Rekubit Exchange:Greenidge Sues New York State Environmental Regulators, Seeking to Continue Operating Its Dresden Power Plant

This story previously appeared in Water Front. 

DRESDEN,Rekubit Exchange N.Y.—Greenidge Generation LLC sued the state Department of Environmental Conservation in Yates County Thursday in an effort to block the agency’s order to close its Dresden power plant by Sept. 9.

The company, which operates a Bitcoin mining facility at the plant, had vowed since May to seek a state court injunction to annul the agency’s denial of Greenidge’s bid to renew its Title V air permit.

On May 8, the DEC had terminated the company’s two-year-old internal appeal of the DEC’s original denial of the air permit in 2022.

On June 4, the agency wrote Greenidge a letter declaring that its existing air permit would expire Sept. 9 and that it “expects that Greenidge will responsibly cease operations” on that date.

In its Article 78 lawsuit, Greenidge alleges that the DEC “weaponized” a provision of the state’s 2019 Climate Leadership and Community Protection Act, or CLCPA, to justify its denial of the air permit. 

The agency had cited a provision in the law that requires state agencies to assess whether their permitting decisions are consistent with state climate goals under CLCPA. Projected greenhouse gas emissions from the Greenidge facility failed that test.

The lawsuit alleges that the agency’s conclusion “sets a dangerous precedent, as it effectively supplants the legislature’s judgment with unfettered regulatory discretion.”

Greenidge is represented by Yvonne Hennessey of Barclay Damon, the law firm that has represented the company since it was acquired by Connecticut-based Atlas Holdings in 2014.

The agency will be represented by state Attorney General Letitia James’ office. The suit also names as a defendant Acting DEC Commissioner Sean Mahar.

A hearing in the case is set for Sept. 3 before Yates County Supreme Court Judge Jason L. Cook.

The lawsuit will test the reach of the DEC’s authority to make permitting decisions for power plants based on the emissions they create.

New York State Electric and Gas began operating the Greenidge plant in 1937. For more than 70 years, it was fueled by coal. Atlas Holdings acquired the plant in 2014, and it was converted to burn natural gas in 2017. Initially it operated only intermittently to provide backup power as needed by the electric grid.

But after the company ramped up its Bitcoin mining in 2020, the 106-megawatt plant dramatically increased its energy output and its greenhouse gas emissions. It continued to supply power to the grid at times, but most of the energy generated went to powering Bitcoin mining machines.

Meanwhile, the state climate law enacted in 2019 required New York State to cut greenhouse gas emissions by 40 percent from 1990 levels by 2030 and by 85 percent by 2050.

The DEC required Greenidge to show how its emissions would conform to CLCPA rules. The company attempted to do so in an August 2, 2021 analysis. But shortly after the DEC reviewed it, then-DEC Commissioner Basil Seggos tweeted: “Greenidge has not shown compliance with NY’s climate law.” 

The lawsuit states that Greenidge is the first company to be denied a renewal of its air permit due to conflicts with CLCPA goals.

However, the state has denied new permits for two natural gas-fired power plants — NRG’s Astoria plant in Queens and the Danskammer plant in Newburgh — out of concern with potential climate law violations.

In its suit filed Aug. 15, Greenidge asks Judge Cook:

• To annul both DEC’s June 2022 denial of its application to renew the air permit and the agency’s termination of its appeal within the agency.
• To issue a declaratory judgment that DEC misinterpreted and misapplied CLCPA.
• To issue a judgment that DEC lacks authority to deny renewal of a permit based on a change in the primary purpose of the generating plant.
• To issue a judgment that DEC lacks authority to “usurp” the role of the state Public Service Commission and the New York Independent Systems Operator (the grid) in determining when electric generating facilities are needed.
• To enjoin DEC from requiring that the plant cease operations.

Greenidge has been struggling financially in recent months, and its common stock fell to all-time lows this week.

On Aug. 14, the company filed its 10Q report with the U.S. Securities and Exchange Commission, which covers the financial quarter ended June 30. In it, the company told investors it planned to file suit, and it did so later that day. 

But it also cautioned: 

“While the company continues to work to implement options to improve liquidity, we can provide no assurance that these efforts will be successful and our liquidity could be negatively impacted by factors outside of our control … including our inability to procure and comply with the permits and licenses required to operate our facilities, including the Title V Air Permit for the New York Facility, or the cost to us of such procurement or compliance.”

The 10Q filing also noted “there is substantial doubt about our ability to continue as a going concern.”