A federal judge in Mississippi rejected SpaceXAI's motion to dismiss an NAACP lawsuit alleging the company operated 27 gas-fired turbines near Memphis without required air permits, allowing the Clean Air Act case to proceed.
A federal judge in Mississippi has rejected SpaceXAI's motion to dismiss a lawsuit filed by the NAACP alleging the company violated the Clean Air Act by operating gas-fired combustion turbines to power its AI data centers in the Greater Memphis area without obtaining the required air permits.
The opinion, released late Friday, allows the case to move forward in the U.S. District Court for the Northern District of Mississippi, dealing a second consecutive legal setback to SpaceXAI — the AI division of Elon Musk's aerospace and defense conglomerate SpaceX — in the same court.
The Southern Environmental Law Center and Earthjustice filed the suit in April 2026 on behalf of the NAACP. The complaint alleges that between August and December 2025, xAI and its subsidiary MZX Tech installed and operated 27 gas turbines in Southaven, Mississippi, "without an air permit or regard for the health and safety of people living nearby."
The turbines, which power the company's Colossus data centers, emit smog-forming pollutants and particulate matter that can elevate health risks and produce an unpleasant odor, according to the suit. SpaceXAI is also constructing a gas turbine power plant in Southaven to support the data centers in the region.
Lawyers for SpaceXAI had argued in their June motion to dismiss that the turbines should be classified as "mobile sources," a designation that would exempt them from state permitting requirements. The company also contended that the NAACP lacked standing to sue under the Clean Air Act and that citizen suit provisions of that statute were unconstitutional.
The presiding judge rejected each of those arguments. "Because the plaintiffs have statutory standing under the Clean Air Act, because the combustion turbines are not 'mobile sources' under Mississippi's SIP, and because the citizen suit provision does not violate Article II of the Constitution or the private nondelegation doctrine, the plaintiffs' claims will proceed," the judge wrote in the opinion.
The ruling arrives approximately two weeks after the same court turned down a U.S. Department of Justice request to end the case against Musk's company — a separate blow that had already signaled the court's reluctance to close the litigation.
SpaceX did not immediately respond to a request for comment.
The Colossus facilities and the Southaven power plant have drawn sustained community opposition for years, with residents and environmental advocates raising concerns about air quality and the health of people living near the installations.
The case now enters the discovery phase, where both sides will have the opportunity to gather evidence. How the court ultimately rules on the underlying Clean Air Act claims could carry implications for other AI data center operators pursuing similar power generation strategies in jurisdictions with active state implementation plans, or SIPs, under federal environmental law.
Sara Montes de Oca is the Editor in Chief of TechEchelon. Previously a correspondent and producer in Washington, D.C., covering business, finance, and politics.
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