Cayuga Clash: 400MW Data Center Tests Town Zoning Authority in Upstate NY

The rapid conversion of legacy energy infrastructure into high-density computing hubs for Artificial Intelligence (AI) and High-Performance Computing (HPC) is triggering a wave of zoning clashes across New York State. One of the most closely watched showdowns is unfolding in Lansing, Tompkins County, where the former Cayuga Power Plant—historically known as Milliken Station—has become the center of a high-stakes regulatory fight. On December 16, 2025, the Town of Lansing will decide whether a proposed 400-megawatt data-center complex qualifies as a permitted use under existing zoning.

A Legacy Grid Asset Back in Play

The site at 228 Cayuga Drive has long served as one of the region’s major industrial power assets. Commissioned in 1955, Milliken Station operated two coal-fired units with a combined generating capacity exceeding 320 MW. After ownership changes—including a US$240 million acquisition in 2012 and a later transfer to Riesling Power LLC, a Beowulf Energy–affiliated entity—the plant officially retired in 2019. Its industrial footprint—including high-capacity transmission connections and a 96-inch cooling-water intake from Cayuga Lake—continues to make it uniquely suited for redevelopment.

TeraWulf Inc., alongside Cayuga Operating Company LLC and Lake Hawkeye LLC (the “Applicants”), is seeking to transform the property into the Cayuga Data Campus, a research-computing hub for advanced scientific and machine-learning workloads. The proposed redevelopment would eliminate fossil-fuel combustion, demolish the coal stack, and replace the site’s historical once-through cooling system with a closed-loop process that withdraws no water from Cayuga Lake.

Scale Signals Stakes

The initial build-out is designed for 138 MW of research-compute infrastructure, with expansion capacity topping out near 400 MW—placing the project among the largest proposed digital infrastructure redevelopments in the Northeast. TeraWulf has deployed similar strategies Upstate, including its Lake Mariner Campus in Somerset, where an idle power station was converted into a multi-phase HPC facility. A research tenant at Lake Mariner, Fluidstack Ltd., has attested that its workloads consist of scientific simulation, model training, and other research-driven compute tasks—evidence the Applicants are using to bolster their case that the Cayuga site will function as a research environment rather than a commercial data-center enterprise.

The Regulatory Fault Line: What Counts as a Laboratory?

The zoning dispute centers on how the Town of Lansing’s Industrial/Research (IR) District classifies modern HPC infrastructure. The Town’s Code Enforcement Officer (CEO) issued determinations on October 22 and November 10, 2025, concluding that a “data center” is not a listed use and therefore not permitted. The Applicants have appealed the ruling to the Zoning Board of Appeals (ZBA), arguing:

• Scientific Research Laboratory: The facility's core functions—scientific simulation, experimentation, testing, and algorithm development—fit the Town Code’s definition of a “Laboratory,” a permitted use in the IR District.

• General Processing / Warehouse: Alternatively, the Applicants say the Town Code’s references to “General Processing” and “Warehouse / Storage of non-agricultural goods” encompass digital processing and storage, and that the code does not limit “goods” to tangible items. They contend that denying the project based on its electrical scale is inconsistent with a district that already anticipates large-format industrial uses, including power generation.

A Municipal Crossroads

The ZBA is now weighing the appeals, with site-plan review filings already in the pipeline. The Applicants are seeking a determination that the project is a permitted principal use—avoiding the need for a variance and setting the stage for formal review.

Recognizing the technical complexity and regional implications, the Town of Lansing secured funding to retain outside legal and engineering expertise, engaging Harter Secrest & Emery LLP and LaBella Associates DPC to review the project’s environmental and operational impacts. The outcome of the ZBA’s decision will shape the trajectory of one of New York’s most consequential digital-infrastructure conversions and could set precedent for how municipalities classify the next wave of AI-driven industrial redevelopment.