Space Exploration Technologies Corp.’s (NASDAQ:SPCX) AI division, SpaceXAI, failed to get an NAACP Clean Air Act lawsuit thrown out, with a federal judge’s opinion released late Friday keeping the Mississippi case alive.
The dispute centers on gas-fired turbines used to supply electricity for AI data centers near Memphis.
The ruling comes as the Elon Musk-led company is working under an agreed timetable to wind down temporary units at its Southaven site, with the last mobile turbines scheduled to leave by July 2027.
The NAACP’s complaint, filed in April 2026, targets xAI and related entities now owned and run by SpaceX, and the court declined to accept the company’s bid to end the case, reported CNBC. The suit alleges the companies installed and operated 27 turbines in Southaven between August and December 2025 without an air permit.
Judge Rejects Company’s Defense
SpaceXAI has framed its turbine strategy as transitional, telling regulators it is moving toward a larger, permanent electricity setup for its Greater Memphis-area supercomputer project. In that update, the company tied the phaseout of temporary generators to a 1.2-gigawatt facility it says is being developed under a Clean Air Act permit.
The NAACP’s case was brought with the Southern Environmental Law Center and Earthjustice acting as counsel.
The judge rejected the company’s core defenses and allowed the claims to continue, writing: "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 decision followed another setback for the company in the same court roughly two weeks earlier, when a Justice Department request to end the case was turned away, according to the report.
SpaceX Calls It Mobile Equipment
In court filings, SpaceXAI argued the turbines should be treated as mobile equipment and therefore outside certain permitting rules, while also challenging the NAACP’s ability to sue under the statute. The judge disagreed, concluding the turbines did not qualify as mobile sources under Mississippi’s state implementation plan.
SpaceXAI said air monitoring shows local conditions continue to meet or exceed Environmental Protection Agency standards.
The permanent buildout described by SpaceXAI is larger than the temporary setup at the center of the lawsuit. The company said the long-term plant will use 41 turbines and that it received a Clean Air Act permit for that facility in March 2026.
SpaceX earlier told investors in its IPO filing that xAI expected to spend $2.8 billion on additional mobile gas turbines even as the emissions lawsuit continued.
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