Judge dismisses lawsuit against North Tonawanda crypto plant, but calls on owners to keep noise down

State Supreme Court Justice Frank A. Sedita III ruled that the plaintiffs – the Sierra Club and three North Tonawanda residents – didn't have standing to sue, and even if they did, the lawsuit was filed well after a deadline set in state law.

"Because I sit as a court of law, I must follow the law," Sedita said.

But Sedita did offer advice to Digihost, a Canadian cryptocurrency company set up on the front lawn of the Fortistar natural gas-burning power plant at 1070 Erie Ave.

"It would be a good idea to reduce the noise," Sedita told attorneys for the companies. "That would be a decent thing to do."

Last week, residents near the plant complained about noise from the operations in shipping containers that contain the computers. Mayor Austin J. Tylec and the city's Building Inspection Department determined that the noise came from outdoor tests of some of the Digihost equipment.

Digihost made a deal last year to buy the power plant for $3.5 million, planning to use its electricity output to power the stacks of computers it needs to carry out the complex mathematical calculations needed to provide security for cryptocurrency investments – a process called "data mining."

"Digihost remains focused on transparency and cooperation with all stakeholders regarding our project at the Fortistar power plant in North Tonawanda, and is always ready to work with elected officials and their constituents to ensure any concerns are addressed," Alec Amar, Digihost president and director, said in an emailed statement. "We acted swiftly in mitigating the noise issue and will continue to monitor its impact on the surrounding community."  

However, the state Public Service Commission has yet to vote on accepting the plant sale.

Opponents of cryptocurrency mining say that the data mining process uses massive amounts of electricity, leading to increased emissions of greenhouse gases from power plants in violation of the state's environmental goals, set in a law passed two years ago.

During Wednesday's court arguments, Assistant City Attorney Nicholas B. Robinson revealed that since court papers in the lawsuit were filed, the Building Inspection Department has issued Digihost a certificate of occupancy and all other necessary permits.

Those arguments pertained to the statute of limitations and whether the plaintiffs had the right to sue.

The timing issue wasn't complicated. Sedita said state law allows 30 days to file suit to overturn a ruling by a city planning board.

North Tonawanda's board approved the Digihost site plan on Sept. 8, and the lawsuit wasn't filed until 54 days later, on Nov. 1.

Richard J. Lippes, attorney for the plaintiffs, contended another state law offers a four-month window.

But William V. Rossi, one of the attorneys for Digihost and Fortistar, said that only applies if there's no other law setting a shorter window for a particular type of lawsuit.

"The court finds this matter was untimely filed," Sedita ruled.

Sedita also said the three residents and the Sierra Club didn't establish "standing" – a legal term meaning that someone is harmed enough by a particular action that they have the right to challenge it in court.

Sedita said attorneys normally try to establish that by filing affidavits from the plaintiffs detailing the harm that befell them. But Lippes didn't do that, merely writing in his complaint that the three residents live "nearby" the power plant.

Lippes said none of them live within 1,000 feet of the plant, and Rossi said the power plant has been operating with a state permit for the past 30 years, the same as it is now.

"Allegations of harm must not be conclusory or speculative," Sedita said. In legal terms, a conclusory allegation is one made without supporting evidence.

"We alleged traditional environmental issues that the petitioners are concerned about," Lippes said.

Deborah Gondek, one of the plaintiffs, said they will discuss whether to appeal Sedita's ruling.

Darlene Bolsover, another plaintiff, said the city didn't notify residents near the plant or hold a public hearing on the Digihost site plan. There was a public vote, and a contentious Common Council meeting in August at which the Council voted against a moratorium on cryptocurrency projects.

"What we feel raising awareness on this particular project has done is to make people aware what good city government should look like," Gondek said.