Elon Musk and xAI logo.
Vincent Filley | AFP | Getty Images
The Environmental Protection Agency this week closed a loophole exploited by Elon Musk’s xAI to quickly ramp up the company’s first data center in Memphis, Tennessee.
Musk’s artificial intelligence startup used a cluster of gas-fired turbines to create a type of off-grid power plant for the Colossus facility. The company was able to avoid air pollution permits by classifying the turbines mounted on its trailers as “non-road engines.”
The EPA’s latest rules make clear that these types of turbines cannot be designated as nonroad engines, especially if their total emissions exceed a “major source threshold” for pollution, and companies must also obtain a Clean Air Act permit before installing them.
The Shelby County Health Department in Memphis previously allowed xAI to designate its turbines as non-road engines and begin using them without public comment or environmental impact reviews as required by the standard permitting process.
Representatives from the county health department and xAI did not respond to requests for comment.
The move by federal regulators could slow xAI’s expansion as it builds facilities in the Memphis area. Nvidia’s The graphics processing unit will develop AI models and services in the fast-growing generative AI market, currently led by OpenAI. google.
At its Memphis data center, which first opened in 2024, xAI infers and trains Grok models and apps, including chatbots and image generators that are tightly integrated into the company’s social network X.
xAI previously told Memphis regulators that its turbines would include cutting-edge pollution control features known as selective catalytic reduction technology, but its suppliers solaris energy infrastructure told CNBC in June that xAI’s “temporary” turbines had no such controls installed.
SEI, a Houston-based energy services provider, has seen its stock soar in recent months, in part due to xAI’s expansion plans. SEI did not respond to a request for comment.
Pollution from turbines is a major source of local controversy.
Last year, residents of the majority-black community of Boxtown in south Memphis testified at a public hearing about the smell of rotten eggs in the air and the effects of worsening smog on heart and lung health.
A study by scientists at the University of Tennessee in Knoxville also found that xAI’s use of turbines is increasing the air pollution woes in the Memphis area.
Environmental advocacy groups, including the NAACP, said they would sue to stop xAI from using the turbines without permission. However, the county allowed xAI to treat the turbine as a temporary non-road engine and filed no complaints after issuing the permit.
Amanda Garcia, an attorney with the Southern Environmental Law Center who represents the NAACP, said in an email that her office will monitor xAI’s operations for violations of permit conditions and ensure that the upcoming facility near Mississippi is operating within current EPA regulations.
XAI recently raised $20 billion from investors including Nvidia and Nvidia. Ciscois currently under investigation in multiple jurisdictions because the Grok and X apps allow users to easily create and distribute deepfaked violent and sexual images of women and children.
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