Elon Musk's xAI company, now owned by SpaceX, is confronting new legal challenges from environmental groups in Mississippi. The company plans to construct a large methane gas-fired power plant in the town of Southaven. Non-profit organizations, including the NAACP, Young, Gifted & Green, and the Safe and Sound Coalition, are demanding that Mississippi revoke the construction permit issued to xAI last month by the state's environmental regulators. Members of these groups reside near xAI's local operational area. In a petition submitted to the state government on Thursday, the groups' lawyers stated that the power plant would "exacerbate the region's persistent ozone pollution problem" and lead to a "significant increase in pollutants such as nitrogen dioxide and related fine particulate matter," thereby harming air quality and threatening residents' health. On March 10, Musk's company received a permit from the Mississippi Department of Environmental Quality (MDEQ) to permanently install 41 natural gas turbines in DeSoto County, Mississippi, to power a nearby data center. xAI currently operates a data center called Colossus 2 in Memphis, Tennessee, located just across the state line, and is building a new facility named Macrohardrrr in Southaven. As the world's wealthiest individual, Musk envisions the Memphis area as a core hub for xAI's development, aiming to compete with OpenAI, Anthropic, and Google in the booming AI market. SpaceX acquired xAI in February of this year. Following the transaction, the combined company's valuation reached $1.25 trillion, with a record-breaking IPO anticipated in the coming months. Across the United States, communities are increasingly concerned about the financial and environmental risks associated with the energy-intensive infrastructure required to support AI models and their applications and services. Groups opposing the xAI development, represented by the Southern Environmental Law Center, argue that the company, through its local subsidiary MZX Tech LLC, and state regulators did not use accurate pollution assessment data when considering the power plant construction. They also contend that xAI was not required to use the cleanest turbines or purchase environmental offsets, that local stakeholders were excluded from key meetings, and that government emails suggest regulators rushed the approval process under pressure from xAI. The permit obtained by xAI is known as a Prevention of Significant Deterioration (PSD) permit—a federal air quality standard applicable to major pollution sources like large utility power plants. Such permits typically require years of communication between the Environmental Protection Agency, state regulators, and the public before being issued. MDEQ stated via email on Friday that it had received the groups' "request for an evidentiary hearing on the permit" and that xAI will have the opportunity to participate as a party in the proceedings.
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