SpaceXAI started Southaven data center construction without water permits, state alleges. Fines could exceed $6M

Mississippi’s environmental regulators released details this week on a set of penalties against SpaceXAI for violating state water pollution laws by starting construction on its Southaven data center facilities without needed permits. 

The company first announced the potential fines to investors two weeks ago, speculating the amount could reach as much as $6.1 million. 

To limit pollution from construction reaching public bodies of water, state law requires companies to first obtain a permit. Without proper protections, rain, for instance, 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 its growing Southaven footprint, which includes a power plant as well as land to build a $20 billion data center facility called MACROHARDRR. 

But during a July meeting between MDEQ 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, MDEQ staff visited Southaven and confirmed the infractions. The agency sent two notices of violation to MZX Tech on Aug. 10, both of which “will be subject to the maximum statutory penalty” of $25,000 for each day construction continues without the needed permits, MDEQ wrote. 

“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’s unclear where the $6.1 million figure came from. Based on the $25,000-per-day figure, it could suggest the violations lasted for several months. But MDEQ declined to say if the amount was accurate, citing its policy not to comment on pending enforcement matters.

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

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

MDEQ responds to federal judge about its turbine exemptions

Last week, a federal judge found that MDEQ had misinterpreted federal clean air statutes when allowing SpaceXAI to run 69 temporary natural gas turbines without a permit. U.S. District Court Judge Debra Brown included the opinion in her ruling against a motion to dismiss the NAACP’s April lawsuit against the data center company. 

MDEQ relied on a federal Clean Air Act exemption intended for mobile generators, and SpaceXAI’s turbines clearly did not meet that criteria, Brown reasoned. That distinction is a key focus of the NAACP’s argument against the company. 

The agency 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.”

The agency first told the Elon Musk-owned company last year that it could run the generators without a permit because the units are “affixed to a portable unit (i.e., a flatbed trailer)” and are therefore considered mobile. 

Brown, though, disagreed. She argued that, given the size of the generators and the fact they aren’t “self-propelled or intended to be propelled” while operating, the federal exemption for mobile sources can’t apply.