As cities across the U.S. grapple with the rapid revolution of artificial intelligence, Memphis finds itself in the center of the debate over how to balance protecting community needs with the expansion of the Mississippi Delta’s data center alley.
This week, the Memphis City Council advanced a proposed moratorium on new AI data centers, reflecting growing concerns about the strain these facilities place on local infrastructure and resources.
The proposed Memphis moratorium would pause new building permits and site plan approvals for data centers in Memphis, while allowing facilities to continue operating as long as they do not expand. The ordinance aims to address mounting concerns over the infrastructure demands of large-scale data centers. In City Council this week, this measure passed its first reading; becoming law requires three readings, so final passage could take several weeks, and its legal status may face challenges.
This ordinance comes amid recent debates over AI data centers in Memphis. SpaceXAI, led by Elon Musk, has established at least three data centers on industrial-zoned sites, taking advantage of current regulations that permit such development without specific oversight. MLGW and the Tennessee Valley Authority (TVA) have negotiated an agreement with xAI for the company to construct a greywater recycling plant—a system for recycling wastewater from sinks and showers—to provide the additional water needed to support the full data center expansion footprint.
Until the greywater facility is completed, xAI is permitted to use drinking water sources for data center development and operations. In initial contract negotiations with xAI, MLGW stated that 2 million gallons of water per day would be available from the existing piping for the development and operation of an xAI facility without adversely affecting existing customers. Per the existing contract with MLGW, xAI currently has a limit of up to 1.28 million gallons of drinking water per day.
Additionally, for over a year, the company operated natural gas turbines in Memphis and Mississippi without air emission permits—permits that were later granted by state regulators. Now, SpaceXAI’s power operations at both locations are governed by air emissions permits or a consent order mandating emissions testing.
Notably, the Colossus data center (built primarily to operate and train xAI’s chatbot, Grok) alone is anticipated to use over 3 million gallons of water daily. In research publications from Protect Our Aquifer, with a fully expanded footprint per xAI’s proposal, combined facilities are estimated to require at least 1.5 gigawatts of power—enough to power over 1 million homes—and over 5 million gallons of water per day. MLGW has opposed this reporting, claiming that the data center is operating in compliance with the water cap agreed upon in negotiations. These conflicting claims underscore the public’s concern and lack of trust around how these facilities will impact communities.
