TeraWulf attorneys call for resignation of Lansing officials, withdrawal of moratorium

Legal representatives for the company that plans to build an artificial intelligence data center on the site of the former Cayuga Power Station in Lansing say their clients think Town Supervisor Ruth Groff and Deputy Supervisor Joe Wetmore should resign and that the local law proposed by town board members to halt some construction projects — known in the town as a construction moratorium — should be withdrawn.

The statements were made by legal representatives of Lake Hawkeye LLC — a subsidiary of TeraWulf listed as the tenant on the lease agreement to build the data center — in a letter sent to Lansing Town Attorney Guy Krogh on Nov. 1. 

Attorneys from New York City-based firm Paul, Weiss, Rifkind, Wharton, and Garrison LLP were responding to another letter sent by attorneys representing TeraWulf and Cayuga Operating Company (COC) — the company that owns the land at the site of the former power plant — sent the day prior. In it, lawyers from DLA Piper accused town board members of gathering a legal quorum through a Google Groups listserv and “deliberating” on public matters like the moratorium. 

In both letters, lawyers accuse town board members of being in violation of open meetings laws, given that town officials are discussing public matters in a private setting with no open access or record keeping. 

Lawyers also allege that Groff and Wetmore attempt to influence members of town volunteer boards, like the planning board, on matters like the proposed moratorium, zoning interpretations and projects in front of the planning board and zoning board of appeals. 

“Together, the letters underscore the seriousness of the transparency and governance issues now formally raised before the town,” Kerri Langlais, TeraWulf’s chief strategy officer, told Tompkins Weekly in an email.

The calls for the resignation of Groff and Wetmore and the withdrawal of the moratorium are the latest development in a heated series of exchanges between proponents of the data center and town officials. 

TeraWulf company officials have accused town board members of not being transparent and fair about the moratorium in correspondence submitted to the public record, on social media and at community meetings.

Tensions have continued to percolate among the board, TeraWulf and community members, both in favor and against the moratorium and the data center ahead of a public hearing on the local law on Nov. 19. The board could potentially vote on the legislation that day.  

TeraWulf officials will be on hand at the meeting for a public presentation on the data center project. 

The moratorium, proposed by town board members as part of a project that started in 2018, would culminate in overhauled zoning based on principles established by the town’s long-term comprehensive plan.

But the local law has become a symbol of a larger public discussion on the future prospects of TeraWulf’s project.

Lawyers representing the companies associated with the data center and the former power station have taken issue with how the town board’s discussions have taken place. 

Groff said that the listserv, known as the Lansing Discussion listserv, includes anywhere from 150-300 members and has been around for several years. The group is typically used by Wetmore to post the upcoming agendas for meetings once they are made public on the town’s website, Groff added.

“The listserv is one that I am a member of but rarely participate in,” she said. Members of the listserv will ask Wetmore questions about items on the agenda, Groff said. Wetmore sticks to direct answers to the questions posed, Groff noted.

Over the past few years, Groff said she has only participated in conversations on the listserv once or twice, with a clarification for an inquiring community about a topic that she sees as affecting her actions as a supervisor.  

“That’s the extent of my involvement with the listserv, but Joe responds frequently to questions from the public,” she noted. “A single board member answering a question from the public is not a deliberation and is not contrary to the Open Meetings law.”

Groff said sometimes there are three or more members active on the listserv, thus creating a legal quorum, but town board members are diligent about “keeping their distance from each other and never talk about town business.”

“Individual board members are allowed to have discussions with residents. That’s how we stay transparent and that’s how we learn what the public is thinking,” Groff said. “We cannot do our jobs in a vacuum.” 

Board members have not deliberated on the moratorium through the listserv, she added. 

“I have never seen that happen,” Groff said. “Deliberations are always held during working sessions at the town board meetings.” 

Groff did not respond to a request for comment on allegations that the board influences the judgment of members of volunteer boards like the planning board.

Concerns over water usage and State Pollutant Discharge Elimination System permit application

The project has also come under increased public scrutiny this past week for the potential usage of lake water. On Oct. 27, State Assemblymember Anna Kelles, who represents Lansing in the New York State Assembly, published an opinion piece in The Ithaca Times arguing that the project could very well be drawing water from Cayuga Lake to cool down its computing infrastructure. 

Kelles wrote that data of the water withdrawn and returned to Lake Ontario at TeraWulf’s other project in New York, located in Barker, shows it is likely the company will use a hybrid cooling system that requires the consumption of potentially millions of gallons of Cayuga Lake water every day at the Lansing facility. 

“Research in humid climates like those in Barker and Lansing, shows that hybrid cooling systems are generally more energy-efficient. In this environment fully dry systems use roughly 10–30% more energy,” Kelles said. “Together, these findings make a hybrid design the most logical choice for Barker or Lansing and explain the continued water withdrawal observed in the DEC findings.”

This, she notes, is a departure from claims that TeraWulf will not use water from Cayuga Lake for its cooling system. 

Company officials have told the public that the system used in Lansing will be a closed-loop system that does not draw water from the lake for cooling — outside of a few gallons of utility water daily, according to a fact sheet produced by TeraWulf. The water utility in Lansing, Bolton Point, gets its supply from Cayuga Lake. 

Langlais, in response to Kelles’ claims, said that she stands by the company’s promise of using a closed-loop cooling system.

“The Cayuga Data Campus will operate using a closed-loop cooling system that recirculates water internally and does not withdraw or discharge to the lake,” Langlais wrote in an email to Tompkins Weekly. “The system design ensures that heat is dissipated through mechanical and air-assisted cooling equipment located entirely within the project’s leasehold footprint.”

In a hybrid system, like the one Kelles says is in operation in Barker, a secondary, the external loop relies on cooling water treated with chemical additives to prevent corrosion. 

“These chemicals, including corrosion inhibitors, dispersants and biocides, are standard across the industry, but when released into natural waters they can have serious ecological consequences,” Kelles wrote. Some of these additives, the assemblymember noted, can kill aquatic life and feed harmful algal blooms. 

“Water that is periodically discharged through system maintenance or blowdown carries these additives into nearby lakes and rivers,” she wrote, referring to the hybrid system.

Langlais said the cooling methods in Barker and the ones proposed for Lansing are similar. 

“While each site is engineered to local specifications, neither facility withdraws or discharges lake water for cooling,” she said. 

Kelles says that state data shows otherwise. 

On Oct. 29, the New York State Department of Environmental Conservation announced an application by Cayuga Operating Company LLC (COC) for a renewal and modification of their State Pollutant Discharge permit. 

The modification would downscale the number of gallons permitted of lake water intake from 1.44 million gallons per day (MGD) of water from Cayuga Lake to an amount up to 1.008 MGD. 

The current permit allows for the facility operator to bring water in through a cooling water intake structure and is used as noncontact cooling water for equipment.

The news of the permit adjustment with DEC sent shock waves across social media, drawing more than a hundred comments to a since-deleted Reddit post. 

In a letter to the town board, Rebecca Francus, the president of COC LLC, said the permit applications predate TeraWulf’s lease on the site and are unrelated to the company’s data center project. TeraWulf leases about 183 acres of the 430-plus acre site aiming to develop the Cayuga Data Campus.

“We have formally agreed to surrender our Water Withdrawal permit in the event the Cayuga Data Campus receives all requisite permits and approvals to advance as planned,” Francus said in a letter submitted to the town board on Oct. 31. A LinkedIn page appearing to belong to Francus shows she has served as general counsel for Beowulf Electricity and Data for the past year. Beowulf was acquired by TeraWulf earlier this year. 

The company has gone to great lengths to try and assuage concerns from residents who say they worry about the potential impacts of the AI data center on Cayuga Lake. 

At an Oct. 17 meeting at Lansing Middle School, where TeraWulf executives delivered a presentation on their project’s environmental and economic impacts, Chief Operating Officer Sean Farrell said the former power plant’s water intake system was already decommissioned. 

“The water intake infrastructure has been fully decommissioned,” he said. “It doesn’t even have pumps or motors. Literally. It has literally been decommissioned.”

Langlais said that the intake structure exists physically, but it will not be used for operational purposes. 

“Under [DEC] procedures, a structure remains referenced in the permit record until the associated permit is formally modified or surrendered,” Langlais said. “The intake system plays no role in the data campus design and will remain inactive. When TeraWulf representatives stated publicly that the system ‘is not functional,’ they meant that it is not operational, maintained, or intended for use in any capacity related to the data campus.”

Kelles said she is concerned that lax regulations on water withdrawals and returns reporting could be obscuring the picture regarding the operations of the facility in Barker. 

The Barker facility brings in millions of gallons of water every day, with withdrawal and return volumes matching exactly each month, which Kelles said is not a likely outcome of the center’s cooling operations. 

“Even the most efficient systems lose some water through evaporation, through drift, which is when tiny water droplets escape into the air with exhaust air, or through blowdown,” Kelles wrote. 

Blowdown occurs when operators “deliberately flush out a portion of the recirculating water to prevent the buildup of minerals and contaminants,” Kelles added. 

Langlais said the reports do not indicate millions of gallons cycled and returned. 

“They show gross flow-through and return volumes, which are nearly identical because the water is recirculated,” Langlais said. “The ‘withdrawal equals return’ record is consistent with state-filed engineering reports, and all data are submitted to and verified by the NYSDEC.”

But for Kelles, lax DEC regulations that do not require companies to meter their inflows and outflows can make for a muddy oversight picture. “Because DEC’s framework does not require metering of actual use, companies like TeraWulf can appear water-neutral on paper while cycling massive volumes of public water,” she wrote. 

Readings at the facility in Barker do involve metered reading at “defined points within the closed-loop system,” Langlais said. 

“Because it is a recirculating system, these readings confirm that there is no net withdrawal or consumptive loss of lake water.”

Langlais said she denies allegations of inaccurate reporting at TeraWulf. 

“The company’s water management systems for its data centers are metered, monitored and audited through regulatory reporting requirements,” she noted.

Pollutants entering the lake in the event of discharge were also concerns raised by Kelles’ article. She wrote that the state does not require full transparency on the chemical additives used in industrial data center cooling systems.

“While SPDES permits list certain pollutants and specify sampling schedules, they often do not explicitly control or disclose all of the chemical additives used in industrial data center cooling systems,” Kelles wrote. “Companies can legally use a range of corrosion inhibitors, phosphonates, and non-chlorine biocides without public disclosure. The lack of publicly available reporting of these chemical additives leaves communities unable to see what is entering shared water bodies.”

TeraWulf’s proposed closed-loop system will require maintenance in the way of internal filter flushing or occasional replacement of noncontact cooling fluid, but Langlais said those chemicals will not be discharged into the lake.

“[That maintenance] will be managed in accordance with NYSDEC and local utility regulations,” she said. “No additives harmful to aquatic life are used in the system’s sealed loop.”