The post Elon Musk’s AI Firm Faces Legal Action, Here’s Why appeared first on Coinpedia Fintech News Musk and controversy go hand in hand. In a latest legal scoop, Elon Musk’s artificial intelligence company, xAI , is facing legal action over air pollution caused by its Memphis-based data center. The company recently received a 60-day legal notice from the Southern Environmental Law Center (SELC) , which claims that xAI violated the Clean Air Act by running dozens of gas-powered turbines without proper permits. The case is being filed on behalf of the NAACP, America’s oldest civil rights group. Meanwhile, xAI is building a second, even larger data center. The NAACP sent a formal 68-page intent to sue letter to Elon Musk for the pollution caused in South Memphis by artificial intelligence company xAI’s turbines, citing the public health risks posed and the pollution to nearby minority communities. https://t.co/Bn3PDExdeT pic.twitter.com/mKEryVF1Uq — Amee Vanderpool (@girlsreallyrule) June 17, 2025 Turbines Running Without Permits The notice says xAI reportedly installed and operated at least 35 combustion turbines at its facility, known as Colossus, to power its AI systems while waiting for a full grid connection. These turbines have been running without the required construction or operating air permits, according to SELC. The group also says xAI failed to use technologies that could have reduced the amount of pollution released into the air. Community Concerns and Environmental Impact The Colossus data center is located in South Memphis, near Boxtown, a predominantly Black neighborhood that already suffers from poor air quality due to nearby industrial activity. The NAACP called the situation an example of environmental racism and said it is ready to take legal action to protect the community. The group is asking for court-ordered relief, civil penalties, and legal fees. xAI Yet to Respond SELC said it reached out to local health officials multiple times, urging them to take action, but has seen no results. Senior attorney Patrick Anderson said the group is now turning to legal means to enforce the law. xAI and the NAACP have not responded to media requests for comment. Despite the backlash, Musk’s company is already planning a second, larger data center in Memphis called Colossus 2. It is expected to need at least 1 gigawatt of power, signaling the company’s big ambitions in the AI space. Data Center Demand Reaches New Highs The demand for data centers is rising fast, mainly due to the rapid growth of AI and cloud computing. According to the U.S. Department of Energy, energy use from data centers could double or triple by 2028. Research firm McKinsey estimates that global investments in the sector will need to hit $6.7 trillion by 2030. Musk’s xAI is just one of many tech companies racing to keep up with the AI boom, but growing environmental concerns may soon force firms to rethink how they power their data.
