BrightRidge, mine owner make new dismissal motion saying BrightRidge not subject to county regulations
JONESBOROUGH, Tenn. (WJHL) — The final outcome of a trial determining the fate of a Washington County, Tennessee Bitcoin mine may come by mid-July, while the defendants in the case have filed a new motion for dismissal and supporting brief.
Electric utility BrightRidge and Red Dog Technologies, the mine’s owner, claimed in the new brief that BrightRidge isn’t subject to local zoning laws or permitting requirements because it is “a political subdivision of the state.” If found valid, that claim would make moot the county’s case to shut down the noise-producing mine in rural Limestone.
County commissioners learned Monday that BrightRidge and Red Dog have dropped their appeal of Chancellor John Rambo’s earlier ruling that the mine violates the county’s zoning rules.
The tactical change by the defendants, Wilkinson said, “does not change the legal ruling … the ruling was favorable to the county that the operation of a Bitcoin mine is inconsistent with the zoning resolution.”
The now-dropped appeal had delayed a second portion of the trial, in which BrightRidge and Red Dog would have argued that even if the mine violated zoning rules and didn’t have a permit, the judge shouldn’t allow its shutdown.
Wilkinson told commissioners she believed the county has a strong position against that argument.
“It’s an affirmative defense where they say, ‘even if that’s so you don’t get to enforce your zoning because of conduct of the county,’ what they would attribute to the county.”
The full trial is set for July 11-13 in Washington County Chancery Court.
“The good news is if someone was going to raise a legal argument on appeal, it’s always good to hear it sooner than later … rather than have the appeal go up and then come down and then have the trial,” Wilkinson said.
It’s now assured more than a year will have passed from when the mine’s rural neighbors began to complain about excessive noise in late April and early May of 2021. Red Dog and BrightRidge responded to those complaints last spring and summer with efforts to mitigate noise from fans that help cool high-powered computers. Those computers perform complex mathematical processes to both “mine” for new Bitcoins and verify Bitcoin transactions.
Wilkinson declined to comment Tuesday when asked about the county’s position on the new motion for dismissal. She said the county will continue its approach at trial.
“The county will still argue the position that Red Dog operating a Bitcoin mine without a permit, in property that is not zoned to allow that, is unjust enrichment of both Red Dog and BrightRidge,” Wilkinson said.
She said a resolution without trial involving a voluntary cessation of operations would be her preference and would save taxpayers money. But Wilkinson added that Red Dog — which just added Nashville-based attorney William Helou to the case — makes an out-of-court settlement unlikely.
“There will be hearings that you might hear about, those are set for May 11,” Wilkinson said. “I do expect that as a result of the additional layer of counsel that there will be a considerable increase in the briefing and the time spent in the trial court before there’s an appeal.”
Enter Johnson City Energy Authority
The first evidence of that came in Monday night’s brief. It said Johnson City Energy Authority (JCEA) (BrightRidge’s legal name), as a political subdivision of the state, is exempt from any local regulations unless that authority is mentioned in a statute or the rule’s application “is necessarily implied.”
The brief says the Municipal Energy Authority Act, which allowed for the creation of JCEA, gave BrightRidge “broad powers in relation to the acquisition of, disposal of, and improvements upon real property.” That would presumably include the property on Bailey Bridge Road that it leases to Red Dog adjacent to a BrightRidge substation.
“BrightRidge is also given broad authority to run its system as it sees fit,” the brief continues. “Finally, there is no language in the Municipal Energy Authority Act that could be interpreted to expressly subject BrightRidge to Washington County’s zoning resolutions or permitting process.”
That’s a far cry from Wilkinson’s position. While it’s not asking for monetary damages against BrightRidge or Red Dog, “the county is saying it has a duty to citizens of Washington County to enforce its zoning resolution and that would be against any party that’s violating it.”
County Commissioner Phil Carriger asked Wilkinson if she knew how much money Red Dog was making from the mine. In a previously dismissed countersuit against Washington County, the company claimed it stood to lose $2 million a month in revenue if the mine were shut down.
“Estimates that I’ve heard, whether they’re accurate or not, put the earnings between $1 and $4 million a month,” Wilkinson said.
“We were prepared for trial on March 14, and we will be prepared for trial on July 11, and we will address whatever that is,” Wilkinson said referring to any arguments about the “county’s conduct.”
“In the meantime, I just always go back to the fact that there’s no permit to be operating out there and so we will continue to reach out and try to help our neighbors understand that the county would appreciate them adhering to the resolution and chancellor’s ruling.”