The legal dispute centers on the AI company’s operations in southern Memphis.
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A recent federal ruling by Judge Debra M. Brown has rejected xAI’s motion to dismiss the lawsuit alleging that its Memphis, Tennessee data center campus operates turbines without proper permits and violates the Clean Air Act. The decision permits the NAACP‑filed case to proceed.
The NAACP filed the suit against xAI in April, alleging that the company—now operating under the SpaceXSI name—has installed unpermitted methane‑fueled gas turbines to power its data centers in the Memphis region. Even as the litigation continues, Elon Musk’s firm has added additional gas turbines to a new AI data center in the adjacent Southhaven, Mississippi community. In response, xAI asked the court to dismiss the NAACP complaint and secured backing from the Justice Department, which asserted that the operations are essential to U.S. military activities.
xAI argued that the turbines qualify for an exemption because they are mobile, but Judge Brown concluded that the power plant supplying the data center is not mobile and therefore not exempt from permitting requirements. The case arises amid a surge in AI‑driven data center construction, as nearby residents grow increasingly opposed to such developments.