A07389 Summary:

BILL NOA07389B
 
SAME ASNo Same As
 
SPONSORKelles
 
COSPNSRLupardo, Englebright, Thiele, Glick, Magnarelli, Epstein, Burdick, Steck, Rivera JD, Clark, Niou, Fahy, Wallace, Barrett, Carroll, Rosenthal L, Seawright, Gallagher, Gonzalez-Rojas, De La Rosa, Burke, Pichardo, Stirpe, Mamdani, Simon, Griffin, Anderson, McMahon, Mitaynes, Otis, McDonald, Gottfried, Galef, Dinowitz, Pretlow
 
MLTSPNSR
 
Add 19-0329, En Con L
 
Establishes a moratorium on consolidated operations that use proof-of-work authentication methods to validate blockchain transactions; provides that such operations shall be subject to a full generic environmental impact statement review.
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A07389 Actions:

BILL NOA07389B
 
05/06/2021referred to banks
05/20/2021reference changed to environmental conservation
06/04/2021amend (t) and recommit to environmental conservation
06/04/2021print number 7389a
10/22/2021amend and recommit to environmental conservation
10/22/2021print number 7389b
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A07389 Committee Votes:

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A07389 Floor Votes:

There are no votes for this bill in this legislative session.
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A07389 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7389B
 
SPONSOR: Kelles
  TITLE OF BILL: An act to amend the environmental conservation law, in relation to establishing a moratorium on consolidated operations that use proof-of- work authentication methods to validate blockchain transactions; and to require a comprehensive generic environmental impact statement review   PURPOSE OR GENERAL IDEA OF BILL: To establish a three year moratorium on consolidated operations based on proof-of-work transaction authentication methods and require completion of a comprehensive generic environmental impact study of the consol- idated operations using proof-of-work methodology in the State of New York in the context of the Climate Leadership and Community Protection Act (CLCPA) goals established in statute in 2019.   SUMMARY OF PROVISIONS: Section 1 declares the legislative findings. Section 2 places a three year moratorium on consolidated operations of proof-of-work based transaction validation methods. Section 3 requires completion of a comprehensive generic environmental impact statement by the New York State Department of Environmental Conservation. Section 4 requires one-hundred and twenty days of public comment on the environmental impact statement and the holding of public hearings in eight regions across the state prior to final issuance. Section 5 requires issuance of a final generic environmental impact statement after close of the public comment and public hearing period and no later than two years after the effective date of this act. Section 6 provides definitions. Section 7 provides the effective date.   JUSTIFICATION: Block chain technology is an innovative technology that allows for the recording and efficient transfer of information: The information in each block is authenticated by users of the system in a transparent, decen- tralized, and democratic manner. Each block has a unique identifier that encodes the information of the block including code for the previous information block from which the new information block was built creat- ing a chain of information exchange known as a block chain. Proof-of- Work is a unique methodology that has been used since 2009 to create and authenticate new blocks on a block chain. There are over 16 different methodologies of authenticating information within a block. However, of these varied methods there is only one, called Proof-of-Work, that, by design, uses a substantial amount of computational power to perform and thus uses a uniquely exorbitant amount of energy. The Proof-of-Work authentication method was designed to require individuals or companies to solve highly complex mathematical equations in order to authenticate a transaction and earn valuable credit. The more equations are solved by users the more complex the equations get. By design, there is no soft- ware that can be created that will be able to solve the equations better than brute force guesswork so the only way to get an advantage and solve the equations faster is for an individual or company to increase their computational power. This has led to the expansion of large data centers consisting of thousands of high power computers that run around the clock to solve as many equations as possible and authenticate the most blocks. There are an increasing number.of data centers in New York performing Proof-of-Work authentication of different blockchains with some being built or modified to exclusively perform Proof-of-Work authentications. Studies show that the magnitude of the computer processing output required to authenticate a single block uses as much energy as an aver- age American household uses in a month. The annual global energy use for PoW authentication is equivalent to that of the country of Sweden and exceeds the energy consumption of all the global activity of major tech companies like Amazon, Google, and Facebook combined. The added energy usage and corresponding increased greenhouse gas emis- sions from these new data centers performing Proof-of-Work authentica- tions in New York could hinder or prevent compliance with the critical state carbon emissions goals put in law in the Climate Leadership and Community Protection Act of 2019. Under this law, statewide greenhouse gas emissions must .be reduced eighty-five percent by 2050 and the state economy must have net zero emissions across all sectors. We must determine whether growth of the Proof-of-Work authentication industry is incompatible with our greenhouse gas emission targets estab- lished in law, or has other significant detrimental impacts to our air, water, or public health. By requiring a statewide generic environmental impact statement, this crucial information about the industry's impact upon our climate law, and associated water, air and wildlife impacts, will be understood and can guide any potential future policy related to industry regulation. Climate change threatens the health, welfare, and economy of the state with increasingly severe and widespread impacts to our communities due to flooding, sea level rise, heat waves, coastal erosion, erratic and unpredictable weather patterns, shifting climatic zones, loss of wild- life, increased harmful algal blooms and invasive species, and increased risk of disease. These consequences disproportionately impact environ- mental justice communities making the need for this comprehensive assessment both an environmental issue as well as a social justice issue. We must not go backwards on our commitment, in law, to prevent these disastrous impacts to the residents of New York.   LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: NONE   EFFECTIVE DATE: IMMEDIATELY
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A07389 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         7389--B
 
                               2021-2022 Regular Sessions
 
                   IN ASSEMBLY
 
                                       May 6, 2021
                                       ___________
 
        Introduced  by  M.  of  A.  KELLES, LUPARDO, ENGLEBRIGHT, THIELE, GLICK,
          MAGNARELLI, EPSTEIN, BURDICK, STECK, J. D. RIVERA, CLARK, NIOU,  FAHY,
          WALLACE,  BARRETT, CARROLL, L. ROSENTHAL, SEAWRIGHT, GALLAGHER, GONZA-
          LEZ-ROJAS, DE LA ROSA, BURKE, STIRPE, MAMDANI, SIMON, GRIFFIN,  ANDER-
          SON,  McMAHON,  MITAYNES,  OTIS, McDONALD, GOTTFRIED, GALEF, DINOWITZ,
          PRETLOW -- read once and referred to the Committee on Banks --  refer-
          ence changed to the Committee on Environmental Conservation -- commit-
          tee  discharged, bill amended, ordered reprinted as amended and recom-
          mitted to said committee -- again reported from  said  committee  with
          amendments,  ordered  reprinted  as  amended  and  recommitted to said
          committee
 
        AN ACT to amend the  environmental  conservation  law,  in  relation  to
          establishing  a  moratorium on consolidated operations that use proof-
          of-work authentication methods to  validate  blockchain  transactions;
          and  to require a comprehensive generic environmental impact statement
          review
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.    Legislative  findings. The legislature hereby finds and
     2  declares that:
     3    (a) Climate change threatens the health, welfare, and economy  of  the
     4  state with increasingly severe and widespread impacts to our communities
     5  due  to  flooding,  sea level rise, heat waves, coastal erosion, erratic
     6  and unpredictable weather patterns, shifting  climatic  zones,  loss  of
     7  wildlife,  increased  harmful  algal  blooms  and  invasive species, and
     8  increased risk of disease, in part, which  leads  directly  to  loss  of
     9  life,  property  damage  and  reduction in value, ecological damage, and
    10  increased infrastructure costs;
    11    (b) It is the policy of the State of New York to conserve, improve and
    12  protect its natural resources and environment and to prevent, abate  and
    13  control  water,  land and air pollution, in order to enhance the health,
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11081-14-1

        A. 7389--B                          2
 
     1  safety and welfare of the people of the state and their overall economic
     2  and social well-being;
     3    (c)  To mitigate the current and future effects of climate change, the
     4  State of New York  implemented  the  Climate  Leadership  and  Community
     5  Protection  Act,  requiring  that  statewide greenhouse gas emissions be
     6  reduced eighty-five percent by 2050 and that  the  state  has  net  zero
     7  emissions in all sectors of the economy by that time;
     8    (d) Data centers running proof-of-work authentication methods to vali-
     9  date  blockchain  transactions are an expanding industry in the State of
    10  New York, often, but not exclusively, located in  retired  or  converted
    11  fossil fuel power stations, including in dormant peaker plants;
    12    (e)  The magnitude of computer processing output required to authenti-
    13  cate a single block of a blockchain with a proof-of-work method uses  as
    14  much energy as an average American household uses in a month. The annual
    15  global energy use for proof-of-work authentication is equivalent to that
    16  of  the  country of Sweden and exceeds the energy consumption of all the
    17  global activity of major tech companies like Amazon, Google,  and  Face-
    18  book combined;
    19    (f)  The  continued  and  expanded  operation  of data centers running
    20  proof-of-work authentication methods to validate blockchain transactions
    21  will greatly increase the amount of energy usage in  the  State  of  New
    22  York,  and  it  is  reasonable  to believe the associated greenhouse gas
    23  emissions will irreparably harm compliance with the  Climate  Leadership
    24  and Community Protection Act in contravention of state law;
    25    (g)  Consolidated  operations  that  use  proof-of-work authentication
    26  methods to validate blockchain transactions often use large  amounts  of
    27  water,  which,  when  discharged,  can raise the temperature of adjacent
    28  water bodies to levels that harm aquatic life,  including  fish  species
    29  that  are  important  for local tourism, and may increase the amount and
    30  frequency of harmful algal blooms on lakes, ponds and streams; and
    31    (h) Many fossil fuel power plants have been shut down across the state
    32  in recent years due to  reduced  energy  demand,  improved  transmission
    33  capacity  and non-economic carbon-based fuel sources. Consolidated oper-
    34  ations that use proof-of-work authentication methods to validate  block-
    35  chain  transactions  are bringing these plants back online, with behind-
    36  the-meter operations  that  greatly  exceed  the  previous  intermittent
    37  usage,  and  can cause significant negative impacts to air quality espe-
    38  cially in environmental justice communities.
    39    § 2. The environmental conservation law is amended  by  adding  a  new
    40  section 19-0329 to read as follows:
    41  § 19-0329. Moratorium on permit issuance and renewal.
    42    1. For the period commencing on the effective date of this section and
    43  ending  three  years after such date, the department shall not approve a
    44  new application for or issue a new permit pursuant to this  article  for
    45  an  electric  generating  facility that utilizes a carbon-based fuel and
    46  that provides, in whole or in  part,  behind-the-meter  electric  energy
    47  consumed  or  utilized by a facility that uses proof-of-work authentica-
    48  tion methods to validate blockchain transactions.
    49    2. For the period commencing on the effective date of  this    section
    50  and ending three years after such date, the department shall not approve
    51  an  application  to  renew  an existing permit or issue a renewal permit
    52  pursuant to this  article  for  an  electric  generating  facility  that
    53  utilizes  a  carbon-based  fuel  and that provides, in whole or in part,
    54  behind-the-meter electric energy consumed or utilized by a facility that
    55  uses proof-of-work authentication methods to validate blockchain  trans-
    56  actions  if  the  renewal application seeks to increase or will allow or

        A. 7389--B                          3

     1  result in an increase in the  amount  of  electric  energy  consumed  or
     2  utilized by a facility that uses proof-of-work authentication methods to
     3  validate blockchain transactions.
     4    §  3.  Generic  environmental  impact statement. (a) The department of
     5  environmental conservation shall prepare, pursuant to article  eight  of
     6  the  environmental  conservation  law,  a  generic  environmental impact
     7  statement on statewide consolidated operations  that  use  proof-of-work
     8  authentication methods to validate blockchain transactions.
     9    (b)  The  generic  environmental  impact statement shall address, at a
    10  minimum:
    11    (i) the number and location of existing consolidated  operations  that
    12  use  proof-of-work  authentication methods to validate blockchain trans-
    13  actions in the state;
    14    (ii) the amount of electric energy consumed by each such operation;
    15    (iii) the sources of electric energy consumed by each  such  operation
    16  and the type of fuel used by each energy source;
    17    (iv) the amount of greenhouse gas emissions and co-pollutants released
    18  by  each  energy  source  attributable  to  providing electric energy to
    19  consolidated operations that use proof-of-work authentication methods to
    20  validate blockchain transactions;
    21    (v) the anticipated increase, if any, of consolidated operations  that
    22  use  proof-of-work  authentication methods to validate blockchain trans-
    23  actions in the state and the anticipated expansion, if any, of  existing
    24  operations;
    25    (vi)  the  potential impacts of electric energy consumption by consol-
    26  idated operations that use proof-of-work authentication methods to vali-
    27  date blockchain transactions on the state's ability to meet  the  green-
    28  house  gas emission reduction goals set forth in article seventy-five of
    29  the environmental conservation law;
    30    (vii) the water quality and other ecological impacts, if any, of cool-
    31  ing water use by consolidated operations that use proof-of-work  authen-
    32  tication methods to validate blockchain transactions;
    33    (viii) the potential public health impacts, if any, due to reduced air
    34  and  water  quality in communities near consolidated operations that use
    35  proof-of-work  authentication  methods  to  validate  blockchain  trans-
    36  actions;
    37    (ix)  the  potential  statewide  public  health  impacts, if any, from
    38  increased greenhouse gas emissions released  by  statewide  consolidated
    39  operations  that  use  proof-of-work  authentication methods to validate
    40  blockchain transactions; and
    41    (x) the social and economic costs and benefits,  if  any,  of  consol-
    42  idated operations that use proof-of-work authentication methods to vali-
    43  date blockchain transactions.
    44    § 4. Any generic environmental impact statement draft shall be subject
    45  to  120 days of public comment from the date of issuance. The department
    46  of environmental conservation shall conduct at least one public  hearing
    47  in  each  of  the  following regions of the state: western New York, the
    48  finger lakes, the southern tier, central New York,  the  Mohawk  valley,
    49  the north country, the capital region/Hudson valley, and the City of New
    50  York/Long  Island,  as  defined  by  the Empire State Development Corpo-
    51  ration.
    52    § 5. The department shall issue a final generic  environmental  impact
    53  statement  after  close  of the public comment and public hearing period
    54  and no later than two years after the effective date of this act.
    55    § 6. For the purposes of this act:

        A. 7389--B                          4
 
     1    (a) "proof-of-work" shall mean a consensus algorithm in  a  blockchain
     2  network  used  to  confirm  and  produce  new blocks to the chain, where
     3  competitors complete new blocks and  where  the  algorithm  changes  the
     4  complexity  of  the  competition  in a manner that is designed to and/or
     5  results in increased energy usage for each competitor when the complexi-
     6  ty is increased; and
     7    (b) "blockchain" shall mean a digital ledger in which transactions are
     8  recorded chronologically and publicly.
     9    § 7. This act shall take effect immediately.
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