David Edwards
Elon Musk’s artificial intelligence company xAI is under legal scrutiny following allegations that its Memphis-based data center, “Colossus,” is violating federal environmental regulations. The Southern Environmental Law Center (SELC) issued a 60-day notice of intent to sue on June 18, citing multiple breaches of the Clean Air Act.
Filed on behalf of the National Association for the Advancement of Colored People (NAACP)—the nation’s oldest civil rights organization—the notice targets xAI’s use of over 35 natural gas-fired turbines to power its AI infrastructure. SELC alleges these turbines were installed and operated without the legally required air permits and environmental safeguards.
Regulatory Gaps and Health Concerns
“xAI has installed and operated at least 35 combustion turbines without obtaining the necessary preconstruction or operating permits,” the SELC stated in its filing. The group further criticized xAI for failing to implement “Best Available Control Technology,” such as selective catalytic reduction systems, to mitigate pollutant emissions like nitrogen oxides and formaldehyde.
The Memphis Health Department has reportedly received four formal enforcement requests from SELC but has yet to take action, according to senior SELC attorney Patrick Anderson. “That hasn’t happened,” Anderson told Newsweek, suggesting a regulatory gap in local oversight.
Environmental Justice in Focus
The Colossus data center is located on a former electronics manufacturing site in South Memphis, near Boxtown—a predominantly Black community historically impacted by industrial pollution. The NAACP has condemned the facility as an example of “environmental racism,” and stated on X, “We are prepared to combat environmental racism at every turn.”
The NAACP is seeking injunctive relief, civil penalties, and litigation costs in its potential legal filing.
Cointelegraph reached out to xAI and the NAACP for comment but had not received responses at the time of publication.
Expanding Demand Meets Limited Infrastructure
The legal dispute comes amid explosive growth in AI-driven data center demand. xAI is also constructing a second facility, “Colossus 2,” which is projected to require at least 1 gigawatt of electricity.
According to McKinsey & Company, global data center investment will need to reach $6.7 trillion by 2030 to accommodate demand, which is projected to grow by 165% due to AI. The U.S. Department of Energy estimates data center electricity consumption could double or triple by 2028.
“AI’s record-shattering demand is running into constraints in both data center capacity and energy supply,” said Nick Ruck, Director at LVRG Research. “Companies are struggling to balance profitability with the rising costs of infrastructure.”
To address similar energy needs, Amazon has recently signed a long-term nuclear power deal in Pennsylvania and committed over $13 billion to AI and cloud infrastructure in Australia.
Legal and Market Implications
As xAI expands, the environmental and legal implications of such rapid growth are likely to draw increasing regulatory attention. The outcome of the SELC-NAACP action could set precedents for how AI infrastructure projects are scrutinized in the context of environmental justice and compliance.
