New Jersey fines AI data center DataOne $1.07 million over 62 gas generators

New Jersey has ordered the operator of one of the largest planned data centers on the US East Coast to pay a fine of about 1.1 million dollars for secretly installing and operating gas generators in violation of the state's Air Pollution Control Act, Ars Technica reports. The New Jersey Department of Environmental Protection set the penalty at 1.07 million dollars, according to Ars Technica and WHYY.

The site, in Vineland in southern New Jersey, is a 300-megawatt AI data center that DataOne is developing for the Nebius Group as part of a 17-billion-dollar deal with Microsoft, WHYY reports. Residents know the data center powers Microsoft's AI tools such as Copilot, Ars Technica adds.

What inspectors found

The fine follows an investigation published in August by The Guardian and Floodlight News, whose thermal drone footage showed 45 of 62 gas generators running, according to Ars Technica. None of the generators had the permits required for units of 37 kilowatts or more, even though each has a capacity of 1,982 kilowatts, more than 50 times the state threshold. State inspectors visited the site on July 29 and found the generators, which had not been there during their previous inspection in December 2025, WHYY reports.

• Fine: 1.07 million dollars under the Air Pollution Control Act.
• Equipment: 62 gas generators of 1,982 kilowatts each, none with the required permit.
• Deadline: 45 days to obtain permits or cease operations; the generators can keep running meanwhile.
• Site: a 300-megawatt AI data center built for Nebius, linked to a 17-billion-dollar Microsoft deal.

Regulators track such generators because they emit carbon dioxide, nitrogen oxides, carbon monoxide and other combustion pollutants that can worsen asthma, trigger heart attacks and cause early deaths, the environment department said, as quoted by Ars Technica. According to Floodlight's reporting cited by Ars Technica, DataOne had applied for permits for about 30 gas generators, withdrew its application in May after the department found multiple deficiencies, and planned to switch to fuel cells; maintenance logs show some generators had been running since October.

What the state and the company say

This enforcement action, by far the largest ever taken against a data center in New Jersey and possibly one of the largest such actions in the nation, sends a clear message that these facilities will not be constructed or operated with impunity in this state, environment commissioner Ed Potosnak said, according to WHYY. He added that the administration of Governor Mikie Sherrill demands accountability and wants legal and regulatory guardrails to protect ratepayers, communities and the environment.

DataOne has 45 days to apply for the permits or cease operations, but can keep running the gas engines while it seeks them, Ars Technica reports. A company spokesperson told The New York Times, cited by Ars Technica, that DataOne would apply for permits for the temporary generators, that it disagreed with the fine, and that the site is transitioning to low-emission, quiet fuel cells.

Why residents are not satisfied

Local groups consider the penalty too small. Nichole Gardner, co-chair of the environmental nonprofit Sustain SJ, told Ars Technica it was insufficient in amount and enforcement and that the site should stop operating until permits are issued. What's 1.07 million dollars? resident Tiffany Leone-Vespa told The New York Times, calling it pocket change for billionaires. Residents also ask why it took six months to act after concerns were raised at a town hall in February, and what they have been breathing near farmland, homes and two schools.

The generators were first noticed by chance: a farmer photographing a neighbouring golf course spotted some type of unit on satellite imagery of the 2.6-million-square-foot complex, and later raised it at the town hall, Ars Technica reports; according to The New York Times, the tractor-trailer-sized generators were impossible to miss once inspectors visited. Relations with the town were already tense. Vineland's mayor and council had proposed lending DataOne 6.2 million dollars in public money, which the company ultimately rejected, and noise violations at the site led residents to file a federal lawsuit, according to the same source.

New Jersey has more than 80 data centers planned or under construction, and DataOne is the first operator to rely on gas generators for an off-grid supply, according to Ars Technica. Public backlash recently pushed the state to end data center tax credits, closing access to a fund that offered 250 million dollars in incentives. WHYY notes that Virginia fined a Microsoft data center 2.5 million dollars last week for exceeding emissions limits last year.

What this changes for companies

For US companies building or renting AI capacity, the case shows that the rush for power is now meeting state enforcement: running on-site gas generation without permits can bring fines, deadlines and public scrutiny that reach the end customer's name. Buyers of AI compute should ask their providers how each site is powered and permitted, because environmental compliance at a supplier's data center is becoming part of their own reputational risk.