New York Court Rescinds Approval of Fracked Gas Power Plant Sale to Cryptocurrency Mining Company in North Tonawanda

November 14, 2024

New York Court Rescinds Approval of Fracked Gas Power Plant Sale to Cryptocurrency Mining Company in North Tonawanda

Victory

-

Court finds that the NYS-PSC's approval of the sale of the Digihost/Fortistar power plant did not comply with New York's Climate Law; The PSC now required to analyze the transaction under the CLCPA

Contacts

Nydia Gutiérrez, [email protected], 202-302-7531

North Tonawanda, NY-

Today, the Supreme Court of Albany County vacated a decision to approve the transfer of ownership of Fortistar North Tonawanda, a 55-megawatt fracked gas power plant, to Digihost International, which uses the plant to power its cryptocurrency mining operation on site. The Court ordered the NYS-Public Service Commission (PSC) to analyze the transfer under New York's Climate Law, the Climate Leadership and Community Protection Act (CLCPA).

The court faulted the agency's failure to follow CLCPA Section 7(2) which requires New York State agencies to consider whether agency decisions are inconsistent with or interfere with the statewide greenhouse gas emission limits set by the law, and to mitigate the damage from decisions that result in greenhouse gas emissions. Although the PSC acknowledged that there were serious environmental issues with allowing a cryptocurrency mining company to purchase a gas plant with the plan to run it as a 24/7 power source for a bitcoin mine, the agency refused to consider them. The Opinion orders the PSC to review the transaction again - this time applying the CLCPA.

While today's decision does not undo Digihost's purchase of the power plant, it sends the approval back to the PSC, which now must consider how to either mitigate or undo the effect of its failure to consider the emissions consequences of the purchase.

"This is welcome news - our state agencies must work with communities and labor to meet the goals of the CLCPA and ensure a Just Transition. The absurdity of allowing the sale of a fossil fuel-based power plant to be used for wasteful operations like cryptocurrency mining which offers little if any benefit to the community or to our job force does not align with anyone's best interest," said Chris Murawski, executive director of Clean Air Coalition of Western New York.

"The Public Service Commission is not exempt from New York's landmark climate law. All agencies are required to consider how their decisions contribute to the climate crisis and the plight of disadvantaged communities already impacted by regressive energy policy," said Roger Downs, conservation director for the Sierra Club Atlantic Chapter. "We applaud the court for ordering the PSC to reevaluate their role in reviving an energy-hungry cryptomine in a community already disproportionately burdened by power plant pollution. When the PSC fails to carefully consider the environmental impacts of its decisions it violates the intent of the climate law and the justice it seeks to advance. We hope this ruling is an appropriate wake-up call for the PSC to do better."

On January 13, 2023, the Clean Air Coalition of Western New York and Sierra Club, represented by Earthjustice, filed suit with the Supreme Court of Albany County citing violations of New York's Climate Leadership and Community Protection Act (CLCPA) in the approval of a fossil fuel-burning Proof-of-Work (PoW) cryptocurrency mining operation. The lawsuit challenges the New York Public Service Commission (PSC)'s approval to transfer ownership of the occasionally utilized power plant in Western NY to a 24/7 Crypto mining operation. The lawsuit seeks to ensure that the PSC follows the legal obligations established by the CLCPA.

On September 15, 2022, the PSC approved the sale of Fortistar North Tonawanda, a 55-megawatt fracked gas power plant located in the City of North Tonawanda, NY to Digihost International, a Canadian cryptocurrency mining company. Over the five years preceding the sale, Fortistar only operated between 10 and 74 days per year, emitting relatively small amounts of carbon dioxide (CO₂) and other harmful air pollutants. With the approval by the PSC, Digihost was able to ramp up its operations to 24/7/365, increasing its greenhouse gas emissions up to 3,500% even as the rest of New York works to drastically reduce its greenhouse gas emissions as mandated by NY's Climate Law. Communities surrounding the gas plant have been designated as "disadvantaged communities" under state law and include census tracts that the state has assessed as bearing an environmental burden greater than that borne by 90% of the state. The increase in operations at Fortistar resulted in higher levels of dangerous local air pollutants that cause asthma, cancer, and premature death, harming an already environmentally overburdened community in violation of the CLCPA.

"This is not only a victory for the North Tonawanda community, but also a significant win for New York's climate law. Today's ruling confirms that every state agency and official must fully consider and uphold the CLCPA in all its decisions, safeguarding both our climate and the well-being of the public. The court's decision reinforces that New York must prioritize the health and safety of its communities, setting a critical precedent for environmental justice and climate action," said Dror Ladin, senior attorney at Earthjustice.

"The CLCPA was championed and passed into law not only to protect our climate and environment but also to shield vulnerable New Yorkers from environmental harm. Today, the New York Supreme Court stood up for us. For years, North Tonawanda has suffered from increased emissions and constant high noise levels from the Fortistar plant, which is now used by Digihost for bitcoin mining. This ruling ensures that the needs of our community are prioritized and that our climate laws are upheld." said Deborah Gondek, Chair of North Tonawanda's Climate Smart Communities Task Force.

Background

Proof-of-work cryptocurrency mining consumes vast amounts of energy as millions of computers race to solve a complex algorithm and win digital currency. After China banned proof-of-work cryptocurrency mining in 2021, citing, among other things, the environmental threats that the energy-intensive process poses to meeting emissions reduction goals, cryptomining increased significantly in the United States. The U.S. now hosts between 38% and 50% of the world's energy-intensive proof-of-work cryptocurrency mining operations. While these facilities of automated machines create few new jobs, they create climate, air, water, and electronic waste pollution, and raise costs for others.

The New York Times has published several in-depth exposés about the negative impacts of proof-of-work Bitcoin mining including energy use, noise pollution, and national security. In September 2022, the White House sounded the alarm about cryptocurrency mining - the Office of Science and Technology Policy released a report about the industry's climate threats and the need for regulation. Earthjustice and the Sierra Club released a Guidebook as well, with state-specific follow-ups for cryptocurrency mining in Pennsylvania, Texas, Kentucky, and Indiana, and calls for additional transparency and accountability.

Additional Resources

• The Environmental Impacts of Cryptomining
• About the Clean Energy Program
• About the Northeast Office

About Earthjustice

Earthjustice is the premier nonprofit environmental law organization. We wield the power of law and the strength of partnership to protect people's health, to preserve magnificent places and wildlife, to advance clean energy, and to combat climate change. We are here because the earth needs a good lawyer.