Elon Musk announced his new company xAI which he says has the goal to understand the true nature of the universe.
Jaap Arriens | Nurphoto | Getty Images

Elon Musk’s xAI, the artificial intelligence startup trying to take on OpenAI, is facing scrutiny in Memphis, Tennessee, for alleged environmental violations at its data center.

In a letter sent to the Shelby County Health Department on April 9, the Southern Environmental Law Center said aerial imagery and other data showed that xAI has installed “a whopping 35 gas turbines,” at its facility, sometimes referred to as the Colossus. The company only applied for permits for 15 turbines to power the data center temporarily, the letter said.

Musk founded xAI in 2023 and has made the company the centerpiece of his AI ambitions as he engages in a high-profile business and legal battle with OpenAI, which he co-founded in 2015 as a nonprofit research lab. Its flagship Grok chatbot is designed to take on ChatGPT.
In late March, Musk announced that xAI had acquired his social network X, formerly known as Twitter, in an all-stock transaction that valued xAI at $80 billion.

Last year, the xAI team began training its AI models at the Memphis data center using 100,000 Nvidia H100 processors. The long-term plan for xAI is to use power from the local utility, Memphis Light, Gas and Water, and the Tennessee Valley Authority, according to its permit applications.

However, the turbines have an estimated power-generating capacity of 421 megawatts, which compares to the capacity of an entire TVA power plant, the SELC said. The company hasn’t said when it would plan to shut off the turbines and switch power sources.

SELC said in its letter that xAI is operating the higher number of turbines “unlawfully without any air permit” and that the local community had already been “profoundly overburdened with industrial pollution.”

“Worse yet, manufacturer-supplied emissions data for these turbines shows that xAI emits between 1,200 and 2,000 tons of smog-forming nitrogen oxides (NOx) per year, making the facility likely the largest industrial emitter of NOx in Memphis,” the letter said.

Exposure to high levels of nitrogen oxides, which are precursors to ozone formation, have been associated with higher risk of death from respiratory disease.

Musk, who’s also CEO of Tesla and SpaceX, is spending much of his time these days in Washington, D.C., as a central figure in President Donald Trump’s second administration. Musk’s primary role is overseeing an expansive effort to slash government spending and eliminate regulations, including those that potentially inhibit his businesses.

SpaceX and Tesla have a history of running afoul of federal and state environmental regulations.

The SELC said it’s likely that xAI has “violated the Clean Air Act and Shelby County’s rigorous preconstruction permitting requirements for major sources of air pollution.”

Amanda Garcia, an attorney with SELC, told CNBC in an email that, “The Shelby County Health Department is the local entity charged with implementing the relevant air permitting requirements, and has the authority to hold xAI accountable under existing law.”

At a Shelby County commissioners public hearing on Wednesday, residents expressed alarm at xAI’s use of the natural gas-burning turbines, and the health problems that can follow without strong mitigation efforts.

Easter May Knox, a resident who lives near the xAI facility, said her family has struggled with chronic respiratory problems. She said she wants to be able to wake up early in the morning and open the windows in her house.

“But when I open up that window, I smell everything but the right thing and the right thing is the clean air,” she said. “Elon Musk has all the money. He’s a millionaire, billionaire, whatever kind of -aire he is. But we need clean air!”

Other residents and officials in attendance complained that Brent Mayo, a senior manager at xAI, didn’t show up to hear their concerns after they reached out to him directly. Mayo is responsible for building out xAI’s technical infrastructure, including in Southwest Memphis.

Representatives for the Shelby County Health Department and xAI didn’t respond to requests for comment.