Epa Pokes Musk Over Using Unpermitted Turbines For Ai

A provision tucked inside an Environmental Protection Agency regulation finalized last week could complicate Elon Musk’s efforts to rapidly expand his artificial intelligence company.

The tech billionaire and former "Department of Government Efficiency" mastermind’s company, xAI, has been under fire from environmental advocates since last year for relying on methane gas turbines to power its Memphis, Tennessee-area data centers. Until this spring, the company behind chatbot Grok had no Clean Air Act permits for dozens of turbines at its facility in South Memphis.

Officials at xAI argued that they didn't need the permits unless the generators were on site for more than a year. That argument was supported by local health officials tasked with air permitting decisions.

Now, EPA has weighed in with a provision inside its final rule posted online last week regarding Clean Air Act rules for natural-gas-fired power plants. The regulation weakens restrictions on nitrogen oxides, harmful gases from burning fossil fuels that form smog and cause health problems like asthma. But the rule also seems to address xAI’s arguments by siding with environmental groups that have pushed for pollution controls at the Memphis facility.

The rule specifically mentions arguments about “temporary” turbines being exempt from air pollution standards, and concludes, “Historically, however, the EPA has not regulated combustion turbines, even those that may be portable, as nonroad engines, but rather as stationary sources."

In other words, EPA indicated that xAI’s arguments about portable turbines were incorrect, saying instead that they require permits even if they are on trailers and can be moved.

xAI did not respond to requests for comment on the rule. It comes as the company is expanding its supercomputers to a second data center in the region.

A coalition of groups that has pushed for environmental regulations on Musk's company celebrated the language, calling it a "clear rebuke of arguments from local leaders that the turbines at the xAI site qualified for a so-called ‘nonroad engine loophole.’” The groups include the Southern Environmental Law Center; the NAACP; and Young, Gifted & Green.

After a high-profile falling out with President Donald Trump over the summer, Musk has been moving back into the White House orbit in recent weeks. In October, the president told reporters on Air Force One that Musk “had a bad moment. But I like Elon, and I suspect I’ll always like him.”

EPA Administrator Lee Zeldin denied Tuesday that the rule would impact xAI, when Fox Business host Stuart Varney asked if he was “tightening the rules on Elon Musk’s AI company xAI.”

“The company’s gas-powered generators now need full pollution permits, apparently closing a loophole used to expand quickly. Does that mean that Musk is banned from using nat[ural] gas at his data center?” Varney asked.

Zeldin responded with a smile and said, “This is one of those points that highlight how not everything on the internet is true.

“We have been working very closely with Shelby County, Tennessee, the state of Mississippi, as they go through their permitting process to allow xAI to go forward,” he added.

Zeldin, who came on the show to celebrate Trump’s first year in office, highlighted a raft of environmental regulations that his agency has begun to roll back.

“The Green New Deal, it’s done, it’s dead,” he said earlier in the interview, referring to the clean energy concept promoted by Democrats during the Biden administration.

Requiring companies to to receive permits for gas turbines could appear counterintuitive for an administration that has prioritized the development of AI. Zeldin noted last year that “making the United States the artificial intelligence capital of the world” is one of five pillars driving EPA actions.

He reiterated that point on Tuesday, saying, "For President Trump, a top priority is advancing cooperative federalism, it’s about getting permits done faster across the board and to unleash energy dominance. So our goal here is to help grow the economy to make sure these jobs are created all across America and to get permits done."

Zeldin has courted the AI industry throughout his tenure. He met with xAI officials at the end of May, shortly before the Shelby County Health Department issued a permit for the gas turbines in Tennessee. In November, Zeldin spoke at a board meeting of the Data Center Coalition, an industry lobbying group.

EPA has also cited the nation’s AI boom when rolling back pollution rules for coal plants, some of which have been ordered to remain open by the administration to power data centers. The agency also eased guidance for diesel generators, a favored source of power for data centers, so they can be used for more than just emergency backup power.

The final rule requiring permits for gas turbines also weakened limits proposed by the Biden administration that would have lowered the amount of smog-forming pollutants they can release.

It also nixed a plan that would have required turbines to be equipped with state-of-the-art pollution control technologies. Environmental groups slammed the rule for not quantifying the health impacts of its changes, a break from long-standing EPA practice.

EPA press secretary Brigit Hirsch said in a statement that state and local air regulators approve facility permits, not EPA, adding that the regulation is not related to xAI.

Still, Memphis-area environmental groups said the new rule proved they were correct all along.

“Memphians have been yelling from the top of our polluted lungs that allowing methane turbines to operate for almost a year with no permit is not only inhumane but illegal,” said LaTricea Adams, CEO and president of Young, Gifted & Green.

The coalition that includes her group had pushed the Shelby County Health Department to regulate the turbines since they began appearing at the xAI facility in the spring of 2024. County officials resisted, saying a permit was not required unless the turbines would be on site for a year.

The groups challenged a permit issued by the county health department last spring, saying it didn’t consider the facility’s earlier use of the turbines. The coalition also challenged a broader county policy on gas turbines. The Shelby County Air Pollution Control Board verbally dismissed the case last month but has not issued a final order.

In the wake of EPA’s new rule, the Southern Environmental Law Center has asked the board to hold another public hearing, and to direct the health department to “change its policy to align with federal law.”

As environmental groups have been fighting to regulate pollution from xAI’s first data center in Memphis, known as Colossus 1, the company has been working on a second one.

Colossus 2, which is roughly 11 miles away from the first data center, is located in Memphis but is powered by gas turbines across the road in Mississippi.

Regulators in that state gave xAI permission in Augustto operate the turbines without a permit for up to 12 months. This week, the company filed a permit application with the Mississippi Department of Environmental Quality for 41 turbines that can produce 1.2 gigawatts of power. (The Hoover Dam generates about 2 GW.)

A public hearing for the permit is set for Feb. 16.

Musk has plans to expand his operations in Mississippi. Gov. Tate Reeves, a Republican, announced earlier this month that xAI would invest $20 billion to build a data center, making it what he said is “the largest economic development project in Mississippi’s history.”

Musk dubbed the facility “MACROHARDRR,” and said the company expects it to come online in February.

“We are grateful to Governor Reeves for his support of building xAI at warp speed,” Musk said in a statement.

Eric Hilt, a spokesperson for the Southern Environmental Law Center, said the coalition is "evaluating all our options when it comes to xAI’s operation of unpermitted turbines in Mississippi."