Does Memphis's data center moratorium even matter?

UPDATE, October 14th: EDGE sent me the signed lease. It covers about 636 acres – more than the 522 reported when EDGE’s board voted in October 2024 – and it took effect March 1st, 2025. The landlords are the Port Commission and EDGE’s Industrial Development Board together. And it’s the 672-acre block on the map below – the land survey in the lease lines up with that parcel.

Here’s what’s in it. The lease lists what the xAI company can put there: “data center(s), substation(s), mega pack(s), lithium ion batteries, natural gas turbine(s),” plus roads and utilities. Solar isn’t named. The two public landlords promised they “shall not directly or indirectly impair, oppose or obstruct” the company’s efforts to get its permits. And when the first 21 years are up, the company can buy the land for about $23.6 million.

I asked EDGE for any appraisal or valuation behind the rent and terms. The answer was “None,” and EDGE said its “staff and board members have expertise and experience in this area.”

To be fair – leases like this usually list every use a tenant might ever want. Nothing in it says turbines or a data center are planned there, and solar could still fit under “any other lawful purposes.” You can read the lease here.

UPDATE, October 7th: The council didn’t vote. On October 6th it voted 7 to 5 to put off the final vote on the moratorium until October 20th. The version posted for that meeting adds progress reports every 90 days, and it says the permanent rules are due “no later than one hundred eighty (90) days” after it takes effect – the words and the number don’t match.

Okay – let’s talk about the data center moratorium in Memphis.

The xAI files

Every essay in this series is pinned to a question on the board at rachelandthecity.com/the-xai-files.

The Memphis City Council takes its final vote today at 4 p.m. – and honestly, I don’t think it matters whether it passes or not.

Let’s talk about what it would actually do – cause it’s written to do a lot less than it sounds like.

Back on September 4th, I wrote about the two ways this pause could end early. This one is about what it would do while it’s running.

It’s Ordinance 5982, and Councilman JB Smiley is the lead sponsor. The final vote got pushed back from September 15th, and Smiley brought back an amended version. Everything below comes from the version the City posted in August.

WHAT IT WOULD DO

For 12 months, the City would keep taking applications for new data centers – it just wouldn’t process them. That means no rezonings, no site plans, and no building or grading permits for a new one.

Data centers that are already running would be exempt – as long as they don’t grow. If one wants a bigger building, more electricity, more utility capacity or to run harder, it loses that exemption.

It would also set up a study committee – MLGW and other experts – to look at the stuff people actually worry about. The August version gives it a long list, including how far data centers should sit from homes and schools, noise limits, water and cooling, backup generators, and how to keep the cost off our bills.

There’d be a progress report due at six months. The pause would end at 12 months or when permanent rules pass, whichever comes first – and the council could extend it.

The ordinance doesn’t set a rule for water, air or noise. Under it, a data center that’s running today wouldn’t have to change a single thing.

The reason is what the city is allowed to touch. Allan Wade, the council’s attorney, told the committee on September 1st that “the main thing that we control is siting. That is a property zoning issue.” He said the council doesn’t control “water, water consumption, electric consumption, all the things that everybody’s hanging their hats on.”

Air permits in Memphis come from the Shelby County Health Department, not the council. So the council reached for the one tool it has – zoning – and a zoning pause is mostly a pause on paperwork.

That same afternoon, MLGW’s president Doug McGowen walked the council through the data centers waiting on power in Memphis.

He said the next two in line add up to 350 megawatts, and neither one would “get any traction until after the first of the year and into the first quarter of 2027.” He also said no commitments to serve either one had been made. Behind those two are ten more he called speculative, and he said none of them had been studied yet.

Then he said that, “in the next six months, there is no data center that will just pop up anywhere. It can’t happen.”

So who is that 350 megawatts for? No one is saying – but I have a theory.

About 50 of it is another expansion for 5C, the company with the data center in the old Fred’s headquarters. McGowen named that one. He didn’t name who wants the other 300 – and 300 megawatts is a whole lotta power.

So, here’s my theory.

It isn’t xAI’s Colossus II on Tulane Road.

On August 20th, TVA’s board approved more than 100 megawatts for an unnamed customer that TVA would serve directly – skipping MLGW – starting as early as November. The Daily Memphian reported the same day that SpaceXAI asked TVA to directly supply more power to its Colossus II campus, and Fox13 reported the board gave the go-ahead.

Why would they need it?

In June, xAI’s own employees swore in federal court that Colossus II runs entirely on the gas turbines in Southaven – 59 temporary ones at the time, against a permit for 41 permanent ones. And Mississippi’s order gives every one of those temporary turbines a date to stop running – the last one in July 2027. So you do the math.

If Colossus II’s power is coming straight from TVA, I think that takes it off the table for MLGW’s 300.

Could the 300 be for a data center that isn’t xAI’s? Maybe – but here’s what I think is a better bet.

xAI’s land in Pidgeon Industrial Park is the most likely possibility. The Commercial Appeal reported that an xAI company leased 522 acres there from EDGE, the city and county’s economic development agency, in October 2024. That land sits right by Colossus 1 – and McGowen described the 300 as “again in an industrial park” right after he placed Colossus 1 at Pidgeon.

That’s where the solar farm is supposed to go – but 522 acres is a lot of space.

Satellite map of Pidgeon Industrial Park in Memphis: land owned by xAI's company CTC Property in red, including Colossus 1, and vacant land owned by EDGE in yellow, including a 672-acre parcel southeast of Colossus 1 and a 622-acre parcel to its west. — EDGE-owned land near Colossus 1, from the Shelby County parcel map. Nothing public says which parcels the 522-acre lease covers. The 672-acre block to the southeast is the best fit for where the Commercial Appeal placed it.

So xAI has the room – and the price tag points right back at them too.

Under TVA’s new rules, 300 megawatts through MLGW would cost about $449 million up front, paid to TVA – $1.521 million per megawatt above the first 5, and it isn’t refundable. That matches the “$450 million” McGowen told the council.

On top of that, the requester pays up front for every grid upgrade MLGW needs – and McGowen said MLGW doesn’t know yet what this one will cost. Then, under TVA’s new rules, data centers lose the cheaper factory rates by October 2027, and their rates go up in two steps – TVA expects about 10% higher bills. McGowen said they pay for that capacity whether they use it or not.

Who else could afford that besides xAI? And what company building something that big would look at Memphis right now and think – yeah – this seems like a great place to do it?

Councilman Jeff Warren told WREG on Monday, “What we got right now is no system coming in within the next year, no big system looking.” Then he added, “Now we have some that could expand, and these regulations could apply to their expansions.”

And nothing in the moratorium stops their power request from being approved – which means the upgrades could move forward during the moratorium. They’ll probably take a year or more to be finished anyway.

McGowen said xAI’s second 150 megawatts at Colossus 1 “was just approved,” that it comes on by the end of the year, and that “there are no further approvals required of that.” By his account, that one isn’t waiting on anybody.

If that 300 megawatts is theirs too, the one thing the moratorium could slow down is the buildings – not the power. The moratorium doesn’t touch MLGW’s power deals – and the council has no say over TVA at all.

And the rules the moratorium is supposed to lead to mostly can’t reach xAI’s data centers now anyway – cause they’re already built.

The gas turbines at Colossus 1 in Memphis run under the standard the Shelby County Health Department set. Now, SCHD did ask the EPA back in 2024 to put that standard in writing – but as far as I can tell – the EPA never did. So – right now – if nothing changes – they’re following the rules.

So – what would they study anyway?

They’d study distance from homes and schools, noise, water and who pays.

But some of these questions have already been answered, specifically the one about the power. In March, Amazon, Google, Meta, Microsoft, OpenAI, Oracle and xAI signed a pledge to pay the full cost of the power their data centers need. It’s called the Ratepayer Protection Pledge. xAI signed it. It’s also voluntary. In Memphis, MLGW’s contract already makes xAI pay for its power – and if they walk away early, they owe $20.3 million for every year left on the deal.

Now, if I am right about this new data center – the rented land is closer to the neighborhoods than where Colossus 1 sits now – so a new sound ordinance could possibly affect building there – but they could also put up a sound barrier. And if that doesn’t pass muster – guess who has a plot of land directly behind Colossus 1 – so that it would be further away from neighborhoods? EDGE – the same entity they’re renting land from down the road.

So, there just aren’t any real parameters that I can see that are going to stop xAI from doing anything.

Anyone hanging on to the dream that xAI is going to get shut down – needs to wake up and come back to reality.

My biggest problem with the moratorium is that – it’s just a bandaid to soothe a certain set of people who really have no understanding of anything that’s happening.

The moratoriums – both this one and the national ones – are not bans – they’re just a way to kick the can on making decisions no one needs a year to decide.

Warren already wrote a data center ordinance of his own, and it’s posted on the City’s website. New data centers would have to use cooling that keeps reusing the same water instead of evaporating it. They couldn’t use city drinking water for cooling or drill new wells for it, and gas turbines couldn’t be their main power source. While Colossus 1 still has both a closed loop and an open loop system – and has turbines – these new rules wouldn’t make them change any of it.

Every data center in town – old and new – would also have to report its water use every year and go on a public list.

But this is where the gray water plant comes in – because it is a much better situation for Memphis and xAI than I think has been sold to the public. When it’s built, xAI estimates it’ll cut the whole area’s aquifer pumping by about 9% – and that counts the water xAI itself would’ve used. Right now their contract caps them at less than 1% of what MLGW pumps in a day – and they’re using about half of a percent. TVA, the biggest planned customer, has signed a letter saying it intends to buy its water. And MLGW and TVA really want that plant – they’ve been planning for it since 2018 – they just didn’t have the money to build it until xAI showed up.

They already have a contract with MLGW about how much water they can use – and they aren’t even close to hitting the daily limit of their contract. Factor in the gray water plant once it’s running – and by its own design numbers, they’d be saving the region more water than they use.

Councilman Philip Spinosa wrote his own version too. WREG reports all three proposals – the pause, Spinosa’s and Warren’s – are up for a vote today, and Warren said they may be combined.

Warren’s draft has holes – the text doesn’t say how much water counts as a “major” withdrawal, and it doesn’t touch noise or distance from homes. But a draft with holes is something you fix in a few weeks – and a pause by itself gives the city a year before it has to.

On Monday, Mayor Paul Young told WREG he wants guardrails in place – “the thing that I want to make sure is that we do it expeditiously.”

Funny, cause he is the ONLY person I could find that could have probably put in guardrails when xAI arrived in Memphis – but that’s another story to tell.

Either way – a 12-month study that the council can extend is a lot of things – but expeditious isn’t one of them.

If the pause passes, the six-month progress report is the first real test. If it comes back with rules ready for a vote, the pause did its job. If it comes back asking for more time – with the drafts still sitting there – then all we got was a wait.

McGowen already told the council nothing can pop up in the next six months. That’s six months the council could spend writing the rules – instead of studying them.

Every record this essay is built on is on its own page, and the ones that exist nowhere else online are hosted there: the records behind this essay.

If you like facts-first info on all this, consider leaving a tip on Venmo or PayPal – this stuff takes a lot of time to put together. And check out everything I’ve written with citations and receipts at the xAI Files.

Does Memphis’s Data Center Moratorium Even Matter?

The xAI files

WHAT IT WOULD DO

Sources

The xAI files

WHAT IT WOULD DO

Sources

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