A recent federal court decision involving xAI’s data-center power generation illustrates a potential limitation on the litigation protection that federal support for data-center development offers: even where the U.S. Environmental Protection Agency (“EPA”) opposes a private Clean Air Act (the “CAA” or “Act”) enforcement action, that opposition may not be enough to stop litigation brought under the Act’s citizen-suit provision.

In an October 19, 2026 Opinion and Order in National Association for the Advancement of Colored People, et al. v. X.AI Corp., et al., No. 3:26-cv-74-DMB-JMV (N.D. Miss.), the U.S. District Court for the Northern District of Mississippi permitted the United States, on behalf of the EPA Administrator, to intervene in a CAA citizen suit against X.AI Corp. and MZX Tech LLC (collectively “xAI”) as a plaintiff. Importantly, however, the Court rejected the United States’ attempt to dismiss the citizen suit under Federal Rule of Civil Procedure Rule 41 as well as pursuant to EPA’s authority under the CAA. The Court also rejected the government’s argument that principles of constitutional avoidance supported construing the CAA to give EPA authority to terminate a citizen suit when the Executive Branch has determined that the litigation should not proceed.

The Litigation Background

On April 14, 2026, the NAACP and Mississippi State Conference of the NAACP (collectively the “NAACP”) filed suit alleging that xAI violated the Act and Mississippi’s State Implementation Plan (“SIP”) by constructing and operating the Colossus Gas Plant, a plant comprised of gas-fired combustion turbines, in Southaven, Mississippi, without a permit. As a result, the NAACP seeks injunctive relief “permanently enjoining” xAI from operating the plant “except in accordance with the [Act] and requiring [xAI] to install and operate best available control technology,” along with civil penalties of up to $124,426 per day per violation, and attorneys’ fees and costs. The United States sought to intervene on behalf of the EPA Administrator to dismiss the lawsuit.

The Court readily determined that the United States could intervene because the Act’s citizen suit provision provides that “[i]n any action under this section, the Administrator [of the EPA], if not a party may intervene as a matter of right in the proceedings.” 42 U.S.C. § 7604(c)(2). It disagreed, however, with EPA’s position that EPA had the authority to dismiss the NAACP’s claims.

EPA’s Enforcement Primacy Does Not Give It Complete Control Over Citizen Suits

The United States advanced three arguments as to why it was entitled to dismiss the action against xAI; because (1) as a plaintiff it can dismiss the action under Rule 41 of the Federal Rules of Civil Procedure, which provides that “[subject] to...any applicable federal statute, the plaintiff may dismiss an action without a court order”; (2) NAACP cannot pursue CAA enforcement over the United States’ objections since the Act provides EPA with “primacy over when and how the statute should be enforced”; and (3) Article II of the Constitution, which enumerates the executive powers, vests “the power to seek civil penalties on [the government’s] behalf...conclusively and preclusively in the Executive Branch.”

The Court first rejected Rule 41 as an independent basis for dismissal. It explained that Rule 41 allows a plaintiff, under specified circumstances, to dismiss its own action without a court order--not another plaintiff's action. Accordingly, the Court concluded that if the right to dismissal exists it must stem from the CAA.

The United States’ CAA argument was largely based on the structure of the Act. It argued that its right to intervene under the Act includes a right to dismiss because the Act does not suggest that “Congress, when enacting the citizen-suit provision, deputized citizens to ‘commandeer the federal enforcement machinery,’ especially where the United States has determined that a citizen’s suit would not serve the public interest.” 

Although the Court agreed that the Act makes the EPA and state agencies the primary enforcers, it determined that such a role does not mean that the Act affords the United States with “complete control over all [Act] litigation.”  Looking to the text of the statute, the Court explained the Act explicitly provides the EPA with one situation where it may preclude a citizen suit: when the EPA or a state is “diligently prosecuting a civil action.”  The Court noted that if the United States was correct and the EPA could dismiss any action it disagreed with, there would be no need for the diligent prosecution provision. 

The Court further distinguished cases protecting EPA settlements and enforcement actions from citizen challenges because those cases involved circumstances in which the government had actually acted to enforce the environmental law. Here, the Court emphasized, EPA had not acted to bring the defendants into compliance and had not indicated any intention of doing so.

Constitutional Avoidance and a Potentially Broader Question About Citizen Suits

The United States also advanced a potentially far-reaching constitutional argument. In short, it argued that allowing the NAACP to pursue civil penalties payable to the United States treasury raises serious Article II constitutional concerns because punishing unlawful action through penalties payable to the U.S. Treasury is “quintessentially executive [power].”  In other words, the Constitution does not permit citizens to wield executive power and thus the Act should be interpreted to be consistent with the strictures of the Constitution.  It also argued that dismissal was necessary even though NAACP also sought injunctive relief because doing so still violates Article II by stripping the Executive Branch’s discretion to determine that no enforcement is appropriate.

The Court rejected the arguments on two grounds. First, the Court explained that the constitutional-avoidance interpretive canon (under which a court should favor a statutory interpretation that does not raise constitutional problems) could not supply authority to the United States absent an ambiguity in the statute. Because there was no “fairly possible” interpretation of the CAA giving EPA unilateral authority to dismiss a citizen suit, the Court determined that the canon was not applicable.

Second, the Court rejected the premise that citizen enforcement created a serious Article II problem in the first place. The Court explained that the CAA permits private parties to enforce the Act through litigation, and a citizen plaintiff suing “on his own behalf” is not exercising the same authority as an executive agency seeking penalties on behalf of the United States.  Rather, “[c]itizen suit plaintiffs bring action on their own behalf, seeking remedies, including civil penalties, to address their own injuries…” not the injuries of the United States.

Although the court rejected the constitutional arguments, the government’s argument nevertheless raises a constitutional issue potentially extending beyond data centers. The United States’ position-- if further pursued on appeal or in other matters--tees up a potentially significant challenge to the constitutional underpinnings of citizen enforcement provisions in many environmental statutes, particularly where the Executive Branch affirmatively opposes the private enforcement action.

Implications for Data Centers

This decision underscores a practical distinction between government/political support and litigation protection and risk. Even where an administration favors data-center development as a policy matter, and even where EPA itself concludes that a particular citizen enforcement action should not proceed, statutory citizen-suit rights may create an independent source of project risk. Indeed, here the United States did considerably more than express general support for data-center development: it intervened and affirmatively sought dismissal. The Court nevertheless concluded that the Act did not give EPA the power to terminate the action. This may not be the last word on these issues, as the EPA may seek appellate review.  For now, the Opinion and Order raises potentially significant and impactful legal arguments and highlights project risks for data centers.

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