Virginia's Department of Environmental Quality fined Microsoft $2.5M for air pollution violations at its Leesburg datacenter facility.
A substation failure last summer forced a Microsoft data center in Leesburg to switch to backup generators, prompting the Virginia Department of Environmental Quality (DEQ) to levy a $2.5 million fine for exceeding the facility’s air quality permit limits.
Under a DEQ consent order, Microsoft notified the agency on June 27, 2025, of a catastrophic failure at the Cochran Mill electrical substation. The incident cut off grid power to a data center along Compass Creek Parkway, triggering a seven-day outage.
The facility’s operating permit caps annual consumption of ultra-low sulfur diesel and hydrotreated vegetable oil (HVO) for emergency generators and fire pumps at 655,850 gallons. It also establishes strict emission limits for nitrogen oxides, carbon monoxide, volatile organic compounds, and both PM10 and PM2.5 particulate matter.
“The Facility operated 62 emergency engines for the 7-day duration of the event. Based on data provided by Microsoft on July 16, 2025 and emissions calculated by DEQ, during this event the Facility exceeded its permitted fuel throughput and emissions limitations for NOx, CO, VOC, PM 10 and PM 2.5,” the order states.
DEQ issued a notice of violation to Microsoft on August 21, 2025. By October, Microsoft responded, noting that its initial emission estimates relied on a worst-case scenario and that it had developed an alternative methodology to more accurately reflect actual emissions.
“Microsoft also stated that based on historical reliability data from the electricity provider, it is confident that an event like this will not recur,” the order notes.
Microsoft further announced plans to invest $31 million in a dual-feed power system designed to mitigate the risk of future total power failures and prevent comparable extended outages.
From December 1, 2025, through July 28, 2026, DEQ and Microsoft negotiated the appropriate methodology for calculating actual emissions. During this period, Microsoft conducted stack testing at the facility to generate more precise data, submitting the results to DEQ on July 9 and July 28.
“This data demonstrated that the Facility exceeded both permitted fuel throughput and emissions limits for Nox, VOC, PM10, and PM2.5 with the highest total rolling 365-day emissions occurring between October 4, 2024 and October 3, 2025,” the order confirms.
Although DEQ has previously required data centers to pay civil penalties, Communications Manager Irina Calos confirmed this is the largest.
A Microsoft spokesperson told Loudoun Now that the company remains committed to responsible data center development and operations in Virginia and globally.
“During this event last June, we worked closely with the Virginia Department of Environmental Quality, providing regular updates on our response as we worked toward a resolution. As part of our continued commitment to the communities where we operate, Microsoft will support VDEQ’s expansion of air-quality monitoring in Northern Virginia, as they work to deliver additional data and insight into regional air quality,” the spokesperson said.
Of the $2.4 million paid by Microsoft, DEQ plans to allocate $1.5 million toward a mobile air monitoring station and $900,000 for 45 air quality monitoring sensors. Any remaining funds will be directed to the Virginia Environmental Emergency Response Fund.
The Piedmont Environmental Council (PEC) has consistently raised concerns regarding data center emissions, claims frequently countered by industry representatives citing compliance with DEQ standards.
“There is a difference between standards and health impacts and now we have an example of a problem that DEQ has acknowledged and the more data centers there are and problems that occur, the more health impacts there will be,” said PEC Senior Land Use Field Representative Gem Bingol.
PEC and DEQ have published competing assessments regarding air quality near Loudoun’s data centers. PEC’s report examined worst-case emission scenarios, focusing heavily on a Sterling facility that utilizes gas turbines for building power. By applying the maximum legally permissible emission rates, the report concluded that continuous turbine operation could generate significant air pollution. DEQ subsequently responded, asserting that PEC overstated actual emissions and mischaracterized the underlying data.
Bingol noted that while DEQ evaluates emissions on a per-facility basis, PEC is concerned about the cumulative impact of the county’s 53 million square feet of data center space.
“What we have said repeatedly is, there has been no cumulative analysis. DEQ looks at each data center alone, but there are cumulative impacts that haven’t been studied,” she added.
Loudoun County Supervisor Koran T. Saines (D-Sterling) is actively addressing data center generator usage. In July, he secured support for a proposal directing county staff to research regulatory frameworks for backup generator operations. That analysis is currently underway, though Saines’ office has not yet established a timeline for presenting recommendations to the Board of Supervisors.