Elon Musk’s companies’ data center activities in Memphis and its surroundings have reignited debates over environmental and health issues in the region. The natural gas turbines and water infrastructure used to expand the company’s data center capacity are drawing criticism from local residents.
The report highlights that the company sells artificial intelligence computing capacity at its Memphis campuses, with these operations reaching a significant economic scale. However, concerns are growing among residents along the Boxtown and Southaven corridor due to air pollution, water usage, and construction impacts.
Gas Turbines at the Heart of Permit Controversy
xAI’s Colossus 1 campus in Memphis came under scrutiny in 2024 amid allegations that natural gas turbines were operated without permits. Authorities noted that due to a loophole in the Clean Air Act, the company was able to run turbines without permits for an extended period, after which permits were granted for 15 turbines on site.
The company later began installing unpermitted turbines for Colossus 2 in Southaven, Mississippi, and by mid-May, at least 46 natural gas turbines had been brought to the site. This development sparked a new wave of objections among local residents and environmental groups.
Increasing Legal Pressure Over Health Impacts
Fine particulate matter emitted from natural gas turbines has been linked to serious health issues such as heart attacks, high blood pressure, and premature deaths among individuals with chronic conditions. The location of Colossus 1 in Boxtown, a historically Black neighborhood in Memphis, has further intensified the backlash.
A lawsuit led by environmental justice groups alleges that the company installed turbines without air permits and without considering the health of nearby residents. Residents of Southaven have also filed a separate class-action lawsuit, claiming that the data center construction has disrupted neighborhood life.
Initial findings from environmental measurements released this week have heightened concerns. Air data collected at three points in Southwest Memphis showed PM2.5 levels exceeding EPA limits from November through March.
Uncertainty Surrounds Water Usage and Construction Future
Communities are closely monitoring not only air pollution but also water consumption. The Colossus 1 facility may require over 5 million gallons of water per day for cooling during peak usage.
When the company first arrived in Memphis, it announced plans to build a water recycling facility to avoid impacting the aquifer. However, construction abruptly halted in mid-April, raising questions about the project’s future.
Owner Musk stated in early April that the focus would first be on completing Colossus 2 and stabilizing the system, followed by establishing the water recycling plant. While city officials describe ongoing communications with the company as positive, they want the process to be explained more transparently to the public.
Tax Revenue to the City Fails to Ease Concerns
The report also highlights that xAI provides significant tax revenue to the region. Shelby County could collect up to $28 million in property taxes from the company’s Tennessee campus this year, compared to a total property tax revenue of just over $800 million last year.
The local government has decided to allocate 25% of the collected taxes to projects that strengthen the neighborhoods where the data centers are located. Discussions are ongoing about how to use approximately $3 million collected in 2025 for housing repairs and environmental signage projects.
However, neighborhood representatives and environmental advocates argue that the tax revenue is insufficient to offset health impacts. Numerous lawsuits, the increasing use of turbines, and debates over water infrastructure indicate that the environmental tensions accompanying Musk’s investments in various states and countries continue in Memphis as well.
