Does a Moratorium Hand xAI a Monopoly?

So – the Memphis City Council finally started writing actual data center rules on Thursday. That’s what I’ve been asking for – and it happened two days after they put off the vote on the moratorium for the second time.

The xAI files

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

There were two meetings, and a lot happened in both – so let’s walk through it.

THE 4 P.M. MEETING

Let’s start with the part that counts. Two data center zoning ordinances passed their first reading.

The first one is Ordinance 5987. It was written by Allan Wade, the council’s attorney, and it pulls pieces of everybody’s proposals into one. Councilman Jeff Warren is the lead sponsor, along with Ford Canale, Philip Spinosa and Chase Carlisle.

The second one is Ordinance 5988 – that’s Councilwoman Rhonda Logan’s, and Warren is a co-sponsor on it too. In the version the City posted for October 6th, it doesn’t write the rules itself – it tells the city’s planning office to come back in 45 days with a first look at where data centers could go, and in 90 days with the actual zoning language, which then goes to the Land Use Control Board.

Both went through on the consent agenda – one vote for the pair, and there was no debate. The clerk read ten yes votes. I watched that vote – and JB Smiley, Yolanda Cooper-Sutton and Edmund Ford Sr. don’t look like they were in the room. Smiley and Cooper-Sutton are back for the very next vote a couple of minutes later, and Ford isn’t read out on any vote after the first two of the meeting.

They each have two more readings to go. The council didn’t take up the moratorium Thursday – that vote was already held to October 20th.

THE WORKING SESSION

The real show was the 1 p.m. meeting – the working session Carlisle pointed to on Tuesday when he moved to hold the moratorium. Right before it, Carlisle held a press conference – Action News 5 reports he called Tuesday “an absolute low point” and said the pressure on the council was “intimidation.”

All I can say about that is – where the hell has he been? This all has been building up for months. That’s like calling the water in a kettle starting to boil intimidating.

Spinosa ran the working session, and he called it the first of five hearings. Everybody but Councilwoman Jerri Green was there when the chair went through who was in the room, along with Wade and Brett Ragsdale, the city’s planning director. Green was at the 4 p.m. meeting and voted yes.

Councilman Warren said that after three readings, Wade’s ordinance would be law – “four weeks from now” – and he asked Wade if that was right. Wade said, “That’s correct.”

Then Warren said, “So just for people who are looking for a moratorium, what we’re telling you is we can have regulations in place in four weeks.”

He said four weeks of rules “doesn’t require a moratorium” – and that he’s worried a moratorium “will send a message to people who want to put these facilities here that we don’t want them.”

I mean – isn’t that kind of the point of all of this – to stop more hyperscale AI data centers in the area?

On Tuesday, Warren told WREG that if Memphis passes a moratorium, companies “get the same benefit from going to Desoto County, Crittenden County, Fayette County, Tipton County.”

My first thought was so?

But I assume he doesn’t want to lose the tax dollars other data centers might bring in. And that is something to consider. From my research – the Memphis area actually does not have the same number of these as other cities when population is considered. Data Center Map lists 13 data centers in Memphis – and 28 in Nashville, a city about our size. And we DO have the room. There could be a middle ground where tight regulation and smart spending could fix a lot of issues the city faces – and I am betting that’s what some Memphis City Council members are hoping for.

Now – back to the rules – four weeks would be great. Like I wrote on October 6th, the drafts were already sitting there, and a draft with holes is something you fix in a few weeks.

But there’s a catch.

On Tuesday, in committee, Wade told Warren that “every proposal you’ve got on the table today has to go through Land Use Control Board or be invalid” – and he said the board meets Thursday.

It did meet Thursday morning – but the recording shows the board never took up 5987 or anything about data centers. It spent the morning on a car wash, subdivisions and other permits. The City’s meeting calendar lists the board again on October 20th and November 12th. Warren’s own word was “potentially.”

THE xAI LINE

The line that should be getting more attention came from Wade – early in the working session.

He said even the moratorium wouldn’t touch “any projects that are in progress or already in existence.” Then he said, “So essentially what it does, to be brutally honest about it, what it does is pretty much give XAI a monopoly for a while. Because nobody else can get into the business.”

And that’s what I have brought up many times. Moratoriums consolidate power.

If you’ve read my theory about xAI building another data center next to Colossus I – remember xAI already has four sites on and around the Colossus II campus – how do you keep them from doing it on land they already control? And if my theory is correct – they’re already in talks to get the power from MLGW, and TVA has already set the up-front price for that much power – and the grid upgrades would come on top of that.

So, xAI gets another hyperscale – and other companies just have to sit around and wait – because remember – a moratorium is not a ban – and NO ONE on the council is suggesting a ban.

Warren made a version of the same point. He said people have been sold the idea that a moratorium means “all the construction is going to stop on Colossus 2,” and “that’s not going to happen with the moratorium.”

At public comment later, Amber Sherman, Black Voters Matter’s Tennessee lead organizer, said that’s not what people think – she said they understand a moratorium “won’t stop the data centers currently here,” and that it’s a pause, not a ban.

Look – I tried to go read Ordinance 5987 – but they haven’t released it yet – so I don’t know exactly what’s in it.

But here’s the part I can’t decipher.

Later Wade said the zoning needs to go forward, “and probably you’d have a limited moratorium until that is completed.” It just can’t work like a flat ban – he said state law makes a moratorium be “reasonable in time.”

Smiley picked that up. He offered to strip his moratorium down to the pause and one way out – it would end when 5987 passes – and he said Wade would agree to that. And Spinosa said, for the record, that he wants his own moratorium to end December 31st.

Then Spinosa asked Wade – if a data center wanted to come tomorrow, could it build right next to a neighborhood like last time? Wade said, “If we are pursuing 5987 and we have a moratorium that says it will prevent that until we adopt it, no.”

But a couple of minutes later, Warren asked if the city is “already protected” just because the moratorium bills are still pending – and Wade said, “Absolutely.” Warren followed up – “So no one can come in and put a data center in while we’re considering those things.”

So which is it – do they need the short pause or not?

If the city is already protected, a pause that ends the day 5987 passes doesn’t cost anybody a thing. If it isn’t, then they need it.

WHO’S ACTUALLY COMING

Councilwoman Janika White asked what’s pending right now. Ragsdale named three – the original one on Paul R. Lowry, an expansion on Tulane Road he called “a 300,000-square-foot building,” and the old Fred’s headquarters on Getwell. “There are no others that we’re aware of that are pending,” he said.

So – I am theorizing that the 300k buildout is the one that is set to get its power directly from TVA – I’ve explained that deal in a previous essay.

Wade said MLGW’s president Doug McGowen told him “there were maybe three or four others that may be coming along” – about four to five months out. Smiley said McGowen once told them at least 10 others had talked about coming to Memphis.

Smiley recorded a video for his socials the day after the moratorium meeting went haywire that tried to explain why it was held. In that video – he mentioned OpenAI and ChatGPT – who aren’t currently connected to Tennessee at all. Are they the ones that are talking about coming to Memphis – and he let it slip? Interesting.

And by Ragsdale’s account, nothing they pass reaches what’s already filed – he said if a permit is already in process, “this would not regulate them.”

When Cooper-Sutton asked how fast they could get data centers out of neighborhoods in 38109, 38113, 38127 and 38107, Wade said that’s beyond what the council can do – unless the city wanted to buy them back through condemnation.

That’s a hilarious answer since xAI’s company paid about $265 million just for the land and buildings at its two Memphis sites, before anything built on Tulane Road since 2025. That does not include any of their buildouts or the compute inside the buildings.

And Tennessee only lets a city take property for a public use. The city can’t take land first and figure out a use later. It has to name the public project up front. Tennessee’s list covers roads and transit, utilities, cleaning up blighted areas through a housing or community development agency, state parks and natural areas, and some polluted-land cleanups.

So, the city would have to come up with the money for a large-scale public project – get it passed – and then come up with $185 million on top of that to buy JUST Colossus I.

I don’t know if Cooper-Sutton has a grasp on anything that is happening.

WHAT THE RULES COULD DO

As I said, the City’s meeting site still has the agenda marked “not currently published” – so this is Wade’s description of 5987, not the text.

He said a data center would have to show it has a deal for its power before it starts, and turn in studies on things like noise and buffers. He said the council could turn down a site that wants to bring its own gas turbines – “You can prefer green energy” – and he said that piece is “already in 5987.”

He also said Memphis’s noise rules cover cars and construction hours – but not the sound a plant makes while it’s running. “We have no ordinances for that,” he said.

THE LETTERS

At the 4 p.m. meeting, most of the people who spoke at public comment asked for the moratorium.

And State Rep. Justin Pearson asked Chairwoman Jana Swearengen-Washington if there was paperwork saying he might be banned from council meetings. She said, “Yes” – and then, “there was some correspondence that was sent out.”

Pearson said he hadn’t gotten one himself – but the letters he’s seen call whoever gets one disruptive, and he called them “blanket letters.”

The Commercial Appeal reports the letter is signed by the chair and bars whoever gets it from the next two meetings. Action News 5 reports activist LJ Abraham was handed one at the door Thursday – banning her from that meeting and the October 20th vote – and a council representative didn’t say how many went out.

WHAT’S NEXT

The next hearing is Monday, October 19th – noise, water and air, with MLGW, TDEC, TVA, the Shelby County Health Department and the University of Memphis’s CAESER on the list. Thursday, October 22nd is for the public, Monday, October 26th is community benefits, with xAI’s leadership, EDGE and the Greater Memphis Chamber invited, and Thursday, October 29th is the final review – all from 1 to 3 p.m.

The moratorium vote is set for October 20th, in between.

If they really can pass real rules in four weeks – great – I’ll be the first to say so. But a pause that ends the day those rules pass is the easiest vote they’ve got – so just pass it and get to work.

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.