Legal Action Over Unpermitted Gas Turbines

Elon Musk’s artificial intelligence company, xAI, is facing legal action regarding air pollution allegations at its massive data center in Memphis, Tennessee.

The Southern Environmental Law Center (SELC) together with the National Association for the Advancement of Colored People (NAACP), is threatening xAI to address the Clean Air Act violation in 60 days lest they face legal charges.

In its letter, the organisation alleged that the xAI data centre has been running unpermitted gas turbines at it Memphis supercomputer site, where it has been emitting harmful pollutants including nitrogen oxides and formaldehyde into the air, further deteriorating the already poor air quality in South Memphis.

"Over the past year, xAI has installed and operated at least 35 combustion turbines and other sources of air pollution at the colossus site without ever obtaining the necessary preconstruction or operating air permits."

The Memphis neighbourhood, where the data centre is situated at is called Boxtown, and is noted to to be a place where the cancer rate is four times the national average.

And the health situation in the neighbourhood could further deteriorate following this new development.

Allegations of Environmental Injustice

The legal notice accuses xAI of failing to implement “Best Available Control Technology,” such as selective catalytic reduction, to limit emissions—a requirement under the Clean Air Act for major industrial sources.

SELC senior attorney Patrick Anderson told Newsweek

“We have on four different occasions sent formal requests to the local health department asking for them to use their authority to enforce the law. Obviously, that hasn’t happened.”

The NAACP has also called this a situation of "environmental racism." President and SEO Derrick Johnson wrote on his statement

"We cannot afford to normalise this kind of environmental injustice-where billion-dollar companies set up polluting operations in black neighbourhoods without any permits and think they'll get away with it because the people don't have the power to fight back."

The civil rights organization is currently seeking injunctive relief, civil penalties, and litigation costs.

xAI’s Response and Broader Industry Context

In response to the allegations, xAI has denied violating the environmental regulations and insists that the company has been operating in compliance with all applicable laws. It adds that it takes its environmental and community obligations seriously.

The company has also highlighted its significant economic contributions to Memphis, including millions in local taxes and hundreds of jobs created, as well as investments in infrastructure like a power substation and water recycling plant.

This controversy comes at a time when the explosive growth of AI and cloud computing is pushing the demand for data centres to an unprecedented level.

The U.S. Department of Energy projects that data center demand could double or triple by 2028, with global investments needed to meet this surge estimated at $6.7 trillion by 2030, according to McKinsey.

AI’s insatiable appetite for computing power is pushing companies to build ever-larger facilities, often relying on fossil fuels to meet their energy needs.

Musk’s xAI is already planning a second, even larger facility in Memphis, requiring at least 1 gigawatt of power—enough to supply hundreds of thousands of homes.

Meanwhile, other tech giants like Amazon are turning to alternative energy sources, such as nuclear power, to meet their data center needs and reduce environmental impact.

Balancing Technological Growth With Environmental Preservation

The lawsuit against xAI highlights the growing tension between the rapid expansion of AI infrastructure and the need for environmental justice.

As data centers multiply across the country, their impact on local communities—especially those already burdened by industrial pollution—is coming under increasing scrutiny.

The case also raises important questions about regulatory oversight and the responsibilities of tech companies to minimize their environmental footprint.

For now, the legal battle over xAI’s Memphis data center is a stark reminder that the race for AI supremacy must not come at the expense of public health and environmental equity.