SpaceX Memphis data centers face House Democrat demand for tour

SpaceX Memphis data centers are drawing scrutiny from the top Democrat on the House Energy and Commerce Committee, a sign that the AI infrastructure boom is becoming a political and regulatory issue for investors to watch. Rep. Frank Pallone of New Jersey sent Elon Musk a letter Wednesday seeking records and a tour of SpaceX’s AI data centers and related power plants in and around Memphis, Tennessee.

Pallone wrote that Americans are worried about what data centers and large tech companies’ AI expansion mean for “communities, jobs, property values, and future.” He also pointed to rising electricity prices, pressure on the power grid, pollution concerns and noise as issues affecting local residents.

The request targets facilities known as Colossus and Colossus 2, which CNBC reported include three data centers filled with Nvidia processors. A data center is a facility that houses computing equipment and networking gear; AI data centers use large amounts of electricity because advanced models require many high-performance chips running at once.

Why does Congress want to tour SpaceX’s Memphis data centers?

Pallone accused SpaceX and Musk of showing disregard for nearby communities and said the company created “a massive health risk” by bringing in off-grid natural gas turbines to power the sites without proper permits or pollution controls. He asked Musk to provide information about the facilities by Aug. 11.

According to CNBC, the Memphis sites were originally built by xAI before SpaceX acquired Musk’s AI startup. xAI developed Grok’s AI models, chatbot and image editing tools. The facilities now sit at the center of SpaceX’s AI strategy as the company seeks to compete with OpenAI and Anthropic and pursue longer-term plans involving orbital data centers, CNBC reported.

SpaceX did not respond to CNBC’s request for comment.

The Memphis dispute is part of a broader backlash against AI data centers across the U.S. Gallup said in a May survey that seven in 10 Americans opposed construction of an AI data center in their local area, including 48% who were strongly opposed. CNBC reported that other AI data center projects are underway from OpenAI, Meta, Microsoft and Google.

The conflict also has a legal front. The Department of Justice under President Donald Trump filed a motion to intervene in a lawsuit seeking to stop xAI’s use of allegedly illegal, air-polluting turbines, according to CNBC. The suit was filed by environmental advocates and the NAACP in Mississippi.

Pallone criticized the Trump administration’s position in the letter, writing that it had “essentially claimed that it alone decides whether SpaceXAI and other companies get a free pass to pollute unimpeded.” He added that federal support for tech companies did not make the company’s actions legal.

The debate matters beyond Memphis because AI computing is turning electricity access into a core business issue for technology companies. If local opposition, permitting fights or utility cost disputes slow data center buildouts, companies pursuing AI products may face higher costs or longer timelines.

Some states are already responding. New Jersey Gov. Mikie Sherrill, a Democrat, signed legislation earlier this month aimed at making data center operators pay what the state describes as a fair share for electricity rather than shifting costs to households and businesses, according to the governor’s office.

This story draws on original reporting from CNBC.