Musk’s xAI is being sued over its data center generators. Now, it’s buying $2.8B more.

Elon Musk's artificial intelligence venture, xAI, is facing significant legal challenges due to its controversial use of polluting gas turbines at a Memphis, Tennessee data center. Despite these issues, the company is planning to invest an additional $2.8 billion in turbine technology over the next three years, as revealed in SpaceX's recent IPO filing. A major component of this investment includes a $2 billion deal for mobile gas turbines, the very type that has drawn legal scrutiny. Last month, the NAACP filed a lawsuit against xAI, arguing that the operation of these unregulated turbines contributes to worsening air quality in an already polluted region. The organization is seeking an injunction to halt the use of these turbines, which xAI has been operating without proper permits. Currently, xAI has been permitted to operate 15 turbines, but reports indicate that it has been using a total of 46. Each of these turbines has the capacity to emit over 2,000 tons of nitrogen oxides (NOx) annually—a group of pollutants linked to smog and respiratory issues. xAI contends that the turbines can be operated without permits because they are classified as “mobile,” remaining on their original trailers. This stance highlights a legal gray area between state and federal regulations, with Mississippi claiming that mobile generators do not require permits. However, federal authorities maintain that turbines of this size must comply with air quality regulations, regardless of their mobile status. Earlier this year, the Environmental Protection Agency (EPA) determined that xAI was in violation of federal law concerning its turbine operations. In its IPO filing, SpaceX acknowledged the potential risks associated with these legal challenges, stating that reliance on natural gas and turbine technology is crucial for their data center operations. They warned that any injunctions or revoked permits could have a detrimental impact on their AI endeavors.