HOUSE MINORITY LEADER TIPPI MCCULLOUGH

Many were shocked last week when 15 of the 18 House Democrats declined to vote for resolutions that would have aggressively regulated crypto mines. The Democratic group represented the decisive votes that blocked four of the resolutions. It remains a live issue, as Sen. Bryan King (R-Green Forest), the co-sponsor, is having discussions about expunging the votes and trying again.

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“Mining” has nothing to do with mines; it’s the process by which bitcoin confirms transactions and creates new bitcoin, using a network of high-powered computers. Unfortunately, this big-money industry is noisy and terrible for the environment. Crypto mines are a major nuisance for the rural communities where they’ve popped up.

This should be bread-and-butter stuff for Democrats: regulation of big corporations with negative externalities; environmental regulation involving energy, climate change, and water; helping out rural communities battling against giant companies with lobbying muscle.

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So why didn’t Democrats back proposals that would have enacted maximal regulation on the crypto mining industry?

House Minority Leader Tippi McCullough told me that there was no consensus among Democrats about how to handle the crypto resolutions, with each member voting their own way for their own reasons. Her own vote, she said, was based on a principled objection to bringing up non-appropriation bills in a fiscal session.

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Fiscal sessions, which occur every other year, are generally only for passing budget-related bills; for a bill to be filed on a non-budget matter during the fiscal session, both the Senate and the House must approve a resolution to consider it by a two-thirds majority. Only then can a bill be filed, which then follows the normal process. The crypto issue was brought forward after a groundswell of complaints from rural communities in the aftermath of the disastrous Act 851 of 2023, a law that sharply limited the ability of cities and counties to regulate crypto mining.

“I do think this is a problem,” McCullough said of taking up non-fiscal matters during a fiscal session. “This has been kind of a crazy fiscal session. The audit thing came in and then we’ve also got the crypto mining stuff going on. It’s like the budget stuff has kind of been pushed off over to the side.”

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A few other members also took this principled stand, McCullough said.

Rep. Andrew Collins (D-Little Rock), for example, released a statement voicing the same view. He didn’t necessarily disagree with the proposals on the merits, he said. “The question before us was whether to open the fiscal session to these substantive issues,” Collins said in his statement. “I didn’t favor that.”

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McCullough and Collins voted present (same as a “No”) on all nine of the non-fiscal resolutions before them on Wednesday: Six resolutions co-sponsored by King, which take the most aggressive approach to curtail bad practices from crypto mines, failed to get two-thirds approval; two other resolutions — those more favored by the crypto lobby — that regulate crypto mines and address some of the problems with Act 851 passed; another resolution regarding state employee pay also got the needed two-thirds approval to move on.

Other Democrats voted present or “No” only on the King bills, but voted “Yea” on the other two crypto bills. Not everyone in the caucus agreed with McCullough’s thought process.

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McCullough said that Democratic members all had their own reasons. Some favored one resolution over another. Members in general had been given the impression that the Republican leadership’s plan was to coalesce around one or two bills with the sponsors of Act 851 leading the charge, and a few Democratic members may have simply been going along with that. Or, and here I am speculating, perhaps some simply had better working relationships with those sponsors than they did with King. Meanwhile three Democrats — Rep. Nicole Clowney (D-Fayetteville), Rep. Stephen Magie (D-Conway) and Rep. Vivian Flowers (D-Pine Bluff) — voted for all or most of King’s resolutions to advance.

McCullough objected to any notion that the 15 Democrats were voting as a block against King’s resolutions. “It was not an intentional block,” she said — it just happened that way.

She said that the caucus met early in the session and not much was said about the crypto bills when she brought them up. “There was no consensus,” she said, so each member simply did their own thing. “As Democrats, everybody thinks for themselves — everybody has their own districts and their own issues.”

“I know this is a huge issue to a lot of people,” she said. “I agree, if you’re living by one, you want it done.” She was sympathetic with the urgency these rural communities felt to do something as soon as possible, she said. But her preference would be to take the matter up in a special session. It’s far from clear that the governor would be willing to call a special session on this issue, but for McCullough that would be the only proper mechanism to do something before the regular session meets again next year.

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This is pretty harsh medicine for someone suffering from having a crypto mine in their community, and McCullough acknowledged that process arguments about legislative procedure are generally not very convincing to the public if there’s a problem impacting their lives and an opportunity to address it sooner rather than later.

This process principle also appears to be new. I pointed out that non-appropriation resolutions have been brought up in the past and Democrats, including McCullough and Collins, have voted for them. Here’s an example from 2022.

Collins said that his position was indeed new. “As things have gotten closer to straight substantive bills, I had to consider where I stood,” he said. “When the random resolutions were nearly fiscal in nature, it was a different thing.” McCullough also said the line for her was bills that were more substantive in nature.

McCullough said that another factor was that Democrats weren’t getting communication from constituents about this issue, since most Democrats represent urban districts where crypto mines generally haven’t shown up yet. McCullough and Collins are both in Little Rock.

“I did not get one email, not one call about this,” McCullough said, a sentiment echoed by Senate Minority Leader Greg Leding, a Fayetteville Democrat who took a similar stance on non-fiscal resolutions, but wound up approving one of King’s on a second vote once all the others got through on the Senate side and it became clear Democratic votes were needed.

Now that the two remaining resolutions are bills, McCullough said she would consider them on the merits. Something absolutely needs to be done to help these rural communities and undo the damage of Act 851, she said.

“I don’t think any of us think there’s issues that don’t have to be fixed,” she said. “I will look at the bills presented to me in committee or on the floor, and if they fix problems, I will support them.”

I asked this morning for her to clarify whether she would support the King resolutions if he tried to run them again and have not heard back.

Part of what made some liberal voters frustrated by the Democrats helping to kill the King resolutions was that Rep. David Ray (R-Maumelle) — a right-wing zealot who came up as an apparatchik for Tom Cotton, Tim Griffin and Americans for Prosperity — took to the House floor and gave a series of tendentious, inaccurate and passionate speeches against each King resolution. His flurry of speeches was heavy with crypto lobbyist talking points, and he raged against the more liberal-friendly aspects of King’s approach, such as heavier-duty regulation and fees. At one point, he said that if crypto mines were charged for using too much electricity on the grid, they wouldn’t be able to make a profit. Which kind of seems like an argument against the public giving carte blanche to crypto mines?

In one embarrassing moment, Rep. Tara Shepard (D-Little Rock) thanked Ray for his commentary. “You stated we should choose the best ones,” she said. “Out of the [eight] that are proposed here, which ones are the best?”

Ray advised her to vote down the King resolutions and vote for the two non-King resolutions. A number of other Democrats did just that (Shepard voted for one of Ray’s two recommendations and voted “Present” on King’s).

“David Ray has no influence on me or my fellow Democrats,” McCullough said.

Without commenting on the specific resolutions, McCullough acknowledged that the thrust of King’s proposals — tighter regulation on corporations, more intensive environmental protections — might have been helpful, and were generally the sort of thing Democrats might like. (Because of the rules, King’s material can’t be woven into the bills that did pass, so if they don’t get approval to be considered at all, they’re dead.)

“I’m not happy necessarily that at all of [Sen. King’s] bills didn’t get through,” McCullough said. “At the same time. … Our votes — nobody thinks [Democrats] can do anything until they think we can do something. And then all of a sudden, you know, it’s a big issue.”

She said that even though it turned out that the 15 Democrats were a deciding block in stopping King’s proposals, her stance on the underlying principle about fiscal sessions remained the same. She recognized that the rules themselves offer an option to hear such proposals with two-thirds approval, but felt that such a process would be abused if there were too many substantive proposals.

Collins put it this way: “This [two-thirds exception] mechanism is seldom used. Rather, the general understanding is that the fiscal session is for appropriations bills only, and substantive bills have to wait until the next regular session. That isn’t the system I would create, but it’s the system we work in.”

“This is one issue out of a million issues that we work on,” McCullough said. “There are lots of urgent issues. There are hungry kids, there are mothers that don’t get the care they need. Yes, this one is urgent and needs to be fixed. But it’s kind of like, now we’re going to pick and choose. Are we going do this every time we have a fiscal session from here on out?”

She added that she did not have enough time to analyze the crypto resolutions. She regretted voting for Act 851, she said, and felt that part of the problem last year was a rushed process. “I don’t want to feel rushed again,” she said.

The Democrats have also been criticized for not taking up the issue even prior to the session. Especially as Democrats struggle to connect with rural voters, this might have seemed like an issue where a progressive perspective on policy would connect with people struggling with crypto mines in their communities.

“I’ve heard it said that we should have taken this issue and made it ours and helped the rural folks,” McCullough said. “I don’t disagree with that. It’s just that these were constituent-led issues and those just happened to be in [Republican] districts.”

McCullough said that it’s possible some things could have been done differently but remains firm, in terms of her own vote, on the procedural principle.

“I think there’s a lot of Monday morning quarterbacking in politics,” she said. “I’m not infallible. Maybe this was an issue we should have picked up on and run with.”

The process organically wound up in the lap of lawmakers like King because of rural voters lodging complaints in their districts, she said. “I guess there was never that vision of, ‘hey, this is a great rural issue that we could pick up and that might help us with those voters.’ It’s certainly possible.”

On the Senate side, Leding, the minority leader, said, “This was something that affected largely rural areas. I find it hard to believe that Democrats somehow missed an incredible opportunity to advocate on behalf of rural Arkansans. To me, defending public schools, defending rural hospitals, defending libraries — that’s the stuff that’s gonna have far broader appeal and more impact to the voters that we need.”

Leding said that the principle against voting for non-fiscal legislation was a good one, though he admitted that he was not wholly inflexible on the point. “If there was some sort of urgent issue — particularly that was important to my constituents — yeah, I would take it on its face. But I think it’s smart for the minority to hold the default position that we only do this under extreme circumstances.”

“We’re still pretty young as far as being in a minority,” McCullough said. “So we’re still figuring out ways to navigate. But I’ll just tell you this. Nobody works harder, nobody cares more, nobody studies harder than this Democratic caucus.”