• Environmental advocates say Elon Musk's xAI is running gas turbines to power its data center in Memphis, Tennessee, and emitting air pollutants there, without authorization.
• Memphis already has a major smog problem, and the county where the xAI data center is located received an "F" grade from the American Lung Association for its poor air quality.
• Musk said in July that xAI had begun training its AI models at the facility using 100,000 of Nvidia's H100 processors.

Elon Musk's artificial intelligence startup, xAI, is being accused by environmental and health advocates of adding to the pollution problem in Memphis, Tennessee, by using natural gas burning turbines at its new data center, and doing so without a permit.

The company said it was opening the data center in June in a former Electrolux factory, shortly after announcing it had raised $6 billion at a $24 billion valuation. In a post on X last month, Musk boasted that xAI had begun training its AI models at the facility using 100,000 of Nvidia's H100 processors.

The Southern Environmental Law Center sent a letter this week to the Health Department in Shelby County, where Memphis is located, and to a regional office of the Environmental Protection Agency on behalf of several local groups, asking regulators to investigate xAI for its unpermitted use of the turbines and the pollution they create.

The letter notes that xAI "has installed at least 18 gas combustion turbines over the last several months (with more potentially on the way)."

The company has been using the turbines to power the facility, but its long-term plan is to use power from the local utility, Memphis Light, Gas and Water and the Tennessee Valley Authority.

MLGW told CNBC that it started providing 50 megawatts of power to xAI at the beginning of August. However, the xAI facility requires an additional 100 megawatts. The utility has installed more circuit breakers, and started making improvements to transmission lines in the area to prepare for the added power consumption by xAI, as well.

Musk, who is also the CEO of Tesla and SpaceX and owner of social media company X, started xAI in 2023 to develop large language models and AI products that aim to compete with those from Google, Microsoft and OpenAI. The company's initial product is a chatbot called Grok, billed as a politically incorrect alternative to OpenAI's ChatGPT. AI models generally require massive amounts of power for data training and processing.

"This plant requires an enormous amount of electricity," the advocates wrote in the letter.

Some of the 18 turbines are visible from the road around the property and, according to the advocates' letter, emit air pollutants called nitrogen oxides (NOx) that add to a longstanding smog problem in the area. Shelby County has been given an "F" grade by the American Lung Association for its smog.

According to the Centers for Disease Control and Prevention's website, even low levels of nitrogen oxides in the air can irritate a person's eyes, nose, throat and lungs, causing them to cough, experience shortness of breath, tiredness and nausea. Breathing high levels of nitrogen oxides can cause "rapid burning, spasms, and swelling of tissues in the throat and upper respiratory tract," and other serious health problems, the agency says.

Businesses in Tennessee are typically required to obtain permits to operate the types of turbines used by xAI. The permits would establish the allowable concentration of emissions, and determine efficiency requirements for the engines.

'Significant health and environmental impact'

A permit would also mandate air quality testing to make sure users aren't polluting more than they had planned to in the area due to issues like poor engine maintenance.

"The overarching concern remains that there has been very little transparency and opportunity for public input for the xAI project," Amanda Garcia, a senior attorney with the Tennessee office of the Southern Environmental Law Center, told CNBC. The added concern, she said, is that it's "already having significant health and environmental impact on the surrounding community."

The groups wrote in the letter that the xAI turbines already in place have the capacity to emit an estimated 130 tons of nitrogen oxides annually, which would rank them as the ninth-largest source of the pollutants in the county. Their combined capacity could power around 50,000 homes.

Musk-led companies have a history of building facilities or operating high-emissions equipment without obtaining permits first.

CNBC reported earlier this month that SpaceX operated a water deluge and cooling system at its launch facility in Boca Chica, Texas, repeatedly discharging industrial wastewater there without a permit, a violation of the Clean Water Act.

Musk's tunneling venture, The Boring Co., was also fined by Texas environmental regulators for a similar issue — discharging wastewater into the Colorado River in Bastrop, Texas, without applying for permits or installing appropriate pollution controls.

Tesla was cited by a California air pollution regulator in 2021 for installing and modifying paint shop equipment that emitted hazardous air pollutants, without a permit and reviews as required by the Clean Air Act.

The Shelby County Health Department said in an emailed statement that the EPA "regulates companies that use mobile gas-burning turbines," and that the county gets involved in the regulation of "stationary gas-burning turbines" if they're in the same location for at least a year.

"Given the mobile nature of the gas-turbines in question, and the length of their operation for less than 364 days, SCHD does not have current permitting authority in regards to these mobile gas-burning turbines," the department said.

The EPA regional office covering Memphis didn't respond to a request for comment. Nor did xAI.

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