SpaceX Loses Bid to Dismiss Clean Air Act Suit Over Gas Turbines Powering Its Colossus 2 AI Data Center
The power plant behind SpaceX's Colossus 2 AI data center now faces a full court fight. A federal judge in the Northern District of Mississippi on Friday denied a motion by xAI, now SpaceX's AI division, and its subsidiary MZX Tech to dismiss an NAACP lawsuit over the gas-fired turbines that power the Colossus 2 data center in Southaven, CNBC reported. SpaceX (NASDAQ: SPCX) did not immediately respond to CNBC's request for comment.
The suit, filed in April by the Southern Environmental Law Center and Earthjustice on behalf of the NAACP, alleges that the company installed and operated 27 gas turbines in Southaven between August and December 2025 without an air permit. The company argued that the turbines were "mobile" and therefore exempt from permitting, that the NAACP had no right to sue, and that citizen suits under the Clean Air Act are unconstitutional. Judge Debra M. Brown rejected all three 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," she wrote in the opinion.
The ruling came about two weeks after the same court rejected a Justice Department request to end the case. The plaintiffs are seeking an injunction, required pollution controls and civil penalties of up to $124,426 per day per violation, according to the opinion. The Southern Environmental Law Center says the turbines can emit more than 5,000 tons of nitrogen oxides, 400 tons of fine particulate matter and 47 tons of formaldehyde a year, and notes that the court has not yet ruled on its motion for a preliminary injunction.
The legal risk now sits on a much more valuable business. In its October filings, SpaceX said a single customer, "Customer B," accounted for about 34.5% of third-quarter revenue through purchases of computing power from facilities such as its Memphis data center, helping the company post its first profit. Bloomberg has identified that customer as Anthropic, Silicon UK reported. Anthropic has committed up to $120.5 billion to SpaceX compute contracts through 2029, according to its IPO filing, though it can cancel them with 90 days' notice starting in early 2027.
That leaves on-site power at the center of the story. Large AI campuses are turning to their own gas generation when grid connections lag, and this ruling holds that so-called temporary turbines still need Clean Air Act permits.
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Why it matters
Power is one of the main limits on how fast AI data centers can grow. A ruling that on-site turbines need full air permits adds legal and timing risk for SpaceX's compute business, which now drives a large share of its revenue, and for other developers relying on similar setups. The case is still at an early stage, and no penalties or injunction have been ordered. This is reporting only, not investment advice.
Sources
- CNBC, "SpaceX loses bid to toss NAACP lawsuit over Memphis data center air pollution" (Oct. 31, 2026)
- U.S. District Court for the Northern District of Mississippi, NAACP v. X.AI Corp., No. 3:26-cv-74, Doc. 139, Opinion and Order (via Justia)
- Southern Environmental Law Center, "Court tosses request to block Clean Air Act lawsuit against Musk's xAI" (Oct. 30, 2026)
- Silicon UK, "Anthropic Identified As SpaceX's Largest Customer" (Nov. 2, 2026)