Elon Musk’s xAI Faces Legal Action Over Air Pollution at Memphis AI Data Center

Memphis, Tennessee – June 2025

Elon Musk’s artificial intelligence startup xAI is under legal fire following allegations that its Memphis-based data center—known as "Colossus"—is emitting harmful air pollutants in violation of the Clean Air Act. The potential lawsuit has been initiated by the Southern Environmental Law Center (SELC), representing the NAACP, one of the United States' oldest civil rights organizations.

Lawsuit Threat Over Gas Turbine Emissions

On June 18, SELC issued a 60-day notice of intent to sue xAI, citing serious environmental and legal concerns surrounding the operation of more than 35 gas-fired combustion turbines at the Colossus site. These turbines were installed to fast-track AI development while awaiting a full connection to the local electric grid.

Screenshot from notice of intent to sue. Source: SELC

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According to the SELC, xAI began running the turbines without acquiring mandatory air quality permits, a violation of federal law. The turbines are allegedly releasing dangerous pollutants, including formaldehyde and nitrogen oxides, into the surrounding environment—both of which are linked to respiratory issues and long-term health risks.

“Over the past year, xAI has operated these turbines without proper permits or pollution controls, directly violating the Clean Air Act,” the SELC wrote in its formal notice.

Colossus data center. Source: xAI

Failure to Use Emission-Reducing Technology

The legal complaint also accuses xAI of neglecting to use Best Available Control Technology (BACT)—such as selective catalytic reduction systems—to minimize emissions. BACT is a requirement for major industrial sources under environmental regulations.

“We’ve submitted four separate requests to the local health department urging them to enforce air quality laws,” said Patrick Anderson, a senior attorney at SELC. “So far, there has been no action.”

Community Impact and Environmental Racism Claims

The Colossus data center sits on the site of a former electronics manufacturing plant in South Memphis, adjacent to Boxtown, a historically Black neighborhood already suffering from poor air quality due to nearby industrial activity.

The NAACP strongly criticized the development, calling it a case of environmental racism and pledging to fight it with legal action. The organization is seeking injunctive relief, civil penalties, and reimbursement for legal fees and litigation costs.

“We are prepared to combat environmental racism at every turn,” the NAACP stated on social media.

xAI’s Rapid Expansion Amid Rising Energy Demands

Despite the controversy, Musk’s xAI is already planning a second and even larger facility—Colossus 2—in Memphis, with projected energy needs exceeding 1 gigawatt. This reflects a broader trend in the tech industry as AI and cloud computing drive massive new demand for data center infrastructure.

Projected data center demand. Source: McKinsey & Company 

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According to the U.S. Department of Energy, the energy required to power data centers could double or even triple by 2028. Consulting firm McKinsey estimates that meeting global demand will require $6.7 trillion in investment by 2030.

“AI’s growth is hitting hard limits in power and infrastructure. It’s a race between innovation and supply,” noted Nick Ruck, director at LVRG Research.

Industry’s Search for Cleaner Power

While some tech giants are turning to renewables and nuclear to power their AI ambitions, xAI's reliance on gas turbines is drawing scrutiny. For example, Amazon recently partnered with Talen Energy to source nuclear energy for its data centers in Pennsylvania through 2042. The company also announced plans to invest over $13 billion in Australian AI and cloud infrastructure powered by clean energy.

As environmental regulations tighten and public awareness grows, AI firms may face increasing pressure to balance innovation with sustainability—particularly when operating near vulnerable communities.