Mississippi details penalties against SpaceXAI over unpermitted construction

Judge found state agency misinterpreted clean air law in 69-turbine case

Mississippi’s environmental regulators have released details of enforcement penalties against SpaceXAI for violating state water pollution laws by starting construction on its Southaven data center facilities without needed permits. The Elon Musk-owned company first announced the potential fines to investors two weeks ago, speculating the amount could reach as much as $6.1 million.

The penalties concern the company’s growing Southaven footprint, which includes a power plant as well as land to build a $20 billion data center facility. State law requires companies to obtain a permit before construction to limit pollution from reaching public bodies of water. Without proper protections, rain can carry debris and chemicals off construction sites and pollute natural habitats, drinking water systems and recreational areas, federal regulators warn.

Earlier this year, SpaceXAI, through its subsidiary MZX Tech LLC, asked the Mississippi Department of Environmental Quality for permits allowing construction within the footprint. But during a July meeting between the department and MZX Tech, “it became apparent” the company had already begun construction on the land in question, impacting about 30 acres, MDEQ records show.

On July 16, a day after the meeting, department staff visited Southaven and confirmed the infractions, the records show. The agency sent two notices of violation to MZX Tech on Aug. 10, writing that both “will be subject to the maximum statutory penalty” of $25,000 for each day construction continues without the needed permits.

At one MZX Tech property, a former Southaven training facility that neighbors Horn Lake Creek, staff found that “no steps have been taken to protect stormwater infrastructure at the site” and that the property lacked protection against “fugitive dust emissions.”

At the 2400 Stateline Road property, the planned site of the data center, inspectors found “no controls around storm inlets.” They noted that while construction appeared to have started around the beginning of 2026, the property’s last construction storm water permit expired in 2023.

“The Company is cooperating with MDEQ and is in discussions to resolve the matters through a single agreed order,” SpaceXAI wrote in its Oct. 22 filing with the Securities and Exchange Commission.

It is unclear where the $6.1 million figure came from. Based on the $25,000-per-day penalty, the amount could suggest the violations lasted for several months. The department declined to say whether the figure was accurate, citing its policy of not commenting on pending enforcement matters.

The penalty details were released a week after U.S. District Court Judge Debra Brown ruled against a motion to dismiss the NAACP’s April lawsuit against the data center company. In that ruling, Brown found that MDEQ had misinterpreted federal clean air statutes when it allowed SpaceXAI to run 69 temporary natural gas turbines without a permit.

The department relied on a federal Clean Air Act exemption intended for mobile generators. It told the Musk-owned company last year that it could run the units without a permit because they are “affixed to a portable unit (i.e., a flatbed trailer)” and are therefore considered mobile.

Brown disagreed. Given the size of the generators and the fact that they are not “self-propelled or intended to be propelled” while operating, she reasoned, the federal exemption for mobile sources cannot apply. That distinction is a key focus of the NAACP’s argument against the company.

MDEQ responded to the order in a statement to Mississippi Today on Wednesday. “MDEQ is aware of the Court’s order and takes seriously all opinions by a federal court,” agency spokesperson Jan Schaefer said. “Nonetheless, MDEQ is not a party to that case and the order is not binding upon the agency. Furthermore, that litigation is ongoing and subject to appeal so it is not final at this point.”

“MDEQ always seeks to make sure our policies are in compliance with state and federal law and will do the same here once that litigation concludes,” Schaefer said.