A federal judge has issued a preliminary injunction against Arkansas County officials in a cryptocurrency mining lawsuit to prevent the county from enforcing a noise ordinance against a company building a crypto mining operation there.
Last week, U.S. District Judge Lee Rudofsky heard from attorneys for Jones Digital LLC and for Arkansas County in a dispute over a county ordinance Jones Digital said illegally impacts a crypto mining operation it has in the works. According to a complaint filed in federal court in Arkansas’ Eastern District, an amendment to a noise ordinance passed by the Arkansas County Quorum Court last month placed noise restrictions in violation of a state law passed in the last legislative session that prohibits city and county governments from passing laws that discriminate against cryptocurrency mining operations — the Arkansas Data Centers Act.
According to Arkansas County Judge Thomas Best, the Arkansas County Quorum Court passed an ordinance in July limiting daytime noise from businesses to 65 decibels and nighttime noise to 55 decibels. But in October, he said, the county passed an amendment limiting daytime noise to 55 decibels and nighttime noise to 45 decibels.
“They all agreed the July ordinance would stand but the October amendment was an overreach,” Best said. “Perhaps trying to get it to 45, even at night, was too much, at least that’s what the judge said so that’s what we’ll go with.”
Best said the October amendment was adopted out of concern that excessive noise levels could impact migratory birds and waterfowl in the area. Although he was unable to supply exact figures, Best said duck hunting in Arkansas County is a major source of revenue.
“Our thing with the ordinance was concern about the noise,” he said. “It’s a big duck hunting area in Arkansas County as well as in our neighboring counties.”
According to a transcript from the Nov. 16 hearing that was filed Monday, Rudofsky’s bench ruling found that the October ordinance was discriminatory and a violation of state law.
“As far as I can tell,” Rudofsky said, “Arkansas County does not have any noise requirements for any other business or maybe even — maybe anybody, whether it’s business or residential or anything, and there is only a noise ordinance with respect to digital asset mining. And so I think it is discriminatory … if there’s an ordinance that is specifically discriminating against a data mining business and stopping it or chilling it from operating, that I think is expressly preempted by the law.”
Regarding the July ordinance, Rudofsky said evidence suggested that ordinance would be sufficient to protect waterfowl and migratory birds. Regarding the more restrictive October amendment, the judge said it was “more likely than not,” that Jones Digital would prevail on the merits of the case and he enjoined Arkansas County officials from enforcement of the more restrictive October amendment.
William Ogles, an attorney with Wright, Lindsey and Jennings in Little Rock, which represents Jones Digital in the lawsuit, said in an email that Jones Digital had promised on July 19 to comply with the sound requirements in the July ordinance.
“It will keep its promise,” Ogles said in the email. “Expert witness testimony was presented to the Court that these levels are far below what would be harmful to humans (for example OSHA regulations requires hearing protection at 85 db for an 8 hour period), and there was no evidence that the July sound level would affect wildlife.”
In the wake of Rudofsky’s order, Ogles said, Jones Digital plans to move forward with its operation, which he said will be operational “as soon as this week or next week.”
A bench trial in the matter has been scheduled for Jan. 14, 2025 at the federal courthouse in Helena-West Helena. Rudofsky ordered the parties to submit a Rule 26(f) Report outlining the plan for discovery by Feb. 12.