The AI boom runs on electricity, and a courtroom in Mississippi just became one of the places where the cost of that electricity is being argued out.
A federal judge has denied a motion by xAI, the AI company now owned by SpaceX, to dismiss a lawsuit brought on behalf of the NAACP over the gas turbines powering its Colossus data centers in the Memphis area. The case will now proceed in federal court.
Here is what the lawsuit claims, what the judge decided and why it matters, based on reporting from TechCrunch and CNBC.
What the lawsuit says
The Southern Environmental Law Center and Earthjustice filed the suit on behalf of the NAACP in the U.S. District Court for the Northern District of Mississippi in April 2026.
According to TechCrunch, the plaintiffs say xAI “installed and operated at least 35 combustion turbines and other sources of air pollution at the Colossus site without ever obtaining the necessary preconstruction or operating air permits,” in violation of the Clean Air Act. CNBC reported that the complaint alleges xAI and its subsidiary, MZX Tech, installed and operated 27 gas turbines in Southaven, Mississippi, between August and December 2025 without an air permit.
The suit says the turbines emit smog-forming pollutants and particulate matter that can increase health risks for people nearby. SpaceX is also building a large gas turbine power plant in Southaven to power its data centers in the area.
xAI’s arguments
In its motion to dismiss, filed in June, xAI made three main arguments, according to CNBC:
- The turbines were “mobile” and therefore exempt from permitting requirements.
- The NAACP did not have the right to sue under the federal Clean Air Act.
- Lawsuits brought by community groups in this way are unconstitutional.
What the judge decided
Judge Debra M. Brown rejected all three. “Because the plaintiffs have statutory standing under the Clean Air Act, because the combustion turbines are not ‘mobile sources’ under Mississippi’s [State Implementation Plan], and because the citizen suit provision does not violate Article II of the Constitution or the private nondelegation doctrine, the plaintiffs’ claims will proceed,” she wrote.
On the constitutional question, she added: “Because citizen suit plaintiffs sue on their own behalf, in their own name, and seek penalties that redress harm to themselves, they are not exercising the federal government’s executive power.”
Importantly, this ruling does not decide whether xAI broke the law. It only means the case can move forward to be argued on its merits.
Second loss in a month
CNBC noted the decision came about two weeks after the same court rejected a request from the U.S. Department of Justice to end the case.
“The courts have repeatedly rejected attempts by xAI and the DOJ to dismiss the NAACP’s Clean Air Act case, affirming our right to pursue justice for communities impacted by pollution,” said Abre’ Connor, the NAACP’s director of environmental and climate justice, in a statement quoted by TechCrunch. “Our position has been clear: xAI cannot operate gas turbines without the required permits.”
TechCrunch said it had reached out to SpaceX for comment, and CNBC reported that SpaceX did not immediately respond.
Why this matters beyond Memphis
Training and running large AI models takes enormous amounts of power, and companies racing to build data centers have sometimes turned to on-site gas generation to get capacity online faster than the grid can supply it. This case tests whether that approach can sidestep normal air permitting.
The ruling also lands amid a broader backlash. TechCrunch noted that New York recently passed a moratorium on new data centers, other state and local governments are weighing similar steps, and the issue could play a role in the upcoming U.S. midterm elections.
What to watch next
With the motion to dismiss denied, the next milestones will be new filings and a court schedule for the merits phase. Anyone following how AI companies power their growth should keep an eye on the docket.
The takeaway
AI’s appetite for electricity is no longer just an engineering problem. As this case shows, it is increasingly a legal and community issue too, and the rules for how data centers are powered may be decided as much in courtrooms as in boardrooms.
Image: SunRackMountServers by Raysonho @ Open Grid Scheduler / Grid Engine via Wikimedia Commons, Public Domain Mark 1.0
