Memphis City Council members kicked off a larger discussion on data centers as a temporary moratorium on the resource-hungry tech facilities continued its advance this week.
A pair of competing ordinances outlining the long-term regulation of data centers were added to the consent agenda before the council’s Tuesday, Sept. 1, meeting. The ordinance proposals passed 10-0.
Concerns over the data centers have risen with the rapid expansion of the SpaceXAI (formerly xA) Colossus I and II supercomputer in South Memphis and nearby Southhaven, Miss. The facilities daisy chain over 500,000 Nvidia graphics process units (GPU) used to create training models for the AI chatbot Grok. More are on the way too. A total of 1 million Nvidia chips will be in use when the facilities are brought to full-scale.
A first vote on the moratorium was held during the Aug. 25 committee meetings. If a third and final vote passes, the introduction of new data centers in Memphis will be halted in their tracks for the immediate future. However, the ordinance doesn’t forbid further expansion at existing facilities.
A moratorium will buy the council and city leaders time to craft an enduring solution. The pair of ordinances now under consideration present a spectrum of differences.
Councilman Philip Spinosa’s proposal attempts to strike a balance between laying the groundwork for a quickly emerging industry and shielding the public good.
The ordinance would ask the city to create a digital infrastructure district, along with a “strategic large-load development” to handle future property and energy demands. Data centers would be held to enforceable, predictable standards through a “source-neutral” operating system. The facilities are currently largely unregulated.
In addition to advancing qualified applicants and collecting tax revenue, it also attempts to “protect citizens, neighborhoods, utility reliability, public finances and several other concerns.” Locally, one of the biggest worries over data centers is water consumption.
In that respect, the SpaceXAI doesn’t disappoint. Combined, its two locations pour through roughly one million gallons a day. When fully online, the volume is expected to climb to three million gallons. In fact, some estimates put the number at five million. The water currently is drawn from the Memphis aquifer.
The pitch calls for a “low-potable water” development standard to protect the region’s main water source. This boils down to a set of rules that require non-drinking water be used to minimize the impact on fresh supply. Construction on a planned grey water treatment facility to cool SpaceXAI’s GPUs stalled in early April.
“If a company can meet the standards that we set as a body, we should move quickly, and we should provide clear rules, a coordinated process and a predictable path. That’s the bargain. We don’t have to close the door on this, but we don’t have to accept it on someone else’s terms either,” Spinosa said.
Of the two ordinances, Spinosa’s represents the more business-friendly proposal. The add-on to the consent agenda was quickly followed by Councilman Jeff Warren’s proposal.
During previous discussions, Warren has been a reliable critic of data centers. He has also aggressively pushed for the facilities to provide for their own resource needs through zero emissions technology and waterless cooling systems. His proposal mirrors the earlier suggestions.
The ordinance would prohibit the use of potable water for “routine evaporative and water cooling,” in favor of “closed loop water circulation systems.” The “progressive” use of renewable energy is also included. This would be obligated by a scheduled phase-out of carbon-based sources of energy.
Conservative estimates put the natural gas consumed by SpaceXAI’s 59 gas-powered turbines at over 117 million cubic per day — enough to power around 600,000 homes.
“We’re going to use the same AI data as we go forward,” Warren said. “Our kids are going to use it for study, but we’re going to be paying extra if they’re not paying taxes here.”
Both proposals also call for various layers of oversight that will be spelled out in further detail in committee. Consent agenda items are voted on without discussion.
