A major US environmental regulator has delivered a significant blow to Elon Musk's artificial intelligence venture, xAI, ruling that the company acted unlawfully in powering its massive Tennessee data centres.
EPA Closes 'Portable' Generator Loophole
On Thursday, the Environmental Protection Agency (EPA) declared that xAI's use of dozens of truck-sized methane gas turbines to supply electricity to its facilities was illegal. The company had argued that the portable, temporary nature of the generators exempted them from standard air quality permitting requirements.
The EPA's new ruling explicitly revises policies around such turbines, stating that operating these machines still mandates air permits even if they are used on a portable or temporary basis. This decision effectively closes a local county loophole that xAI had exploited, which allowed generator operation without permits provided they did not remain in one place for more than 364 days.
At its peak, up to 35 of these unpermitted turbines were powering the firm's 'Colossus 1' data centre. xAI later obtained permits for 15 turbines at that site and is currently running 12 permitted machines there. Under the fresh EPA ruling, the permitting for these turbines will now fall under stricter federal law.
A Victory for Overburdened Memphis Communities
The ruling represents a hard-fought win for community activists in Memphis, who have long contested the operation of the polluting turbines. The data centres are situated just miles from historically Black neighbourhoods, which campaigners say are already bearing a disproportionate environmental burden.
"Our communities, air, water, and land are not playgrounds for billionaires chasing another buck," said Abre' Conner, director of environmental and climate justice for the NAACP. The civil rights group initiated a lawsuit against xAI last July, alleging the unpermitted turbines violated the Clean Air Act.
Methane gas turbines emit harmful nitrogen oxides, pollutants linked to cancer, asthma, and other serious respiratory illnesses. An EPA spokesperson stated the agency estimates its final action will lead to net annual reductions of nitrogen oxide emissions by up to 296 tons by 2032.
Powering AI's Insatiable Appetite
For xAI, the creator of the Grok chatbot, these turbines are deemed essential to meet the colossal energy demands of its supercomputers. The Colossus 1 facility alone uses 150 megawatts of electricity at full capacity—enough to power approximately 100,000 homes for a year—with plans for further expansion.
Musk's company built Colossus 1 in a record 122 days during summer 2024. An even larger, one-million-square-foot facility, Colossus 2, is under construction on the Memphis border in Southaven, Mississippi, and is also powered by dozens of gas turbines. Mississippi Today reports that site has 59 generators, 18 of which are considered temporary and lack air quality permits. A third xAI data centre in Southaven began construction last week.
Amanda Garcia, a senior attorney with the Southern Environmental Law Center, which filed its intent to sue alongside the NAACP, said the EPA ruling "makes it clear that companies are not – and have never been – allowed to build and operate methane gas turbines without a permit." She added that there is no loophole allowing corporations to set up unpermitted power plants and called on local health leaders to take swift enforcement action.
It remains unclear how or if the federal government will penalise non-compliant companies. The EPA did not respond to questions regarding enforcement. xAI did not return a request for comment on the ruling.
