Two years ago, Elon Musk selected Greater Memphis as the hub for his ambitions in artificial intelligence, quickly establishing data centers and energy infrastructure. However, local residents are now facing challenges, such as increased noise and emissions from natural gas-powered turbines. The backlash against SpaceXAI’s facilities, known as Colossus and Colossus II, is shaping a framework for communities nationwide that resist similar AI developments. Recently, New York Governor Kathy Hochul implemented a one-year halt on AI data center constructions in her state, a move that drew criticism from President Donald Trump, a known supporter of Musk. Meanwhile, New Jersey Governor Mikie Sherrill has enacted regulations ensuring data center companies contribute fairly to electricity costs rather than offloading those expenses onto local residents and businesses. Various protests, legal actions, and policy proposals are emerging across the country, often referencing Memphis and SpaceXAI, which Musk’s defense contractor, SpaceX, purchased in February. “The precedent set by Colossus has not been a positive one,” stated Jigar Shah, former director of the U.S. Department of Energy’s loan program office and an established energy entrepreneur. “It’s essentially a case study of what not to replicate elsewhere, though they received capitalistic rewards.”
Jason Haley from Southaven, Mississippi, is involved in a class action lawsuit against SpaceX due to the disruptive noise from the nearby power plant.
In June, SpaceX achieved a remarkable initial public offering (IPO), highlighting AI and its Colossus facilities as central to its expansion strategy. Major companies like Google, Anthropic, and Reflection AI have signed contracts to utilize surplus computing power at Colossus and Colossus II, potentially worth up to $2.32 billion per month. Yet, local residents feel disconnected from these benefits. Many have expressed that SpaceXAI never consulted them about their plans before breaking ground, despite the clear implications for the neighborhoods. Jason Haley, whose home is located about a mile from Colossus II, described the noise from its gas turbines as “a form of torture.” Southaven is part of the Greater Memphis region.
Growing opposition
Concerns about AI data centers are on the rise, not only towards SpaceXAI but also toward projects proposed or underway by Microsoft, Meta, Google, OpenAI, and other major tech companies. A Gallup poll from May revealed that 70% of Americans oppose the establishment of local AI data centers, with nearly half expressing strong disapproval. Musk himself has acknowledged the public's reluctance to host AI data centers and their supporting power plants. “Very few people want a power plant in their backyard,” Musk said in a JPMorgan interview during the SpaceX IPO roadshow. He indicated that if the country aimed to double electrical usage, it would necessitate building twice as many power plants, which many communities wouldn’t welcome. Neither Musk nor SpaceX responded to repeated inquiries regarding the dissatisfaction from Memphis residents.
In Southaven, SpaceXAI is constructing a substantial gas turbine power plant intended to supply its local data centers.
SpaceXAI has acquired over 1,100 acres in the Greater Memphis area for its data centers and power generation plant. These facilities were initially designed to train and support xAI's Grok AI models and chatbot, which have faced their own controversies. While data centers are not a new concept, their construction surged dramatically with the rise of generative AI, increasing the demand for data processing capabilities and energy sources. These facilities traditionally require extensive land, power to operate their complex systems, and water for cooling. Despite their sophistication, once operational, data centers typically require minimal staffing, often resulting in limited job creation and tax revenue. Residents in Memphis, alongside environmental advocates, are sharing their challenges as cautionary tales, using their experiences to motivate other communities to seek improved regulations or better agreements with developers. Their narratives are influencing changes in policies, lawsuits, elections, and movements extending beyond Memphis. Nearby communities such as Olive Branch and Jackson have revised their zoning regulations, aiming to prevent the difficulties faced by Memphis residents when Musk's developments began. Additionally, in June, Republican primary losses were incurred by Utah Senate president Stuart Adams and two other local officials who supported a controversial data center project backed by investor Kevin O’Leary.
Loretta Thornton, a resident of Whitehaven, Tennessee, lives adjacent to xAI’s Colossus II.
Musk announced that the Colossus I facility was completed in just 122 days, which he shared in a post on September 2, 2024. Upon its first operational year, SpaceXAI contributed $25 million in taxes, making it the second-largest taxpayer in Shelby County, following FedEx, according to Memphis Mayor Paul Young, who played a pivotal role in attracting the data center industry to the area. Mayor Young acknowledged ongoing efforts to mitigate potential adverse effects from the facility while enhancing its benefits. However, he noted that SpaceX has not yet fulfilled certain commitments, including the construction of a water recycling plant aimed at minimizing water usage for cooling at Colossus. Residents in the Greater Memphis region have reported increases in their water and electricity bills since SpaceXAI established its presence. Nevertheless, Memphis Light Gas & Water stated that rates have not been affected by SpaceXAI’s operations, clarifying that an upcoming 4% increase in electricity rates over three years starting in 2024 is unrelated to data center demands.
Legal disputes
Last year, Haley joined the Safe and Sound Coalition, a neighborhood group focused on measuring noise levels, raising awareness, and advocating for changes from the company and local leaders. In March, Southaven Mayor Darren Musselwhite promised to enforce stricter noise regulations, though in emails reviewed by CNBC, he suggested Haley might consider selling his home. In response to inquiries from CNBC, Musselwhite mentioned he has dedicated extensive time to addressing noise concerns, denying claims that he advised residents to move.
Southaven residents, including Haley, filed a proposed class action lawsuit against SpaceX in June, claiming the company has created a “public nuisance” due to noise from Colossus II. In a parallel situation, neighbors to Microsoft’s Fairwater Data Center in Mt. Pleasant, Wisconsin, recently initiated a similar class action suit concerning noise complaints. Earlier this year, the Southern Environmental Law Center and Earthjustice filed a lawsuit on behalf of the NAACP, arguing that SpaceX violated the federal Clean Air Act by operating numerous gas-burning turbines without required permits or pollution controls. According to specifications, the turbines used can emit significant amounts of smog-forming nitrogen oxides annually. SpaceXAI also contributes to particulate pollution, including PM 2.5, during both construction and operations. In May, lawyers for the NAACP sought an emergency injunction to halt the use of gas turbines in Southaven. The U.S. Department of Justice intervened, urging the court to dismiss the lawsuit. The DOJ stated that SpaceXAI’s technology has been employed in military operations and is integral to national security, arguing that the lawsuit poses a threat to national, economic, and energy security. SpaceX is currently defending itself against the NAACP’s legal action, asserting that the turbines in place are temporary and that plans are underway for the installation of permitted turbines equipped with pollution controls.
