(b) Notice of Noncompliance.

1. (1) A Notice of Noncompliance may be issued when any regulated entity is not in compliance with any requirement of this subpart, the Arkansas Data Centers Act of 2023, Arkansas Code § 14-1-601 et seq., or Arkansas Code § 23-119-101 et seq., and:

   1. (A) The noncompliance was not caused by the regulated entity’s deliberate action;
   2. (B) Any action necessary to abate the noncompliance was commenced immediately and was or will be completed within a specified date, as established by the Director of Production and Conservation, or his or her designee, not to exceed thirty (30) days from the date that the regulated entity was determined to be out of compliance; and
   3. (C) The noncompliance has not caused and cannot reasonably be expected to cause significant harm to public health and safety or damage to property.

2. (2)

   1. (A) The Notice of Noncompliance shall be documented in writing and delivered via first class mail to the regulated entity or to the regulated entity’s representative as reported on the Oil and Gas Commission organization report.
   2. (B) The written notification shall indicate the:

(i) Nature and circumstances of the noncompliance; and

1. (ii) Time within which and the means by which the noncompliance is to be abated.
2. (3) If abatement is not completed as specified in the written notification, the director, or his or her designee, may issue a formal Notice of Violation in accordance with subsection (c) of this section.

3. (4) The provisions of this subsection shall not apply to the following types of incidents, which may require a Notice of Violation to be issued in accordance with subsection (c) of this section:

   1. (A) Conducting any regulated activity prior to issuance of the appropriate commission permit; or

   2. (B) Failure to bring an existing mining facility into compliance with Arkansas law or 15 CAR § 275-902.

      1. (c) Notice of Violation(s).

4. (1)

   1. (A) A Notice of Violation may be issued by the director, or his or her designee, when any regulated entity is in violation of any requirements of the Arkansas Data Centers Act of 2023, Arkansas Code § 14-1- 601 et seq., Arkansas Code § 23-119-101 et seq., or rules, orders, or any permit conditions of the commission.
   2. (B) Unless otherwise determined by the commission after notice and a hearing, a regulated entity shall not be compelled by the commission to abate violations of the Arkansas law, rules, or orders or any permit conditions of the commission in the absence of the issuance of an underlying Notice of Violation.

5. (2) The Notice of Violation shall be in writing and contain:

   1. (A) A statement regarding the nature of the violation, including a citation to the specific section of the Arkansas Data Centers Act of 2023, Arkansas Code § 14-1-601 et seq., or Arkansas Code § 23-119-101 et seq., or rules, orders, or any permit conditions of the commission alleged to have been violated;
   2. (B) The suggested action needed to abate the violation, including any appropriate remedial measures to prevent future violations;
   3. (C) The time within which the violation shall be abated; and
   4. (D) A notice of any civil penalties, as specified in subsection (e) of this section, that the director will request the commission issue.

6. (3) The Notice of Violation may include a cessation requirement, or a separate cessation order may be issued for the following types of violations:

   1. (A) Operating a digital asset mining business or mining facility without a commission permit;
   2. (B) Improper disposal or discharge of cooling fluids; or
   3. (C) Failure to comply with the violation abatement timeframe established in a Notice of Violation.

7. (4) The director, or his or her designee, shall:

   1. (A) Send via certified mail the Notice of Violation to the regulated entity charged with the violation or violations or the regulated entity’s representative as reported on the commission organization report; or
   2. (B) Provide personal delivery of a copy of the notice to the regulated entity or the regulated entity’s representative.

8. (5)

   1. (A) The regulated entity charged with the violation or violations may request a director’s review of the Notice of Violation and provide the director, in writing, any information in mitigation of the violation or violations within thirty (30) calendar days of the mailing or personal delivery of the original Notice of Violation, unless a shorter time period is specified in the Notice of Violation for instances where there is a condition that creates an imminent danger to the health or safety of the public or threatens significant environmental harm or damage to property.
   2. (B) Such written information may include a proposed alternative to the required action needed to abate the violation or violations.
   3. (C) Upon timely receipt of such documentation from the regulated entity, the director shall conduct a review.

9. (6) During the review, the director may consider any of the following criteria in reaching a final director’s decision regarding the violation or violations:

   1. (A) The regulated entity’s history of previous violations, including violations at other locations and under other permits;
   2. (B) The seriousness of the violation, including any irreparable harm to public health and safety, the environment, or damage to property;
   3. (C) The degree of culpability of the regulated entity; and
   4. (D) The existence of any additional conditions or factors in aggravation or mitigation of the violation, including information provided by the regulated entity.

10. (7) Upon completion of the review, the director shall issue a final director’s decision to:

    1. (A) Affirm the violation;
    2. (B) Vacate the violation;
    3. (C) Amend or modify the type of violation and abatement requirements specified in the violation;
    4. (D) Establish probationary or permanent modification or conditions to any underlying permit related to the violation, which may include special monitoring or reporting requirements; or
    5. (E) Enter into a settlement agreement to extend the amount of time provided to complete remedial actions necessary to abate the violations or reduce the amount of the requested assessed civil penalty.

11. (8)

    1. (A) The final director’s decision shall be delivered to the regulated entity, or the regulated entity’s representative as reported on the commission organization report, via first class mail.
    2. (B) The final director’s decision may be appealed to the commission by filing an application in accordance with 15 CAR §§ 275-101 and 275-102 and other applicable hearing procedures.
    3. (C) The director must receive the application to appeal the final director’s decision within thirty (30) days of the mailing of the final director’s decision.
    4. (D) The application shall state the reason for the appeal, and the application shall be scheduled to be heard by the commission in accordance with 15 CAR §§ 275-101 and 275-102 and other applicable hearing procedures.
12. (9) A Notice of Violation for which a director’s review has not been requested shall become a final administrative decision of the commission thirty (30) days following the mailing of the Notice of Violation.
13. (10) A final director’s decision not appealed to the commission within thirty (30) days of the mailing of the final director’s decision shall become a final administrative decision of the commission.

14. (11)

    1. (A) All violations specified in a Notice of Violation that have become a final administrative decision in accordance with subdivision (c)(9) of this section, included in a final director’s decision that has become a final administrative decision of the commission in accordance with subdivision (c)(10) of this section, or included in an order of the commission, shall be fully abated within the time frame specified in the original Notice of Violation, final director’s decision, or order of the commission.

    2. (B) No further permits or authorization shall be issued to the regulated entity until all outstanding violations specified in a Notice of Violation that has become a final administrative decision in accordance with subdivision (c)(9) of this section, a final director’s decision that has become a final administrative decision of the commission in accordance with subdivision (c)(10) of this section, or by order of the commission have been fully abated.

       1. (d) In addition to the issuance of a Notice of Violation, the director and the commission may initiate investigative or enforcement proceedings upon receipt of a complaint by:
15. (1) Initiating a referral to the Attorney General for enforcement in accordance with Arkansas Code § 14-1-606;
16. (2) Making reasonable investigations and inspections;
17. (3) Examining properties, leases, papers, books, and records;
18. (4) Holding hearings;
19. (5) Requiring the keeping of records and the making of reports;
20. (6) Taking such action as may be reasonably necessary to enforce state law and commission rules, including compliance with the Arkansas Data Centers Act of 2023, Arkansas Code § 14-1-601 et seq., and Arkansas Code § 23-119-101 et seq.

(e) Civil penalties.

1. (1)

   1. (A) The director shall determine whether to request the assessment of civil penalties based on failure to comply with the applicable abatement requirements for violations issued under subdivisions (e)(2) and (3) of this section.
   2. (B) If a civil penalty is requested by the director, the regulated entity may voluntarily agree to the assessment and pay the civil penalty as requested or modified by the director, or the director or his or her designee may file an application, in accordance with 15 CAR §§ 275-101 and 275-102 and other applicable hearing procedures, to request the issuance of the requested civil penalty by the commission.
   3. (C) The maximum amount of the director’s requested civil penalty shall be computed as provided in subdivisions (e)(2), (3), and (4) of this section.
   4. (D) However, the commission is not bound by the director’s request or the amounts provided below and may impose civil penalties of up to five thousand dollars ($5,000) per day per violation as permitted by statute.

2. (2)

   1. (A) Administrative violations are defined as failure to file required reports and forms and to provide required notices.
   2. (B) The director may request the assessment of up to two thousand five hundred dollars ($2,500) per administrative violation, plus up to five hundred dollars ($500) per day for each day the violation remains unabated after the specified compliance date.

   3. (C)

      1. (i) The per-administrative-violation civil penalty request shall be calculated as follows:

(b) (b) One (1) previous violation of the same rule, one thousand five hundred dollars ($1,500); and

1. (c) (c) Two (2) or more previous violations of the same rule, two thousand five hundred dollars ($2,500).

   1. (ii) The time frame used for determining previous violations shall be limited to the regulated entity’s violation record for the preceding five (5) full calendar years before the issuance of the violation.

2. (3)

   1. (A) Operating violations are defined as failure to maintain compliance with the commission’s digital asset mining rules.

   2. (B) These violations include, but are not limited to, regulated activities such as:

      1. (i) Operating a mining facility without the proper permit or transfer of ownership; and
      2. (ii) Failure to maintain a mining facility in compliance with this subpart.
   3. (C) The director may request the assessment of up to five thousand dollars ($5,000) per operating violation plus up to two thousand five hundred dollars ($2,500) per day for each day the violation remains unabated after the specified compliance date, with the exception that operating violations as specified in statute are limited to a maximum of five thousand dollars ($5,000) per day per operating violation.

   4. (D)

      1. (i) The per-operating-violation civil penalty shall be calculated as follows:

(b) (b) One (1) previous violation of the same rule, five thousand dollars ($5,000).

1. (ii) The time frame used for determining previous violations shall be limited to the regulated entity’s violation record for the preceding five (5) full calendar years before the issuance of the violation.