Can an Arkansas city or county ban cryptocurrency or digital asset mining operations within its borders?

Plain-English summary

Representative Rick McClure asked whether an Arkansas city or county could prevent a new digital asset mining operation by ordinance and whether it could enforce sound or noise rules against an operating mine. The Attorney General answered no to a local ordinance that bans mining outright and yes to enforcement of the sound rules described in the Arkansas Data Centers Act of 2023.

The AG said A.C.A. § 14-1-604(a) protects digital asset mining businesses from a total local ban. Miners must still comply with local operations and safety ordinances and general sound-pollution limits. Under § 14-1-605(a)(2), a local ordinance regulating mining must also apply to data center operations; the AG said local governments cannot regulate mining businesses differently from data centers.

For existing mines, § 14-1-605(a)(1) expressly permits enforcement of local sound-pollution rules that predated the Act and permits local governments to enact and enforce sound limits set generally. The AG did not decide whether any particular local ordinance meets those conditions. He did not address a temporary moratorium, zoning boundaries, a special-use permit, a specific noise limit, or a separate lawsuit.

What this means for you

City councils and county quorum courts

A proposal to prohibit all new mining operations conflicts with the protection the AG identified. If you are considering operations, safety, or sound rules, compare the proposed treatment of mining businesses with data centers. The opinion allows the categories of regulation it names, but does not validate a particular ordinance or supply a test for a temporary pause on permits.

Residents near a mine

Ask which sound-pollution rule the city or county has adopted and whether it applies generally. The Act, as described here, allows enforcement of earlier sound regulations and new general limits. This opinion does not determine that a particular mine violates a rule or promise that a zoning change will stop its operation.

Mining and data center operators

The opinion rejects a total local mining ban while recognizing local operations and safety rules, general sound limits, utility-service rules, and other obligations noted in footnote 5. If a proposed ordinance treats mining differently from data centers, § 14-1-605(a)(2) is the provision the AG identified. Whether a specific ordinance is valid remains unanswered here.

Common questions

Can a city or county ban new digital asset mining altogether?
No. The AG said an ordinance banning digital asset mining conflicts with the statutory protection in A.C.A. § 14-1-604(a).

Can an existing mine be required to comply with sound rules?
Yes, within the categories the AG describes. A.C.A. § 14-1-605(a)(1) allows enforcement of sound-pollution rules in place before the Act and of limits set for sound pollution generally.

May a locality regulate mining operations and safety?
The AG says miners remain subject to local ordinances concerning operations and safety. He also says mining regulations must apply to data center operations. He did not approve any proposed ordinance's specific terms.

Would a short or indefinite moratorium be lawful?
The opinion does not discuss moratoria or identify conditions for one. Its answer concerns an ordinance banning mining, the categories of rules miners must follow, and enforcement of general sound limits.

Background and statutory framework

The opinion cites A.C.A. §§ 14-1-601–14-1-605 as the Arkansas Data Centers Act of 2023. Footnote 2 quotes the General Assembly's recognition that data centers “create jobs, pay taxes, and provide general economic value.” The AG relies on § 14-1-604(a) against a total local ban, § 14-1-604(a)(2) for operations and safety rules, and § 14-1-605(a)(1)–(2) for general sound limits and equal treatment of mining and data centers. Footnote 9 cites earlier opinions for the office's practice of declining to interpret a particular local ordinance.

Citations

• A.C.A. §§ 14-1-601–14-1-605; § 14-1-604(a); § 14-1-605(a)(1)–(2)
• Protect Fayetteville v. City of Fayetteville, 2019 Ark. 30, 565 S.W.3d 477
• Gravett v. Villines, 314 Ark. 320, 862 S.W.2d 260 (1993)
• Ark. Att'y Gen. Ops. 2023-057, 2019-067, 2004-173, 98-160

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Opinion No. 2023-060

November 16, 2023

The Honorable Rick McClure
State Representative
2424 Sulphur Springs Road
Malvern, Arkansas 72104

Dear Representative McClure:

You have requested my opinion regarding the Arkansas Data Centers Act of 2023 1 and local control of digital asset mining. With this legislation, the General Assembly stated that it intended to protect a growing industry that it believes will provide economic benefit to the entire state. 2 But that protection limited local regulation of digital asset mining. You have asked two questions.

Question 1: If a city or county does not have a digital asset mining operation functioning in their city or county, can they prevent permitting or building [of a digital asset mining operation] through ordinance?

No, a city or county cannot prevent a new digital asset mining operation through an ordinance that bans digital asset mining. Because cities and counties have only the power given to them by the Constitution or statute, 3 local ordinances that conflict with state law are invalid. 4 With A.C.A.
§ 14-1-604(a), the General Assembly enacted protections for digital asset mining businesses, and

1
A.C.A. §§ 14-1-601–14-1-605.
2
A.C.A. § 14-1-602(b)(1): “Through the enactment of this subchapter, the General Assembly…[r]ecognize[s] that data centers create jobs, pay taxes, and provide general economic value to local communities and this state[.]” 3 Protect Fayetteville v. City of Fayetteville, 2019 Ark. 30, 3, 565 S.W.3d 477, 480 (cities); Gravett v. Villines, 314 Ark. 320, 325, 862 S.W.2d 260, 262 (1993) (counties). 4 Ark. Const. art. 12, § 4, amend. 55, § 1(a); A.C.A. § 14-14-801(a) (“[A] county government, acting through its county quorum court, may exercise local legislative authority not expressly prohibited by the Arkansas Constitution or by law….”); § 14-14-805(13) (“Each county quorum court in the State of Arkansas exercising local legislative authority is prohibited from the exercise of…[a]ny legislative act contrary to the general laws of the state.”); Protect Fayetteville, 2019 Ark. at 3, 565 S.W.3d at 480; Gravett, 314 Ark. at 325, 862 S.W.2d at 262.

The Honorable Rick McClure
State Representative
Opinion No. 2023-060
Page 2

local governments cannot ban them entirely. 5 But digital asset miners still have to follow local ordinances concerning operations and safety 6 and general sound pollution limits. 7 Even so, local governments cannot regulate digital asset mining businesses differently than data centers. 8 Thus, any ordinance for digital asset mining operations must also apply to data center operations.

Question 2: Is a city or county prohibited from enforcing existing sound and/or noise guidelines if digital asset mining is currently operational in their jurisdiction?

No, under A.C.A. § 14-1-605(a)(1), the Arkansas Data Centers Act expressly allows local governments to (1) enforce sound pollution regulations in place before the Act went into effect and (2) enact and enforce “limits set for sound pollution generally.”

The question whether any particular local ordinance complies with the Arkansas Data Centers Act or other law is beyond the scope of this opinion. The answer to such a question would require one to interpret the ordinance. But it has long been the policy of the Office of the Attorney General to decline to interpret local ordinances when rendering official opinions. 9

Assistant Attorney General Jodie Keener prepared this opinion, which I hereby approve.

Sincerely,

TIM GRIFFIN
Attorney General

5
Even with this protection, digital asset miners must comply with state law relating to businesses and taxes, local ordinances for operations and safety, rules for utility service, and federal and state law for employment issues. A.C.A.
§ 14-1-604(a).
6
A.C.A. § 14-1-604(a)(2).
7
A.C.A. § 14-1-605(a)(1).
8
A.C.A. § 14-1-605(a)(2).
9
See Ark. Att’y Gen. Ops. 2023-057, 2019-067, 2004-173, 98-160.