Elon Musk’s xAI, now part of SpaceX, faces a new legal challenge from environmental groups in Mississippi. These groups are protesting the company’s plan to build a huge power plant, fueled by methane gas, in the town of Southaven.
Nonprofits including the NAACP, Young, Gifted & Green, and the Safe and Sound Coalition want Mississippi to cancel the permit that the state’s environmental agency gave to xAI last month. This permit allows xAI to build the plant. Members of these groups live near where xAI plans to operate.
The power plant will “make the region’s ongoing ozone problem worse,” lawyers for the groups wrote in a petition filed to the state on Thursday. They added that it would cause “significant increases in pollutants like nitrogen dioxide and, relatedly, fine particulate matter,” which would harm air quality and threaten residents’ health.
Musk’s company received the permit from the Mississippi Department of Environmental Quality on March 10. This approval lets xAI install 41 natural gas-burning turbines permanently in DeSoto County, Mississippi, to power its nearby data centers. XAI currently runs a data center called Colossus 2 in Memphis, Tennessee, just across the state line. It is also building a new facility named Macrohardrrr in Southaven.
Musk, the world’s richest person, is relying on the Memphis area to support xAI’s expansion as he competes with OpenAI, Anthropic, and Google in the fast-growing AI market. SpaceX bought xAI in February. This deal values the combined company at $1.25 trillion, ahead of what is expected to be a record IPO in the coming months.
Across the U.S., communities are becoming concerned about the financial and environmental risks that come with building the power-hungry infrastructure needed for AI models and the apps and services that use them. The groups opposing xAI’s development, represented by the Southern Environmental Law Center, argue that the company (through its local branch MZX Tech LLC) and the state regulator did not use accurate pollution estimates when considering the power plant.
They also say xAI was not required to use the cleanest possible turbines or buy environmental offsets. Furthermore, they claim that local community members were left out of important meetings, and government emails showed the regulator was rushing the process due to pressure from xAI.
The authorization xAI received is known as a Prevention of Significant Deterioration (PSD) permit. This is a federal air quality standard for big sources of pollution like large power plants. Such permits are usually granted after years of communication between the Environmental Protection Agency, state regulators, and the public.
Representatives for xAI did not respond to a request for comment. The MDEQ told CNBC by email on Friday that it had received the groups’ “request for an evidentiary hearing regarding the permit,” and that xAI would have the chance to join the proceeding.
