative Dalby, you're recognized. >> Thank you, Mr. Chair. I y'all are the ones who brought up the home. So that raised some questions to me that I want to ask. Um, on that, first of all, you mentioned the PSC, is there anyone here from the PSC to, to, uh, back up your claim that the PSC could, could regulate this or shut it down in a home? And I'd like them at some point to come up. I don't see a definition of home in here. Am I missing it? I see no definition or a reference to one? >> Yes. Representative Dalby, it's in the original act, um Section 503 definitions. Home, digital asset, mining means digital asset, uh digi mining, digital assets in areas zoned for residential use. >> I I understand and I read the original act to compare it to this. But my question is you, you made a statement a few moments ago regarding the castle doctrine within the walls, but there's nothing that says that. And so, you know, my, my concern becomes without a definition saying that's within the four walls of a home. You know, my home is my, my house, my yard where I live, you know, what's going to keep me from, you know, building a, you know, a shed out back and put this in there. And then I heard representing mcclure said they'd have to, you know, abide by any regulation, but right above it, it says the local government shall not pass any ordinance. I'm just, I'm, it kind of, it's like you say one thing, but it, but the bill's not saying that. And so can you address some of my concerns? I mean, are we sure the PSC could enforce it? Are we sure that the utility company would be, you know, would say, well, you're over, over your limit for power, but once again, if they're paying for the power, I would think the utility company would be glad to have the extra money. I mean, can you walk me through some of those discussions you May have that will help me? And then I have another question on something else. >> I think it just goes into the economics of, of the mining process itself. This is, you know, you got to have the access to, to power to be able to turn a profit. So it really becomes a hobby in the sense that whenever you start, whenever the limitations of 240 volt single phase power to your home really limits you to how many of these devices you could have within any walls, any, whether that's a shed or inside your, inside your domicile. You know, you can't put these necessarily out in the open. Um So it's just the limitations of, of the process of data mining is going to prohibit any type of major or, or common nuisance activity. And if it does generate that the locals will have that control, if they choose to take it to prohibit that type of activity through the nuisance level. >> Well, I appreciate that. I mean, you can understand our skepticism after we heard in the last Session that you know, this is not going to be a problem. May I have another? May I have a follow up question, Mr.? I think I just have one real quick question. >> I think John Bethel can probably answer that question that you have if you'd like me to call John. >> yes, if you don't mind. And while Mr. Bethel is coming forward, May I scoot over to another real quick question, Mr. Chair? Go ahead while Mr. Bethel is coming to the table. I noticed on page seven on line 31 they do not codify section and it mentions that they have 90 days following the effective date of this act and you, you talked to you alluded to that, but I find it nowhere in the act and it said do not codify. So can you tell me how that 90 days is going to actually kick in? Do you see my question on that? >> So the applicability, when I, when asked multiple times, hey, what do we do with the current bad actors? How do we get them to comply? Looking at ex post facto and the way the attorney general's attorneys defined it was, you've got, you know, strong retroactivity and weak retroactivity, providing them a a 90 day to comply specifically with the sound issues will give they felt will give the courts that determination that we are doing weak retroactivity to make sure they comply, >> even though it's a do not codify. May I turn back to Mr. Bethel? Now, Mr. Bethel, you heard my question, can you kind of walk me through that? Because I, I mean, y'all are in the business of making money and I don't want, you know, so, >> yes, ma'am. Uh, and first of all, I'll, I'll, I'll start off and say is neutral on both bills. We were neutral on the, on the uh act that passed because it doesn't alter the regulatory s. Yes. Pardon me? I'm John Bethel, Director of Public Affairs for Arkansas. And we were neutral because it doesn't alter the PS C's jurisdiction. It doesn't add to any additional requirements for the utilities. And we believe that the, the public service commission has the authority necessary. And on the specific question, on the residential service, the uh the rate schedule under which we serve residential customers defines residential service as for residential use, meaning it's for the, the, an individual's home and the, the situation you gave about somebody uh building a home and then building a shed. If the shed is uh separately metered, that shed would be served under a commercial rate because it's not used for residential purpose. And that's how the rate schedule would apply in that circumstance. And then if the customers, obviously there, there will be some casual nonresidential use at, at many homes, especially in today's environment. But if it's your primary residence and the primary usage is residential, they're charged the residential rate. If it becomes a commercial venture, then it would cease to be residential service and would become commercial service. And so I think that same uh standard would apply to a home crypto mining facility. And we, we, we have addressed those circumstances. Uh historically and the public service commission has obviously has oversight because they approve our rate schedules. >> Thank you. Thank you, Mr. Chair, >> Representative Kavanaugh, you recognize? >> Thank you, Mr. Chair. Uh My question is going to be on page six and seven and it's dealing with the civil damages. And my question is, I see where we're gonna divvy it up. 50% goes to the Oil and Gas Fund and 50% to the Attorney General's Fund. My question is the local people are the ones being hurt. How come we're not finding a way to get some of that money back to the locals, governments or the entities that are actually having to take the brunt of this. >> Well, talking to energy environment and Attorney general staff, they're the ones that will investigate and enforce and mov'e this thing along to extract this out of, out of, out of its compliance issues with foreign ownership. So ideally the other sections of the law will deal with a nuisance and then it comes down to just foreign actors that attempt to, you know, circumvent the law and become that nuisance and then it comes basically an investigation process after, after that fact. So I don't know that the locals would deal with outside. Once the nuisance issues are in compliance, the locals don't necessarily deal with the foreign ownership issues like the A GS office or the oil and gas Commission would. >> Ok. And follow up Mr. Chair, I guess in my mind, they go kind of hand in hand because if you've got the, the nuisance and then you're gonna, while you do investigation, that's when you're going to find out it's probably foreign ownership and they really go almost hand in hand a lot of times. And it always seems to me when we pass Legislation, we always seem to get the money back to the State, but we don't seem to think about the local governments and citizens that are damaged by these things and we build up these big reserves and whether it's a G's office or any other office that the people actually damaged, don't get any, don't get anything. And so I was trying to understand the reasoning why the people who are damaged by these mines aren't actually getting some benefit from some of the civil damages that come from them. >> I think our, our goal, our intent is to send a clear message that those that currently fall under foreign ownership will be forced to divest and roll through that process. And then if they don't, damages will apply. But in the future, as these things attempt to come online in addition to Senate Bill 79 which will be the regulatory authority of the State that will go through that permitting process and ask those questions and identify owners and identify to the A G's office who's going to be the point of contact so he can have a continual subpoena power to make sure that they're acting appropriately that there really hopefully won't be an issue in the future once we spend the next, you know, 365 days, once this becomes effective to vet out this process. Ok. >> Thank you >> representing the colledge Recognize. >> Thank you Mr. Chair. So, um I want to ask you about this foreign ownership uh issue here. So as I read this, you're saying that someone who is um a citizen of a country on this list, actually several lists or a, a resident in one of those countries cannot invest at all in one of these crypto mines. So I understand what you're trying to get at, which is people who would do us harm. But what you've done is you've cast a very wide net. I mean, you effectively, if you've got somebody from, say, Venezuela who's moved to America, they're trying to, you know, become a citizen, say, or, you know, they're functioning within the confines of the law, completely innocent, no issue. They're not allowed to make an investment. You've got somebody who is living overseas, an American living in Lebanon. So they're restricted here. And I just want to make the point and then ask a question. The point is that there are cost to doing that. Um You've got people who have done no harm, who have no intention of doing harm, who are being denied the right to own property, make investments for their business. Uh They're generally afforded rights under the Constitution. They're generally subject to our laws when they're here. We're saying that in this case, they are not going to be able to exercise those rights. Uh We're chilling for an investment because who knows where we're gonna go next. Uh We're probably chilling immigration because who knows who we're going to go out next based on what national origin. Uh And of course, there are literally the costs of investigating and bringing these actions. So I guess what I want to ask you is given that there are costs to doing this. Can you be a little bit more specific and you mentioned it earlier but be a little bit more specific about when we have ensnared someone who would do us harm? What are we accomplishing by preventing them from owning any of a crypto mine? What exactly are we improving with that? >> I think maybe the the best answer will be is what we know now or what these facilities are capable of doing not only in the, the use of our infrastructure and the use of our power, our, our resources, our natural resources, but also they, you know where they're co located next to our facilities, um power facilities. Yeah, if you, if you take that as a whole, you would hopefully expect that that individual would be loyal to the country, which is providing them the grace to be an entrepreneur here. And so the intent would be fully divest from your home country as far as you know, if you're a Chinese citizen and you want to do business in China, you have to be a member of the CCP to be an effectual member of that society. Well, if you come here and you open a facility here that uses our natural resources that has potential cybersecurity threats to our, our grid and other entities. And you are connected to said grid where your loyalties lie and what will they be asking of you before you become a naturalized or become a citizen of our country or tuck tail and run and go back after you created a nuisance or a cause of damage in the United States. So, you know, I I agree with the point, I had some trepidation about where is that line. But when you look at the potential of what these facilities can do um within our homeland, within our State, you want to make sure that they have the best intentions possible and that they are citizens of our country and not as citizens of a foreign adversary that has the intent to cause not only damage to the United States, not the individual, but the the nation in which they have their loyalty to, but you know, potential damage to the United States, potential access to things that normally they wouldn't have in any other business environment. >> If I could follow up, please, Mr. Chair. Thank you. So you mentioned being connected to the electrical grid and you mentioned being near uh electrical facilities, they could locate other businesses on the grid or near facility. So is there something specific to the crypto mine other than usage? I understand the usage level is high but is there something specific to the crypto mine that makes that more of a threat? And you also mentioned cybersecurity, why is this more of a threat to cybersecurity than any other computer set up anywhere in the world connected to the internet? And >> I think the answer is we don't know, it's an emerging industry. We don't know what, not only what it's, you know, we can guess and have we got, you know, experts here in the room that can talk about the mining industry as a whole. But then you look at the infrastructure and what could that be capable of doing in the future? Because we are, they are, the industry is paying for all these upgrades to create this environment of which we don't know what the potential is in the future. After crypto mining maybe ceases to become a thing. You know, if Bitcoin crashes in the next coming months now, you've got these facilities that are able and a have the ability to fate other processes, we just don't know what that is. And so the ask is that we only, we don't allow foreign adversaries to have access to that potential. >> Yes, please. Yes. Thank you for the question. It's a fair question. It's a complicated question. Um As we realized a few weeks ago, the world can change overnight when any country decides to attack another country, would we like to probably put individual countries in here and just be done with it. That would be nicer easier. But we're in a world situation that changes so rapidly. So a country that May be on this list today May be off in a couple of years. Another, I think a country got added this last week. I believe it was Nicaragua. They got added to the list. So the intent is not to just focus on one or two, but to have something that's moving. So that from a legislative body, we don't have time to react to everything that's happening in the world. Is it the best way to handle it? I'm not sure. But as it's been said, we just don't know and this is a step to try to control that. So. >> Ok, that's it for now. I'll be back in the queue. Representative Rye, >> you're recognized. >> Yes. Thank you, Mr. Chairman Representative mcclure, Senator Bryant. I appreciate you so much for tackling this. It's not an easy subject, but we've covered certain parts of this, sir. And I've heard it mentioned from time to time during this process, but I would like to know and I think we would uh what is the impact, the average impact with the the electrical grid and also the water table. How would this affect our water table, especially in the rural part of delta part of the State where we are already pulling out a tremendous amount of water already? So, can you give us an explanation? >> These facilities are based on, on megawatt usage. And so I think some of our larger facilities can use up to 15 megawatts here in the State that might be considered a midsize. I believe they go, you know, large. I'll let Mr. Bethel address, you know, the, the impact. If they don't have the ability to service it, the answer would be that they don't service it. You can get that preferred rate which drives that economic viability down as far as water usage. I think that depends on the type of construction used. These passively cooled systems do use more water than say, a submerged or liquid cool who uses virtually no water. And so in addition to, you know, trying to control what type of facilities are constructed. That would be the, the hope is that Senate Bill 79 would define those parameters a little, a little broader to make sure we are not depleting those natural resources to make sure that if you put 20 facilities within, you know, five square miles, that the energy environment through the oil and gas Commission can make sure that that local water provider understands what they're being asked to do and control that. Or if they don't have a rural water provider and they're using aquifer, that energy environment will be able to maintain and monitor those situations to make sure that they do not create, you know, water shortage for that area. So that would be the goal the complementary pieces of these two bills is to make sure we manage that. Um And ideally that we're managing early in this endeavor in our State and not coming back, you know, in five years, we didn't know it was going to be a problem. So I look at it as a, as a benefit that we're addressing this now. >> Follow up, sir, please. Oh, yes, go ahead. Ok, Josh, can you from where you're at right now with where we're at? Can you almost give us a good answer as far as do we know that this is not going to affect our farming areas with the water table? And how about the electrical Johns right here with us? Can we give an answer on that to just find out exactly what it could cause as far as problems or maybe not problems at all? >> Yes, sir. Representative Ryan, we, we believe that we are able to serve those uh crypto customers as well as our other customers without affecting reliability. Uh And we've, that's a part of the way we've designed the rate structure under which we serve the crypto customers is that they are interruptible. And so we don't have to acquire additional capacity to serve them and we know that we can serve them at the locations where they've they've chosen to interconnect and in the event that we have AAA usage situation where we need capacity, we can call on those customers to interrupt and we've had a lot of years of experience with interruptible customers. And so we feel confident that we're in a good position to be able to continue to provide uh reliable, affordable and sustainable service, including serving the, the crypto customers. And we had to demonstrate to the public service commission that this rate schedule is reasonable and they reviewed it and approved it. And then every three years, we go through a resource planning process before the public service commission where we evaluate what our, what our load is, what our resources are and what our anticipated growth is going to be and make sure that we have the resources necessary to meet our, our peak load plus having reserves in place. And so given that process, we feel confident that we are able to, to serve those customers and our other customers and not have a detrimental effect on reliability. >> Thank you so much. Representative Rob, let me just touch on the water issue for a second. You're absolutely correct. It's imperative that we protect our agriculture. I mean, it does no good for anyone to have wealth if we're not able to eat. Let's just get to the bottom line. Um There are provisions when someone drills a water well, so we have natural resources. We have our real water supplies or municipal water supplies. They know what they're capable of, they know what's putting pressure under them. Those local ones will have local control. Now, natural resources obviously is not mentioned in the bill, but they, they have uh input with those water supply systems as well as the water wells and those type of things. So that's going to be something we're going to have to just watch very, very closely and to make sure that we are protected and protect our agriculture within the State. Ok. Representative Richardson, you're recognized. >> Thank you, Mr. Chair. Um So, uh Representative Bryant, you talked a little bit about um Senate Bill 79 associated with the 778 the one that you're presenting here. And I, I was just a little curious. It almost seems like this is a, that 79 is a companion bill. If you will um to help provide some of the oversight. Could you speak to uh just for just a little bit, what are the impacts to 78 if 79 is not passed along with it? >> The 78? Really? I mean, they are to, to answer your question, they're absolutely companion bills. Mine does not deal with the State regulation. I think State regulation is imperative for this industry to make sure that the, the burden shifts to the, the industry with State control versus individual counties attempting to manage this, which do not have the resource nor want that. You know, they have the ability to, can they, can they pass a zoning and planning ordinance? Sure. We have counties that, that do that, but they're very limited far and few between and their actual unincorporated areas are, you know, 16% of the county because the cities have massively annexed over the, over the decades. And so to answer your question, Senate Bill 78 if it stood alone, the burden would still be on local, um, not say that locals can't attempt to control it, but they would have a much harder time to do it. And then the local citizens would have to be the ones that bring suit as they have standing if the nuisance is on them, if the county can't effectuate that change or pursue that change, the, the locals could take them to court and get the courts to try to give them um compensation. Whereas 79 puts the State in play much like I said, as they do for racetracks or for the oil compressors, it gives them that, that medium or control. >> Ok. Thank you, follow up Mr. Chair. So, so just so I'm clear with that the um the ability for an individual um which kind of goes back to representative Fran's um specific question, um The local entity, a person that feels like they've been damaged, associated with a specific um business. They still have the right through your bill to file suit, address that issue through the courts uh and seek um some sort of compensation associated with the damages that they incur. And in addition to that, they can also petition through the State assuming that 79 is passed and address that from a State level as well. Ok, thank you. >> Ok, Representative mcalindon, you're recognized. Thank you >> Chairman. Thank you for being here and thank you again, Senator and Representative for addressing this issue. I know it's been a very hot topic and I appreciate you taking time to do that. I had a question for you all about the noise ordinances that you have. Um it says here that you have to reduce the noise. It doesn't say to what extent or what level you're targeting. Do you have a target level in this bill at all? And then my follow up to that would be who is in charge of regulating that or checking to make sure that the noise is indeed reduced. >> So the, the original ordinances that 50 of our counties passed had, I think 55 DB or 65 DB, they're trying to get a DB level. And what they found was that it is hard to, you know, control because it changes with temperature, with wind direction. And so they don't have the resources or the desire to control that. And so any language we put in the State law would basically have the same effect because then we'd be continually out there pursuing something that was ultimately not really pursue. And so the language that was advised was reasonably calculated by industry standards. So the industry knows what they do to regulate the output of noise where you could have a conversation on your cell phone, literally standing 10 ft away from one of these facilities. And so we're going to let the industry through their own their own material basically. And then the judgments of the courts determine what is a reasonable nuisance because again, just like the compressor issue, we just had them house the compressors, which ultimately ideally solve the problem. But then the State had the authority to go in and make sure that they were in compliance. And if not, the State could pursue those, those charges >> follow up Mr. Chairman. So then who is checking that are you, is the industry checking themselves? >> It is. And so in 78 it will be incumbent upon anybody that has standing within 2000 ft if SB 79 passes will be driven upon complaint. And so if the complaint is made to the department of energy environment. They will dispatched their investigators to go out there and make sure that they are complying with the rules that this body will promulgate and make sure that we tighten those rules up to that they can be effectuated, um, as a, using this as a basis of what that would look like. >> Ok, I have a question myself here. Ok. When you talk about, if they uh prevail in district court, you put, they May, uh, let me get the correct language here. They May be awarded reasonable attorney fees and costs. How come you didn't put, shall in there? >> Um The, the easiest answer is the judiciary does not like us to tell them what they will and will not do. And so they wanted to stay within their rules to award based on their fact finding and how much award and damages are given. So that was the recommended language from >> my reasoning for that. They're going to have to go out on their own and they have to prove it and they have to prove that the noise is a nuisance. It's going to be difficult. >> They'll have to make sure they have a strong case to prevail. >> All right. Next question is, uh, Representative mccullough. >> Thank you, Mr. Chair. Um I just AAA short comment and then some language questions. Um I totally agree with Representative Kavanaugh and Representative Richardson in talking about victim restitution. It just seems like there's a place for that somewhere. This has been very constituency driven, the issues that have come up and everything and, and most folks are would be hard pressed to go up against companies that have tons of lawyers and money and everything to, to get back, you know, the ways that they have been harmed to redress that in some way. But anyway, I just want to make that comment. So on, on page two, this goes back to what representative mcclendon was talking about with the noise reduction techniques on page two lines 17 and 18 where it says I just need some clarification where it says without limitation these ways to to reduce the noise. Um II, I guess what I'm asking is, are these, does that mean without limitation, these that are listed, you can use one of these or all of these or does without limitation, open it up to maybe just putting some cotton balls outside the walls and say we we tried to reduce the noise. >> These are, these are ores so you can use liquid cooling, submerged cooling or fully enclosed envelope with obviously the factors that, that they have to comply with or locate 2000 ft away if you're using one that is a passively cooled or an area zone, industrial or otherwise approved use. And so the the limitations are tho those will affect, get rid of the noise. If there's other industry standards that can do that, those will be applied. But again, it goes back to what is a reasonable, reasonable individual feel like that effectuates to have standing in the court. >> Ok. Uh Mr. Chair, can I have a follow up? Thank you. Um ok. So one more question on page six line 22 since we're talking about oars. So the plain meaning of or seems to be that you pick one or the other. I mean, I, I think I might understand what this part is saying, but I, I guess I'm, can you give me some clarification on that? Is it one or the other or is it, if it's goes above the 25% goes above a million, then it's going to be a million. Does that >> make sense not to exceed $1 million or 25% of the fair market value? But >> that's what you mean that if 25% is more than that, that it can't exceed a million. Yes. >> Do not exceed. Yes. >> Ok. All right. Thank >> you. Ok. Representative Long you're recognized. >> Sorry, Mr. Chairman, I was looking for a hard copy of the bill. Um Thank you, Mr. Chairman. Um I did have a question about the 2000 ft. Um I have a couple of these located in my district had zero complaints from noise because they had the good sense to locate away from residential areas. But having had the chance to tour one, the sounds deafening and it's, it's just and not just the, the volume of sound but the, um, I guess the frequency of the sound because of the bands and everything. So it drive you crazy if you're very close and I'm concerned that the 2000 ft is not, doesn't sound like very far to me. How did you come up with that, that, that number? >> So, what I, what I did and I, I derived that number is I use one of the many online tools available when you basically calculate sound. And I I put in 100 DB and then I researched what the most adverse conditions were for. Sounds, knowing that sound can fluctuate on temperature and wind and et cetera. But I put in adverse conditions to noise and I kept increasing the distance until it got to zero or below to a negative. And whenever I hit around 2000 ft, I think it was closer to, you know, 2060 ft, it, it actually became a zero or it's a negative seven B. And so that was a reasonable amount of distance to become to be away from your neighbors to not impact their quiet enjoyment. >> And, and that was you said you started with the figure of 100 DB. >> Yes. Which, which is more I think, I think the, the noise that these can generate is 85 DB and they try to get them down to 65 DB, which is what I believe Bono did. And that again, it's hard to test, it's hard to know when it's doing at 65 or 85 or 45. And so I just plugged in a value worst case scenario and, and started to drive the distance out. >> Ok. You're representing. Yes, sir. All right, Representative Hudson, you're recognized. >> Thank you, Mr. Chair. I wanted to go back real quick to something that, um, you were discussing with Representative Collins, um and Robson mcclure, I think you made this comment. So I'll pass this to you. Um In the course of your discussion with Representative Collins about prohibited foreign parties, you made a point that I hadn't considered before, which is that those lists change. So what are we going to do or what implication is there for someone who starts one of these businesses and then their country lands on this list after they've already started the business and have been a good actor. Are we gonna tell them that they have to divest from the business that they started under this plan? >> That is a very good question and I do not know the answer to that today. >> It feels like we know that >> answer. I would say yes. So the law says if you, if you land on this list, you will not own this business in the State. And if you have, you know, the grievance will be against your home country. Ideally, you will become a citizen of the United States and go through the process if you want to invest in an industry such as this within our borders. >> Do you think that that creates a constitutional question though? An issue >> in the, with the attorney general's office? I think that was a, they're willing to weigh in. We have the authority to do when it comes with an adversarial entity that owns a facility like this within our borders. OK. >> So, but just to, just to be clear since you jumped into, so somebody who's a good actor who is not on the list when they, when they open their business operates for years with no issue, Um has no sound complaints, no nuisances, employees, locals as soon as their country through no fault of their own ends up on this list, we will take their business away from them. >> We will force them to divest. I believe we have several of those actors currently that have been operating for years in our State. Um A as good neighbors, as good um good actors and they will be forced to divest. Now, will they divest into somebody that they know and trust that's an American citizen? That's what I'm told is, is most likely they'll find that contractual relationship that is within their control, but they don't specifically own this because what we're after is the subpoena power of a GS office to be able to effectually control what that entity does. But >> aren't you, what you're talking about is creating shell companies and doesn't that complicate the role of the attorney general's office? Because now bad foreign actors are told, all you have to do is create a dummy company with some American who's, who's in charge of it and then you can go ahead and operate and they can funnel money to you under the table. >> Unfortunately, that is, that is the laws that we have set up to allow within our, with the federal system. But >> is that prefer to knowing who owns the company? >> I, I think of the same limitations that act 3636 apply to the AG and then seeing that they are going to start moving those shell company directions is one reason we shorten that time frame, talking with the attorneys. They can start to basically better understand where those companies are moving and how they're creating that shell system. I believe there's language that will be introduced in 2025 to further address. Um What that looks like and reach further into those shell companies to make sure that we do understand what's going on behind the scenes. >> One last thing looking at section three, this is on page two line 21. Um where you there is a, a section three B two li I um where there is a, a discussion there in the in the language about fully enclosing the envelope. And I see that, you know, there's some language in the definition section in 603. Um or there's I'm sorry, there's language here that talks about what fully enclosing the envelope is. But section 603, which is the definition system doesn't define envelope. Um Now I've looked up and there are several definitions online of what an envelope is but it's not defined in the act at all. Um And from what I saw just looking at it, there are several different types of definitions of what the envelope is. Do you think that we ought to define what that is? >> So this, this is obviously coming from the other attorneys such as yourself, but inside that language, they felt uh directly producing around all sides, including above and below the equipment, producing the noise with material reasonable calculated understanding, understand standards to reduce noise would be the envelope for that system. So I'm I'm going on. So >> you're hoping that the implication is that that's the definition of envelope >> in, in the context of this, of this operation? Yes. >> Um Sorry, I had one last thing. I was just kidding. Um You just discussed a moment ago that there are some differences in regulation between SB 78 and SB 79. But then you said previously that you thought that these two bills were complimentary. How will we reconcile those two different regulatory schemes if we pass both bills, >> I don't think there's differences. I don't, I don't recall if I mean, if I said differences there they are complementary. It's just a matter of, one will be regulation and promulgation of rules and the other is this will stand alone in the event that that does not pass, but the rules will apply these standards in addition to. Thank you. Thank you, >> Mr. Chair. Ok. Representative Schulz, you recognized. >> Thank you Mr. Chair. First. I want to applaud all the hard work by all parties to address this crypto mess that we've been dealing with for the past year. Uh and broadly, I support both of these bills. My question echoes Representative Dalby's concern earlier uh on page two where we are restricting the home data mining issue. I feel like we're, we're leaving a little bit of a loophole there. And I, I realize as to Mr. Bethel's testimony, the capabilities of the electrical grid, et cetera in my personal business, I installed a, a large propane generator there a few years ago, runs two pretty big buildings. Uh And it's quiet, the neighbors can't even hear it. So I just, I, I feel like without that definition of home mining in there, we're, we're in essence putting a patch on a rotten inner tube just it's going to pop out somewhere else and maybe, maybe I'm over scrutinizing it. That's all. >> Can you repeat the question? >> I >> guess my question is why don't we put some language in there just defining what home data mining is? And that takes the question out of the equation. >> Yeah. And I guess home, home data mining is data mining from our residents or residential use structure. I think if you look at cities, cities do well, do well to define what a residential structure is and can abate any nuisances that come to that. And if it generates out of this, are they doing it as a hobby or as a business? They can start to navigate that. Whereas if you're in the, in the county setting and you want that rural setting and you want the government out of your business, I feel like you, you can have that as well because you'll be bound by the limitations of what, what your system can do. And so I again, it May just be a policy or a, you know, how we view local governments. Obviously, I'm, I'm for, I'm for less, you know, even like in the last sessions with, with certain issues of local control and where that is between personal use and what the, what the locals can effectuate. I take a little bit stronger stance. So that's the reason I felt this was based on my research and what I, you know, if you youtube these, you, you'll see what the limits and capabilities are from, even ones that are a little more high profile and want to advocate for it. They got to a point where they had to shut down because it was no longer profitable. Um And so there's a limitation to where the hobby ends and the business picks up and I think locals can deal with that. >> Thank you, Mr. Chair. >> Ok. Representative Ray, you're recognized Mr. >> Chairman with German. He would comment on that. >> Just Representative Schulz I would say also from a utility rate standpoint, the the both the the purpose of you know, primarily for residential uses is defined and applied. And then also the voltage level in the rate schedule would limit the quantity of electricity that a customer could take under residential service and still remain under residential service. >> And one other comment, Mr. Chairman to go ahead. So basically the most residential homes will have about a 200 amp, single phase service, bigger home have 400 amp, single phase service that's not going to run enough servers to do anything. Plus you're going to have the heat that's going on in your home, that you're going to try to cool down or you're going to be like in the country, be in the shed, that type of thing. It's almost like going to the diamond mines out here and having a good fun day and you might get lucky that day versus buying a diamond mine with all the equipment, all the employees and everything else. It's just two different things, the profitability of just doing it at home. It can somebody break through, I'm sure somebody can do something, but it's going to be so difficult and the financial cost is just not going to be there for them, >> right? You recognize >> now? Thank you, Mr. Chairman. Um Just got a couple of questions for the bill sponsors and one for Mr. Bethel if that's ok. Um So Senator Bryant and, and Representative mcclure, I know that um sort of the poster child for all of the problems that have arisen around this industry is the facility in Faulkner County at, at uh Bono. I just want to make sure and it, it is from my reading of the bill, but I just want to hear from you from the two of you as well. Would the provisions in this bill that account for noise and vicinity and foreign ownership apply to the existing facility there? It would. Ok. Um My second question is you had mentioned um collaborating with the A G's office on some of the language in here. Um As, as the two of you were developing the language for this bill, did you collaborate with or visit with any of the elected officials in, in Faulkner County and, or with the association of counties >> extensively both through the association and directly with Judge Dotson? >> Ok. Um And then my question for Mr. Bethel, um going back to the issue of hobby engaging in digital asset mining as a hobby within someone's home. It would it be fair to say that there's probably a large number of people in the State who engage in home mining on a fairly limited basis and have for several years. >> I don't have any information on, you know, the numbers of home digital asset mining in the State. I would assume there is currently some level >> and >> you know that it happens. And then there, as I mentioned in responding to Representative Dalby's question, there's obviously some peripheral level of nonresidential use that, you know, you May take a, a business call, you May work on your business email. There's, there's a lot of that activity that that would be under residential usage. It's the primary purpose of that. And so once you cross that line, that's when you would cease to be a residential rate customer and become a commercial rate customer. So that would be true of digital asset mining or uh you know, answering emails and phone calls uh in your, in your home. >> And in the instances, I mean, in the several years that people have been engaging in this type of activity, are, are you aware of a large number of problems that have arisen from people engaging in digital asset mining at their home? No, sir. Ok, thank you. >> Ok, Representative Dalby, uh we have somebody from the Public Service Commission here, I believe. Now, do we not, would you like them to come to the table? >> I would and I do have a question in regard to that. And I think I have three questions that our discussion has brought to mind. So, while they're coming to the table, I'd like to ask Senator Bryant. It's my understanding and correct me if I'm wrong. These are really stopgap bills until we get to the 25 general Session. Is that correct? >> I would say so I think there's going to be a lot more discussion unfolding, not only in 2025 but also between now and then seeing how these will be effectuated >> and if I May ask and I'll ask the Public Service Commission my question. >> Now, if you would identify yourself for the record. >> Hi, good morning, Danny Hofer, chief of Staff for the Public Service Commission. >> Thank you, MS Hod for being here. I don't know if you heard, I don't know that you were in the room earlier but there has been some discussion and I raised it early on in this, uh, regarding, uh, Senator Bryant had made the statement that the PSC could enforce, this would have some control over, you know, the uh the electric usage and that kind of thing. And, and my question really was, and it comes from probably a position of ignorance, not knowing a lot of how uh you would operate in that regard. But could you just kind of give me a background or kind of a uh in context how this would work because I can't find in this bill, how it would work? >> Sure. So in terms of public service commission, um jurisdiction and authority, of course, you know, that um we have jurisdiction over the public, publicly regulated utilities. Um And so crypto customers per se, you know, a new facility or an existing facility, they don't come directly before the public service commission, what they do is they go to their utility, whoever serves in their territory. Um I know Mr. Bethel was up here earlier um explaining um his perspective. Um and so in terms of usage, that's something that the utility that serves those customers is going to monitor. Um Of course, we monitor the utilities. Um but the utility is kind of the first line in terms of um if they have sufficient resources, reliability, things like that. And of course, they don't, they don't, um, overextend themselves in that way. So, um, I'm not sure if I'm answering your question directly or not. But, >> and yes, I mean, yes, you are particularly, you know, we were having a discussion about, you know, home usage and that, and I think we've kind of beat that horse dead several times and I don't think there's any of us that are really happy with the answer and that May be something that we work on. But, uh that, that was really the question. I think if with the public service commission that if there is a um extra load on our grid, would you be able to step in with the public service? Are they just at the mercy of what the utility companies May come to? I, I think, I think in essence, what we're all worried about, we don't want there to be a load on the grid and the grid goes down and it's because maybe it's might be just in that county or that city, that kind of things, the public service commission, do they have any kind of enforcement power in that situation? >> Enforcement in the sense of, um, you know, if there were to be an incident, um That's something that we have enforcement over. Um We don't have say like a switch or something. Um But to that extent the utilities, uh they on a three year basis um present to us what they call integrated or what we call integrated resource plans, um which is basically like a three year projection of um their portfolio of resources, um their, their use and load and, and things like that. So, um and then any time they bring new resources um into rate base, they come through the public service commission. So anytime that they have say a new right schedule that has to come through the public service commission to be approved. Um for instance, if there were a specific right schedule for crypto customers that, you know, comes through us that gets evaluated through us and, and the commissioners um are very wholesome in the approach they take when they look at these things. So it's, it's not just purely um ok, this, this right schedule has been brought before us. Um But it's also an examination of, of the, you know, the, the big picture of um what, what the that specific utility has presented in, in resource plans and, and things like that. >> Ok, thank you very much. I appreciate you coming. Uh >> Thank you. >> Uh Just a couple of questions and I'll be got lots of questions, but I'm gonna limit it to really a couple uh Senator Bryant, you testified just a few moments ago that you worked with various different stakeholders. Did you also co collaborate with uh crypto mine companies in getting this language as they want >> I wouldn't say as they wanted it. There, there, this places burdens and restrictions on them as well. I did make sure that the, the language was not going to crush them and run them out of the State because I think these are reasonable standards. So yeah, there is an Arkansas Blockchain council that our good actors are Members of and, and they did, they did assist to make sure that I knew what industry standards were that I was not applying an industry standard that would not fix the, the issue. >> But they're good with this language. It's my understanding is that >> correct? >> So they're good with this. Also in your collaboration. Did you talk with the local co ops? Because those are usually the ones who are doing the uh electricity for our rural areas and what burden that May have on the co ops >> and, and the co ops fall under the same guidelines as even entergy where they, they perform a rate study. And if it's available to that customer at a certain rate and it's agreeable for intermittent service and they choose to go that with the approval of the PSC, they can attach to the grid. So the co ops have that ability like the co op where I'm at in my conversations with that President, it's like they, they do not have the ability to create a rate low enough that makes it a profitable endeavor for crypto facility. Ok. >> Thank you. And then since this is something that we're going to be looking at the 2025 I would ask that you also look, we had a lot of discussion earlier about the foreign ownership and what they could do to our electric grid and what they could, the trouble that they could cause. But we also have homegrown terrorists in this country and this May be something that we also need to consider in the Legislation in 2025. Would you agree? I >> do ma'am. Thank you. >> OK. Represented College. >> Thank you, Mr. Chair. Um So a couple of little things here. One is Representative mccullough mentioned this on page two. Just want to redirect you here because where you say on line 17, applying noise reduction techniques including without limitation, including without limitation means for example, OK. So everything after that is meaningless, it's all this stuff about cooling, fulling, closing the envelope. All of that's just examples of ways to, to apply noise reduction techniques. That's what, that's some examples of what they are. You really could put cotton balls up. That's a noise reduction technique and that's permitted, you've satisfied this requirement because that really is where the requirement ends is that that comma apply, apply noise reduction techniques. >> And, and I I would argued if that has the same effect, the same effect as these techniques and it, and it serves the purpose to reduce the noise to where it's known or creating the nuisance in areas that cannot zone these out or in their effectual areas that in addition to this language and applying the promulgated rules, which I hope this body does pass, we can, we can curtail the nuisance without becoming a burden on the industry just to make sure that they allow for quiet enjoyment of their neighbors. >> But where in here does it say that it has to be as effective as these techniques? Is there a a I mean, maybe there is, I'm just not seeing it. Where does it say it has to be a certain level of effectiveness? >> I believe just a language as a whole with a reasonable, reasonable person would say it it effectually is a quiet enjoyment environment. Um I'm told it would suffice. >> Well, I think I'm pretty reasonable and it looks to me like it just says applied noise reduction techniques. But anyway, moving on to another question I have if you don't mind. Um So it says here on page five, one of the parties that is restricted from any ownership in a crypto mind is a fiduciary. This is on line six, a fiduciary of any person or entity previously mentioned. So fiduciary is somebody in a position of trust with regards to someone else. So that would be like a lawyer or a financial advisor. Why do we need somebody who is a lawyer of a foreign national to be restricted from owning a crypto mine when they're when their representation has nothing to do with the crypto mine >> uh representative, this, this is language that our attorney general's office and our governor's staff feel like is effectually will control the bad actors and the bad behavior of this industry. >> Well, I have no doubt it, it'll do that, but it'll go a lot broader and it'll control the behavior of lawyers and financial advisors of people who were covered earlier. But, ok, last thing is really just to kind of a clarification. We were talking earlier about the lists and about the kind of uh changeable nature of the lists of um countries that we're restricting. So one set of lists is the um international traffic in arms regulations and that is actually fixed as of 1124. So that won't change. Um So if you're on the list as of 1124 you're on the list and you're affected forever. What that means of course is that if a country gets off the list that they're still restricted in this law, if it passes. So that's a, that's an issue for me if, if this country starts, you know, fixing its behavior and acting right in a way that we see, you know, to be acceptable, that doesn't help them here. However, there's another list which is on the next page line four, an entity of particular concern designated by the Department of State. So that is a moving target list and and we've decided that if it changes that, you know, we're going to force divestiture if somebody's covered by that. So I guess my question is why the difference, why are we treating one list as being fixed as a, 1124 and the other list we're treating as a moving target. >> The, the, the best answer I can give is by, by our standards that if it's reference to ac fr we fix that at a certain point in time. I mean, I've, I've had bills fail because I did not fix a date stamp on a code of federal regulation. And then the, the additional list is to make sure we do cast that broad net so we can understand and subpoena and target, uh to make sure that the owners of these type of facilities um have our interest in mind. >> Well, I agree with you about the, you know, requirement in our form of legislative drafting to have a date certain, but I don't understand why we wouldn't have a date certain for another published list. And we can just make that floating. That doesn't really make a lot of logical sense to me. >> I assume since it's not enshrined in federal rule or federal regulation, that it just, it didn't flag flag for it and it is a moving target and we can start to effectually understand if they do make that list at our federal level. You know, what does the State need to act upon. >> Thank you, >> Danielle. You can step down. I'm sorry, you're dismissed. Ok. Ok. You're not dismissed. Sit back down. Ah, Representative Cavanaugh. You're recognized. >> Thank you, Mr. Chair. Um, this is for the public service commission. So, do you have any concerns with the language in these, either in this bill? >> No, I don't think we have any concerns with the way the language is written in this bill. >> OK. And at one point during testimony, somewhere we heard that there and probably during rules, we heard that there May be 50 plus minds coming to Arkansas looking to locate here because I'm trying to see you. I'm fixing to be in his lap. Meny, can you mov'e? I can't, sorry, I was getting in representative Ham's lap almost. So uh it's one point there May be 50 plus mines wanting to locate to Arkansas because of the favorable environment for them. The low energy cost. Is there a concern with our grid if 50 do come? Is there a is because you hear people talk about that. There's a concern not for what's here, but what might be coming? Is there a concern with that or are we in good shape? >> So I'll actually, I want to go back to my answer to the last question. Um Just real quick before I answer that. Um And it's not that not that the PC has any concern with the language, but I just wanted to clarify that. It's, it's to the extent that, um, you know, we're, we're not really referenced or implicated but, you know, the reference to utility rates and rules. Um, but no, we don't have any concerns with the language. Um, but, um, to your second question, um, so the number, um, we are not familiar with the number, of course, we've heard, you know, estimates and things. Um, but when say any of these facilities would come online, um They don't come directly to us, they go to the utility in terms of load. I don't know exactly what load they might be bringing. That's information that they would go to the utility with and give those numbers, make those requests. Um And to that extent, no, I don't have an, and the public service commission doesn't have um concern with the utility ability to review and make those decisions for if they have the requisite load to serve. >> Ok. And Mr. Chair, if it's appropriate, if I could get the utility come up, I'd like to have them speak to what, how they feel about the, if services expanded to these, that they can speak to that, we're OK with the grid >> and Mr. Chair, I'd like to make a, just a comment about the number 50. Um that was, that was stated on I believe a CBS Sunday morning environment. I, I emailed the producer just to know like, what is the factual background of that number and he immediately recanted. The 50 took it off the story and said there was no basis to the number of 50. Not to say that obviously, we're creating, we have a favorable environment of this, but the number 50 was an arbitrary number made up. >> I appreciate that. >> And I, Kevin, we feel confident that we can serve our existing load plus the anticipated level of growth. Uh I I also don't know the the source of the 50 number, but based on the number of, of cus Crispo customers we're currently serving and uh some level of additional growth, we feel confident we can do that reliably. And as, as I pointed out earlier, every three years, we go through a, a formal resource planning process at the PSC. And so we look at where we are at that point in time and where we see 10 to 20 years into the future, what the resource needs look like and begin to make those decisions. And so I think if that level of growth occurred, we would be able to make plans to, to meet that level of load. Uh We, we believe that our, our current resources are well positioned to do that with the load and the growth we expect. And uh if a large uh unexpected load showed up or or was going to show up, we would have the opportunity to acquire uh additional resources to meet that load >> with that. I'm gonna because you said expected growth. What are you expecting that growth to be? >> And we don't have a specific forecast on the number of, of crypto customers. We do have a forecast on the overall level of load growth and I don't have that number in front of me, but that's part of our resource planning process is as we look at, I know from, from talking with our resource planning team as a part of looking at the Legislation and looking at where we are, we feel confident that with the resources we have now, we feel confident that we can meet our existing load and our anticipated growth over the next several years and continue to have the reserve margin necessary above our peak level needs to, to maintain reliability. And we, that's how we operate. And so we feel confident today where we are and, and you know, the process that we follow should put us in a position going forward to stay in that place. >> Because as we're talking about the electrical grid, it's not just cryptos that you have to think about is all the other industries that will be coming to locate here. So when we talk about the capacity of the grid, a lot of this conversations around the crypto because that's what we're talking about in these two bills. But it's way beyond just crypto, it deals with agriculture, it deals with manufacturing and I just want to make sure that we've got the capacity to be honest with you, whether it's crypto or it's another type of manufacturing that we're going to be able to handle that because we don't want to end up like Texas and have a Browne out. So, >> yes, ma'am. And we are, that's something we, we think about every day is to make sure that we're ready to serve all of our customers and new customers that, that do show up. And we feel good about where we are currently. If uh if a very large economic development load were to show up, we May have to acquire some additional generating resources depending on the size of that load. But that's, that's the way we've operated for years is to be prepared and, and to be able to respond. >> Thank you so much, >> Representative mccullough, you. >> Thank you, Mr. Chair. So back to the prohibited foreign party stuff. I've kind of a question related to what Representative Hudson and Representative Collins have been saying. So it says in there that a prohibited foreign party has 365 days to divest. And if they don't dive divest within those 365 days, the A G can bring an action against the foreign party. However, once the A G investigates and finds a foreign party in violation of the 365 day rule, then the foreign party has an additional 365 days to divide vest. So I guess my question is so it would allow that prohibited foreign party two plus years considering court cases probably of doing business in Arkansas. I'm trying to see if I'm reading that correctly, which seems just like maybe during that time, more investment, more money. And, um, I guess the, for the reason that you have it here in your mind, possibly more danger. >> So, I, I think under my original language, I had a very short window of time because their concerns were Act 636 was too long on the cases. They were litigating with Act 636 of 2023. Senator Irvin, I believe was a little bit longer. And so the attorneys at the Attorney General's office took this to our attorney general and he said across the board, he wants to be very consistent with not only how we're going to apply this law, but future laws that deal with these type of issues. And so he asked that we place 365 days in both these columns and I, and I complied because I want to make sure he has the tools he needs to represent the State in, in any court proceedings. >> Ok. Representative, uh, Representative Fortner. You're recognized. >> Yeah. Thank you, Mr. Chair. Yeah. Ok. All right. Making me feel like you don't want to hear from me, but I appreciate it. Uh, getting to speak as a, not a member of this. Committee. Uh, I have, I have a question. It's, it's probably a way too basic, but I would like an answer. I've looked at both these bills and I know that you are together and I appreciate you working together. Uh, my question is, I don't, I see, I see in here 90 days, I see 365 days. I want to know, is there any immediate relief for the citizens that are suffering or, or inconvenienced, affected by these facilities right now? Is there anything in either bill that's going to give them relief now in their life? >> I've asked that question to multiple offices, multiple attorneys and I, I believe it depends on your term immediate. Um If it, if it's tomorrow, it will likely not be tomorrow. It'll be a, a reasonable time period to make sure that we can make, enforce the, the new law while this has an emergency clause and will go into effect upon the signing that 90 day window that requires them to reduce their sound will be the relief window if they choose not to comply, if they believe this is a taking. Um And the county has obviously will amend their ordinances to maybe attempt to go lower even though they May or May not have the mechanisms to enforce since they don't have planning or zoning, it May have to fall into their existing lawsuit or a new lawsuit. But I do believe it is the right direction to make sure there is relief that can be provided to the residents that are affected by these facilities. >> Could I have a follow up? Has the Blockchain Council or any of the businesses crypto mines in place now to your knowledge offered to give relief to their neighbors. >> I I have not had that conversation. The individuals that I have communicated with within the Blockchain do not create the same or any nuisances that are affected by those that are affected by the nuisances. The, the ones that are affected by that are a foreign owned entity. And I believe if we tackle that issue, in addition to the noise, we will reduce if not eliminate the nuisance that those residents are facing >> if I were one of these companies and I, I wasn't always old. So I have had experience in my life. I would take care of these individuals to mitigate these problems and go on down the road. Wouldn't you >> agree? I agree. >> Thank you, Mr. Chairman. >> OK, Representative mcnair, you're recognized. >> Thank you, Mr. Chair. Uh Thankfully, we are having these discussions a year late in my opinion, but we, we are having them but and I have lots of questions and concerns, but I've got constituents that have contacted me with a couple of things here if you don't mind. But um of course, the bill says to Amend Arkansas Data Centers Act which is a 51 that, but from what different sources, including the Department of Commerce has said, uh, crypto mining are not data centers. So the question being is why did we not just repeal act 851? And then look at the, uh, problems or potential problems of what these bills are trying to do. But in a constituent's view, we, we have still the State. And I know in our instance up in Harrison, we had a company from a guy from New York came in with a 51 in his hand and he said the only reason we're here is because this bill you all passed. So why, why did we not consider repealing that? I'm, I'm all for? Well, I'm not all for because I, I don't see the benefit to the State for crypto minds, but that's another story. But, but the discussion or why, why could we not repeal that and do the same thing that we're doing now instead of leaving part of that in, in effect? >> Because repeal does not change the outcome at all. If you, if you go back and look at what act 851 attempted to do and the fact that the municipal league felt they still had the authority and the control underneath their planning and zoning rules, the Association of Counties felt felt similar but not knowing the true implications of what maybe the future looks like. But now that they know what the future looks like, they still don't want the, the requirement on their individual counties to place zoning or planning. Now, could they effectuate that and do that? They could? But I think the Association of Counties would say that the counties don't want that. So the repeal of this would not alleviate the problems. Now, the, the components of SB 78 that do repeal sections of act 851 that allow a broader authority if they choose to take it are applied. The parts that the Association of Counties and the municipal League would say were good with Act 851 remain intact. All we're doing is adding additional provisions to provide relief for the counties that do not want to do planning and zoning and confirming that cities have that authority to put these in a box that they see fit. >> Uh other question, excuse me. Um And again, this is coming from constituents point of view, it appears that that we are giving this industry more protection than other industries. I'm sure you probably disagree with that, but that's a public perception because can you address that? So, >> so the broad bill, the data centers Act 2023 creates a framework for data centers. And I think some would say as you pointed that maybe the Secretary of Commerce says these aren't data centers. But with your definition of data center is a physical facility used to house critical applications and data using complex networks, computers and storage infrastructure. Then it is a data center. And so then you take part with the Data Center Act has in it and it specifically creates a separate code for data mining facilities of which as part of this bill amends and corrects. >> Uh just one more question. Uh And, and I know it's changed now, but originally the there was 15% why was the 15% ownership was that? I mean, whose idea was that? And why did we have that to begin with? >> So original conversations with the Attorney General's office dealing with foreign adversary control was that the agricultural bill that I initially took the language on? Because I wanted, I wanted something that we could see court pleadings and, and effectual control using existing language. They said the Attorney General's officer said that that ownership thresholds were too high. 57 I think 53% for out of municipal areas, 47 for in municipal areas. It was basically too high and to land on a number that high was creating more complex problems in the court system. So initially, it was advised that I lower that and I, I picked 15%. Um and I believe Senator Irvin went to zero and we reconciled that through the conversations with the Attorney General's office that he could litigate zero and pursue that for these for the function of data mining centers. >> So the 15% was just what you thought were reasonable to start with >> because I didn't want the courts to say, did you, did you try something else before you went to zero? Were you too aggressive upfront? Um And the answer I got was they could, they could litigate this in the event it gets challenged. >> Thank you, Mr. Chair >> Representative Dalby. You're recognized. Thank you, Mr. Chair. I make a motion for immediate consideration. That's non, it takes two thirds of the quorum all in favor of the say I those opposed say no, OK, it passes. Are you closed for your bill or do we >> consideration? >> You're done? Sorry, you're done. Ok, I need a motion. Yeah, one excuse me. Who came to speak. Do we have people here who came to speak? We should we allow them to speak before we vote? And we've already passed the meeting consideration. Yes. Ok. We have a motion. Do we have a mo excuse me, do we have a motion to pass or I have a motion? Do pass any discussion on the motion? Yes. Representative Ray, you recognize? >> Thank you, Mr. Chairman. I just want to say I, I do support this bill um because it addresses a lot of the issues that we've the negative externalities that we've seen come up in the last year or so related to um digital asset mining when it's done improperly. Um I think the questions have been good and point out that everybody can probably find something that um they're not 100% on board with, but on the big issues as it pertains to this bill, those being noise, vicinity and foreign ownership. I think it addresses all of the big things and um I do want to point out that the fact that Representative mcclure and Senator Bryant were willing to come back and amend and adjust their own bill um to their great credit. I might add, speaks to the fact that I think we can rely upon them as future issues arise. If they do that, we can work with them to make further changes if they're necessary down the line. And so with that, I'd appreciate a good vote. >> Representative Collins. Did you want to speak on the motion? >> Thank you, Mr. Chair. Um, I also appreciate you guys bringing this. Um, I, I do think it does some very helpful things and, um, you know, I think in a lot of ways it's positive, um, in some ways it falls short and if that were all it was, it just, you know, didn't do as much as I hoped it would do. That would be enough for me. My problem with it and the reason I have to be a no on it is that it goes too far in taking away liberties, um, in restricting foreign ownership. In this way, we're casting a net that is both, um, too wide and too narrow. It's gonna catch people up who are totally innocent and it's gonna miss a lot of people who are either homegrown or from one of the countries not on this list. Um We can't really put that back in the bottle if we pass this, I think if we could have um made this more directed, uh made this more like a State cus the Committee on foreign investment in the United States which investigates these things based on specific issues with the potential investment that might be something that I could live with but doing something that is um so broad as to take away uh rights that people should be able to enjoy. I, I just can't do that. So that's why I'm gonna. Thanks >> Representative Whitaker. Oh, there you are. >> Thank you, Mr. Chair and thank you, Senator and Representative for bringing the bill. I share much of many of uh Representative collins' concerns. I also share many of Representative Dalby's concerns. But I think in the, this situation, the actions I've seen in the last two weeks from the sponsors and the folks working with them and their repeated assurances in public forum for all of us that this is the beginning of change, the beginning of fixing what's wrong. I think the things that are in this bill that we, we're not completely comfortable with. We've got between now and January to work with the sponsors and with other Members of this body and the Senate to get us there. I think we'll have disagreements along the way. I know we will but hearing from some constituencies these in the last 24 36 hours, I can tell you that the people who are calling me said at least get started. And so today, I urge you not to let the perfect be the enemy of the good. We can pass this bill and of course the other one and get us on the road to fixing this. So I'll be a yes today, >> ok. Seeing, oh Representative, hope I'm here to recognize. >> Thank you, Mr. Chair. Uh, guys, appreciate you bringing this. Um, this is almost an embarrassing situation. I'm not sure we knew what we were doing when we passed the bill originally. Uh, I've heard you say yourself, we're not sure we're not sure. And of course, that concerns me, but I know we're trying to do something. I'm one of those that represent a rural area and, and concerned about that and, uh, because we are, we have the ability to come back. II, I don't, I don't want to do something to affect other industry in this bill. And, uh, I, I know we're trying to fix and we have the ability to come back and we're just trying to, trying to correct. I'm not sure whether we're, we're helping her or hurting, but, uh, I'm going to support it because I know we need to do something. So, uh, I don't know whether I'm asking a question or whether I'm, I'm what I'm anyway, I'm just, just concerned, but I will support it. Thank >> you. All right, seeing no other, all in favor of passing say I those say no, congratulations. You passed your bill. Ok. Next up is, um, um, Senate Bill 79 Senator Irving and Representative Moore Committee. If we're not able to complete this bill, we will recess and come back after Session today. Ok. If you would please identify yourself for the record >> State representative Jeremiah Moore District, 61 Senator Missy Irvin district 24. >> You May proceed. >> Thank you, Mr., Chair Members of the Committee. Um We come before you today, having heard such extensive testimony and questions about uh this really brand new emerging industry. Up until recently, most of us had no idea what a crypto mine was or the negative ramifications that it could uh put upon the communities in which they're located, everything from noise, power, water, and even foreign ownership. Many of you May have ideas about what to do or questions about where we go from here. But I believe it's pretty clear that the status quo is untenable. Senator Bryant's and Representative mcclure's bill and acts were will enact if passed upon the house floor and signed by the Governor will enact certain statutes, certain regulatory statutes that these businesses and companies must comply with. If we do that, we have to pass some sort of State oversight. My county of 6700 people should not be forced to go through the courts to make sure that companies and businesses comply with State law. My county sheriff is not equipped to go and make sure that these crypto facilities are applying the State law that we are passing this is nothing new. There are many, many examples of regulatory agencies that, and that enforce the laws that we pass, whether this has to do with restaurants and making sure there are certain, uh, grease strains or certain, um, codes of the Department of Health Inures and regulates that these restaurants follow. So you and I can enjoy, uh, safe meals out with our families, whether it's liquor and tobacco retailers, um, regulated and oversaw by the ABC and tobacco control, uh or whether it's companies that do have uh use water or May discharge water regulated by Arkansas Department of Environmental Quality. Our bill in short is a catch all for everything that Senator Bryant's Bill and Representative mcclure's bill does not cover number one. It puts regulatory authority of crypto facilities under the Oil and Gas Commission, which is a subsidiary agency of Department of Energy and Environment. And you May ask why the Oil and Gas Commission, this doesn't have anything to do with oil and gas, does it? Well, this was at the direct request of the Energy and Environment Secretary and it is a little bit more closer. It's a little bit closer than you May imagine. Um, back around a decade ago, the legislative body had to deal with the excessive noise from natural gas compression stations. We're talking about excessive noise with kryptos well, having dealt and still regulating those compression stations, they're a lot more similar than you would first imagine. Moreover, we give the Oil and Gas Commission the ability to create, establish and promulgate rules that would be approved by you the legislative body through A LC and give us legislative oversight of how we're going to regulate this industry as a whole. What we're asking for is just good government. You myself, Senator Irvin, we are here because we believe in good government, we believe in legislating, uh the things that ought to be legislating and for ensuring certain freedoms and peace of mind that everyday Arkansans can enjoy their private property and their freedoms yet also enjoy without um without their neighbor ruining their lives or their property rights. It's really that simple if you have any questions about what our bill does, um Our foreign ownership mirrors the language from the bill you heard previously. Uh these bad actors must be stopped. I've spoken with national security experts in Washington DC and they assure me that putting supercomputers all throughout the State right next to our power grid, that is a real national security threat and an issue that we ought to take seriously. Um But between noise, power, water, these are issues that must be dealt with these. These are issues that must be studied and these are issues that the State must play an active role in overseeing to ensure that the lives of Arkansans are not negatively affected by this new and emerging industry. Senator. >> Thank you, Representative Moore did a fabulous job. Um presenting this bill. I would say, I really um he has constituents that are affected. I bono that you've heard a lot about is in my district. This is a constituent driven bill and I'm grateful for so many people that stepped in Arkansas City and Dewitt is in his district. This is a constituent driven bill. And we have some folks from Arkansas County. I believe that are here that spoke just very eloquently in the Senate Committee in support of this Legislation. But I also want to say, very grateful to Senator Bryant Representative mcclure. This is a hand in glove approach. It's very measured policy. It's a good government. It is proper and a necessary role for the State to provide a level of oversight, particularly for those areas of rural Arkansas that May or May not be equipped in dealing with uh this industry. Um and what it May bring to their, to their front doorsteps just like it did to MS gladys' front doorstep and Bono, I really appreciate Representative Stephen Meeks, representative Ray, representative Matt Brown, representative Mary Bentley, Senator Mark Johnson, that is our Faulkner County delegation that have been working literally, I think for a year on these issues with our constituents. But I also want to thank, uh, Shafer Stayley with the governor's office, Jamie Barker, but also the Attorney General's office, Alex Beton. We couldn't have done it with her Matthew Miller who did an amazing job. Carlton Wing and Representative Carlton Wing helped tremendously on this bill as well. So this is a really good team approach and I think that you've got before you two bills that are companion bills well stated by Representative Richardson that really are hand and glove uh approach that are proper and measured. And with that, we will be happy to answer any questions. >> Ok. Representative, the colledge recognized. Thank you, Mr. Chair uh Representative Moore. You mentioned something and it was directed at the question that I asked and maybe not intentionally, the, the question I asked to the previous bill sponsors, what is it that we're actually protecting against by restricting foreign ownership? And you mentioned something about supercomputers being next to an electrical grid. I I'm looking for a reason to support this. I mean, I, I think it does things we need to do. Um If there is a national security or other security rationale for making sure, extra sure, even if it goes broader than I'd like to go, that adversaries can't have these crypto minds. Uh I want to know about it. So can you tell me any more about what you were describing there with supercomputers being near electrical grid >> thing? Representative. Um So initially when I started studying this, my main concern was we're we're all familiar with malware or ransomware and how these uh bad foreign actors uh usually hackers from abroad come in and they steal our data and they won't release it back to our companies or, um, universities without paying a ransom fee. Um, and I was speaking with, uh, somebody I was directed to in DC regarding this and they said, you know what? That's not the actual concern here. Yes, that is a factor. But really we're, we're not talking about Macbooks or Dells that one can buy. Best Buy. Um, we're talking about highly powered supercomputers that outperforms your everyday personal computer by a mile. Um And the fact that you have thousands of these computers hooked up to our electrical grid within two miles of substations. And that potentially the, the idea that they could have these computers hooked up across the State spider webbing our electrical grid. Um If they, so if they sought to shut down our electrical grid, it's my understanding that they, they theoretically could. Um And I understand your questions about how we're limiting. Um We're potentially not catching all of the bad actors. And if you want to have conversations with what future Legislation looks like to help tamp down on that, I would more than love to have that conversation with you. >> OK. So I think I hear what you're saying is that it's less about a cybersecurity hack and maybe more of an overloading the grid to cause brownouts, blackouts. Is that right? That's the concern really, >> I cannot speak specifically as to the method of which they would uh perform an attack upon our power grid, but it's it's more concerning the electrical grid threat than the malware and ransomware >> because they could do that from any other computer hooked up to the internet anywhere in the world. >> But you can't attack the electrical grid from Russia. >> May I also, I'm not sure if you're, I have a very good friend that works for Sony. Um, Sony was hacked with the ransomware. Shut them down literally after Thanksgiving. And it didn't take until I think it took almost to the end of January, mid February before they were back up and fully operational with a whole new security level and plan in place. And the, and they also hacked into the, I think the New York public Library. Um so the same uh the same. But you know, and so, so my concern is the ability to hack into. It May not necessarily be the ones that are in the crypto mining industry itself, but there's suspect to being able to be hacked into just like we've seen uh where the ransomware is, is being uploaded into hospitals and then they're threatening to release all the data and that's what happened with Sony and it literally shut them down because they were going to release like all the details about what games and things that they were designing with. So, so I, I think, you know, for me, those are, this is the beginning of the conversation, there's a lot we don't know about this industry, but also the ability of technology as it's changing so rapidly. So I think our bill kind of gives you that good, gives the State standing, which I thought was very important as we progress through this new. It's a new and emerging industry but it's, it's most likely susceptible. I would think if Sony's susceptible to attack. So, you know, part of regulating and part of good government is two to, there's two odds to this. It's, it's for the protection of citizens and consumer, you know, citizens and being good neighbors, but it's also protection for the industry as well, that we make sure we have good, strong oversight in some areas to protect the people that are doing it the right way as well. >> But thank you for the question. Well, thank you. And, and what you said there actually raises a follow up because, you know, Sony, for example, was hacked. I don't think that they had to have a, a cyber, you know, Bitcoin mine next to Sony to do that. Right. They just hacked in through a computer somewhere in the world. So how does physical location of a crypto mine in Arkansas make us more susceptible to a cyberattack then anywhere, any computer, anywhere in the world, >> it's certainly possible for those locations to commit cyberattacks. Um But, and in my opinion, the the real threat, the clear and present danger if you will is the proximity and capability of attacking the electrical grid itself. >> Representative Richardson, you're recognized. >> Thank you, Mr. Chair. I appreciate that. Um I have a couple of questions for you guys. II, I know I spoke with both of you beforehand and I appreciate the answers that you've provided. Um and the information uh that we've uh that was passed back and forth. Um I still have a lot of concerns about leveraging the term um that uh that you guys have placed a Blockchain and, and leveraging that term in a generic or I should say a non generic specific to the um technologies that we're, we're working through here, the, the digital asset mining and are trying to place a very broad topic uh or a very broad technology um specifically to um the the digital asset mining. So, could you speak to why you leverage that broad term? Um instead of using crypto mining or Cryptocurrency or any of the other terms that are applicable to this specific field? >> So we actually utilize the definitions as they are already existing in State law. And that was through the Data Centers Act that was passed in in last Session. So that definition was an existing definition in Arkansas State law that we put into this bill. However, we have actually amended that down to be very specific to Blockchain network that's utilized by Cryptocurrency industry because there's a lot of other companies that utilize Blockchain tech technology and it's not our intention to, to have them be regulated at this level. So we made sure that we were real specific with that definition. And so that was my second amendment. If you would look, if you can, you want to go back and look at the history of the bill, that second amendment was to narrowly define that definition. >> And if you look at the bill page seven representative, you'll see we have three definitions of Blockchain network, digital assets, and digital asset mining business. And if you put together those three definitions under the context of this bill, you'll see that it narrowly defines uh specifically to the crypto mine facilities, not to any other data center that Walmart or Dillard's or any corporate um business May have regarding their data centers. So, >> OK, thank you. That as a follow up to that question, the idea was that you used a term that we've already defined in statute elsewhere further, um narrowly defined it to be applicable here in this particular context. OK. Thank you for that. I appreciate that. And by nodding your agreeing with me. So, thanks. Uh The other, if I May follow up a different question, um I just wanted to speak to a little bit of uh Representative Collins uh concerns uh and, and ask a separate question. Uh The a lot of these facilities uh some of these facilities are not just in con access, right? They are in uh built, permanent buildings, they are um they have uh permanent uh facilities associated with cooling with their electrical connections, those types of things. How difficult would it be for and speaking specifically to uh Cryptocurrency mining that, that the systems that are used for that are, are specific to crypto mining, they have no other functionality and can't do any other functionality. So they're very, very tiny. But the concern that I have is how easy would it be to replace those very specific items that have only one function of Cryptocurrency mining with some broader use kind of technology? And how would we as a governmental body or even as the, the, the Oil and Gas Commission Oversight Review and understand what's happening within those facilities changing those to potentially some sort of uh hacking mechanism or computing systems that could leverage attacks elsewhere. How would we be able to see that in the event that a bad actor was, was participating in that kind of action? >> You know, I, I, that's a great question. I'm not sure if I know the answer to that. Um We've written this, this Legislation pretty broadly so that it gives a great latitude on the development of rules and regulations. But it's kind of my question. I was talking to Alan Dotson, our Faulkner County Judge who worked on these both bills. Um He's like, you know, it's kind of like asking 75 counties to regulate A I, you know, we are, there is so much washing upon our shores that we're, you know, having to wrangle with and stress and strain, you know, wrangle with, wrestle with to, to figure out what's the right policy approach. I mean, and I, I think my question, your an, my answer is really, I'm not sure if that's something that we need to look at. Um, it gives latitude and the legislative intent, which is what I told you earlier that we can look into that. But again, we, we're gonna have some limitations. There's absolutely, I'm gonna acknowledge that there's going to be some limitations that we um are gonna face when it, when it deals with this industry and that May be one of them. But you know, I'm hoping and praying that there's people that are out there watching for our national security interest, you know, that, uh, make a lot more money than I do that are, that are watching those types of things because I, I really do feel like, you know, that, that is a threat and I just want to say, you know, on the foreign adversary, foreign ownership, you know, list is specific. I mean, I personally don't want an enemy of the United States of America, right in, in my backyard, in Worcester, Arkansas. I, I just don't. And so um II I, it's a great question >> to your point. It is already illegal to hack private servers, private networks. It was already illegal to attack our country and our state's security grid or our power grid. But we shouldn't allow enemies of the United States and our foreign adversaries even the opportunity at being in a position to act. So, um adversarial, >> so follow up, uh just so I understand your, your approach to limiting or potentially reducing that significant risk is to approach it from a, a, an adversarial. Um If they are an adversary of the US, if they are our adversary and we restrict their ownership, then the potential risk associated with someone doing that is significantly less. >> If we don't trust them enough to trade and sell them weapons, then I don't think we should trust them enough to allow them to put supercomputers next to our power grid. >> Thank you very much. Thank you, Mr. Chair, >> Representative mccullough, you recognize? >> Thank you Mr. Chair. Um I'm gonna pick on the word May again a little bit on page eight um uh line six and I think it goes there's several uses like 617 and 24. So the commission May make in inquiries, it deems proper um later on down on line 17 May make reasonable orders. Uh Line 24 May investigate or assess and assess penalties. I guess my question is, are we not using shall anymore at all? And up here and especially on the May make inquiries, it deem proper if they're deemed proper. Why can't we go ahead and say shall on that? >> I mean, I I the, the Department of Energy and Environment is here, the Secretary is here, can answer those questions. Uh We worked in collaboration with them on this language. Uh I think with the vote threshold of both of these resolutions and us taking this issue up during the fiscal Session, there's a pretty strong mandate that we expect uh for us to deal with this industry uh succinctly. Um And so II, I can't speak for them, but I, I can just say um that I think it was important to collaborate with them to give them full flexibility and latitude. Um We've got to get in here and see where we are. Um But I fully expect that, you know, it can be a combination of these things. If you start to use the word shall, I'm being very prescriptive with a division of the Department of Energy and Environment that I probably shouldn't be that prescriptive with to be frank with you. They are the ones that are need to going to work with us in partnership to develop that framework and bring it to us through A LC, uh the A P A for rules and regulations as they see fit. And I trust that they will do that. >> Ok. I mean, that's just part of it for me that serious complaints are taken seriously and that no, we're not taking some and not others that it's a even playing field. The other uh followup please Mr. Chair, um which you brought me to the next question actually through that answer. Um So are some things such as um is there going to be, are there, will this be promulgated through rules or will we, we have to have more laws, such things as limiting the number of permits per year or in some indefinite time period or uh routine inspection of facilities and, and just things like that. Are these things that will happen when, when we do rules or will these have to be put into law? >> My understanding, I can look back at, at, at the, but I, I think my understanding is, you know, a lot of this can be dealt with in rules and regulations. But again, we don't want this to be overly burdened, burdensome. We want to create a framework of oversight that have these be triggered upon complaints. Um And to give us like proper standing in this uh whole issue. Um And, and, and so I would just, I think, you know, it's not our intention that there be scheduled site visits and inspections and things like that. To me, I felt like that was a little overburdened for the Oil and Gas Commission that we need to be complaint driven, that's limiting our government kind of role there a little bit, which I think is totally necessary and fine. It, it gives us the ability to be um efficient with our, our resources, our personnel and, and our dollars. But um again, I think, you know, to your, to your question, um we have the flexibility within the legislative intent to cover all those different issues as it relates to development of rules and regulations. >> Representative Long, you recognize? >> Thank you, Mr. Chairman Representative Moore. Um Since y'all have oil and gas basically going to be doing the um I guess enforcement. Um Could you give us some examples of how they've enforced uh problems with sound from like the gas compression stations to give us kind of an idea of what to expect in this situation? Thank you, Mr. Chair. >> Thank you, representative. Um Beginning on page seven is the paragraph about enforcement. It says the oil and gas commission shall have jurisdiction of an authority over all persons and property necessary to administer and enforce effectively. Um, and forgive me for just reading from it, but I think it explains it better than I can. Um, upon receipt of a complaint under subscription d of this section, the commission May make inquiries as it deems proper relating to its duties and then list through the reasonable investigations and inspections, examining properties, leases, papers, books and records, holding public hearings and requiring keeping of records and the making of reports by these companies. And then it gives them uh the ability to issue penalties for failure to comply with State law requirements in terms of a permit or rules of the commission including without limit to financial penalties and suspension or revocation of the permit. So, and then one thing I will, this May help page nine lines four through 14. It says this chapter does not prohibit a local government from adopting one or more ordinances, resolutions or other appropriate legislative enactments to regulate digital asset mining businesses that address the area of regulation that are not otherwise addressed by federal law, State law or the rules of the commission. Um So in effect, it gives local authority back to the county's municipalities because if we miss something, if oil and gas Commission does not create a rule that doesn't fit or pertain to a particular locality, it gives them the ability to do that and enforce that themselves. So it's really the best of both worlds. Uh, but if we are going to create State law and statutes regarding these facilities, we ought to have State oversight in order to back those laws up. Thank you. Thank >> you. Ok. Um, Representative Rose, you recognized. >> Thank you, Mr. Chair. Uh, quick question. I've looked through this a couple of different times over the past few weeks and of course, with the amendments just want to clarify. Am I seeing this correctly that the, the fee has been stripped from this for these minds to have a license or >> correct? There is no permit fee. Ok. >> And is that something you see still being uh not included when it goes to rules as well? >> As long as A LC continues its current makeup, I do not see us passing any permits uh fees. >> All right. Thank you. Thank you, Mr. Chair, >> Representative College Recognize. >> Thank you. Um earlier, both of you all mentioned the word enemies with regard to um these countries and citizens of these countries and residents of these countries that we'd be preventing from having any investment in a crypto mine. So I just want to make sure I understand this list of 28 countries includes countries like Nicaragua, Lebanon, Ethiopia, Haiti, Turkmenistan, Zimbabwe, Venezuela. Do you all think that all of these countries are enemies of the United States. >> There's a reason why they're on that list according to the United States of America. And I, I trust that list. And so for me, that's the strongest language that we can put in here and it points back to an evidence-based list. There's a reason why they're on that list. And I stand by the policy that's been created by the United States of America. >> It is a list. but is it a list of enemies >> to your, to answer your question while we May not be engaged as active enemies? Um And we might even have diplomatic relations with these countries. We do not sell them uh certain arms under this um international traffic and arms regulation. And that is a federal designation and one that we think is very appropriate for uh this emerging industry. >> Just to be clear, the list does not restrict people from these countries from investing in crypto mines anywhere else in the United States >> under the federal designation. No, under the State law we are attempting to pass. Yes, >> thanks. >> Good Representative mcnair. You recognize. Thank >> you, Mr. Chair. Uh Anyway, I appreciate trying to, to bring some sort of regulation to this is since that's what a lot of us thought we were voting on the last time, but in the, in the rule making. Um and I'm assuming you probably don't know this till it starts. But we, until that is done, we, we really don't know what this bill is going to do, but I would hope that we are going to the, the noise and, and this is one thing, but we, we do have the power issues, the water issues. So hopefully that's all going to be inclusive in the rules because again, because they're till they're there and approved, we don't know what the bill is going to do. The other one is just kind of, again, the thing that sticks with me. But uh section one says that the General Assembly intends to recognize that data centers create jobs, pay taxes, provide general economic value to local communities and the State which I wouldn't necessarily disagree with that, but I'm not for sure crypto mining. The So is there any examples of, of how the crypto mining industry has, has benefited our local communities because there's not been in existence for a while? >> Thank you, representative. You're referring to page one lines 31 through 33 A. So if you see that is not actually our language, we, we have not added that is this is an amendment to the original Data Centers Act A 51. Um Although we do, we, we clarified that, recognize since it does not begin the sentence, it does not start with the. So I don't, I wouldn't say we're adding that language in there. This is just an amendment to that. >> Well, thank you. But I mean, but you don't know of any examples, like I said, no, I'm not talking data center, but we pretty well decided that there's a difference just like the Blockchain issue. But I, I would be curious whenever we're looking at things to see the economic value of crypto mining. That's it. Thank you. Thank you, >> Representative Richardson Recognized. >> Uh Thank, thank you, Miss, thank you, Mr. Chair. I appreciate it. Um One last question and it kind of goes to, um Representative mcnair's question, wouldn't you? Uh There, there's been a lot of concern around the electric usage. Um And we've heard a lot from the public service commission. We've also heard from AT&T or excuse me, energy. Um AT&T is on my mind from some somewhere else. Sorry. Uh So, uh we've had, we've heard from um sorry about that. Um So we've heard from a number of people around that and we've even in previous Committee meetings, talked through this challenge associated with electricity and continued to hear from uh industry uh individuals that these are not concerns for them and are not uh issues for them. And that generally speaking, these are uh for lack of a better way to describe it, excess capacity um that is already being generated in a number of these circumstances and energy that's um available on the grid for these that they can take back in the event that they need that for excess capacity elsewhere. Um So, so my question for, for you is I I know that they pay that these um um data centers that we want to redefine as something else. Um Crypto mining facilities, whatever we want to come up with a term, I know that we use those terms or we, we, we are trying to come up with some way to define this, this group different than data centers. But however, you want to define them, they use this excess electricity and therefore they pay excise taxes on that electricity. Um So wouldn't you agree that that's providing a significant benefit to the State that would be lost otherwise? >> Yeah, II, I mean, I think you can look at, you know, a, a holistic look of industry itself. And I think when you're looking at Legislation and policy for me personally, I want to be consistent, you know, and so yes, you're gonna have, there's gonna be good things that come along with businesses and there's gonna be some pros and some cons, you know, we have to balance that. But I think we also need to be consistent in our policy and in our approach at how we're going to, to deal with different businesses because you don't want to set a precedent, you know, and it's tricky. I really do a Representative Collins and I appreciate all those questions. I think we have to be consistent with our approach as much as we can. But, um, and, and, and we don't also, you know, it's not our intention to be overly burdensome, but to be in a good government approach. So clearly, there's going to be taxes and, and there's going to be revenues that are associated with different things. And so, um, I think I would encourage people to go back and listen to the testimony provided by the citizens of Arkansas County as it related to water usage and the different water table issues that are very different in the delta versus in my neck of the woods, you know, I've got lakes and I've got rivers and I've got dams that generate electricity. We've got all a lot of water resources in the Ozarks. The delta does not have that much in comparison. And so they've got issues and especially when you talk about farming and agriculture. So you've got water table issues and he did such a fabulous job talking about that and the electrical energy that is required for the different pump stations to the water, you know, out to the fields for agricultural use. And so there's, there's a lot of aspects to this that were, you know, that I have learned in this process of working with, um, everybody on these issues, but I, I think there is an economic uh benefit for sure. Um, but again, I don't know if we can define that. It's, you know, not really and my job to do that in this bill. But, um, there's gonna be pros and cons associated, I think with anything and everything that we deal with from a government perspective. But I appreciate the question. I just want to make sure that businesses are operating as good neighbors. And I think that's been my biggest issue and trying to represent the folks, you know, of Worcester and, um, and Bono and that's not a good neighbor. Um And so, you know, I'm here trying to help my constituents as best I can and I respect teaching every one of you, but I can't do it by myself. I have to have your, your support. Thank you, >> Representative Dalby, you're the last one in the. >> Thank you, Mr. Chair. It's my understanding. This bill is really the companion bill to 78 and that this bill will particularly help those cities and counties that May not have the resources to bring an action for the against the bad actors. Am I correct in that regard? You're saying? Yes, yes, ma'am. Thank you with that Mr. Chair. I make a motion for immediate consideration. >> We have the motion for immediate consideration. It's non debatable, all in favor. Say I all opposed. Say no it passes. Ok. I need, I have a motion do pass any discussion on the motion seeing none all in favor say I I was opposed. Say no, congratulations, you have passed your bill. >> Thank you all so much for taking this up. That's true.