The Memphis City Council will consider three ordinances on Tuesday that would affect data centers, particularly those used for artificial intelligence (AI) products. These include a moratorium that would block all construction of new AI data centers, an ordinance that would require AI companies to use 100 percent renewable energy after 10 years, and an ordinance that would allow data centers but set standards for their construction.
The moratorium proposal, whose sponsors include Tennessee Democrat gubernatorial candidate Jerri Green, would prohibit Memphis from processing, scheduling, hearing, or approving a rezoning, planned development, special-use permit, site plan, building permit, or other approval requested by companies seeking to build data centers for one year.
While the proposed moratorium would impact companies seeking to build in Memphis in the future, a second ordinance would establish regulations requiring closed-loop water cooling systems, non-evaporative cooling, restrictions on how water could be used, and new reporting and disclosure requirements.
It would also require data centers operating in Memphis to immediately begin sourcing 60 percent their energy from renewable fuel sources. The percentage would increase dramatically, and after a decade, companies would be required to obtain 100 percent of their energy from renewable sources.
Instead of a moratorium or renewable energy requirements, a third proposal would “replace a blanket data-center moratorium” with a series of regulations designed to allow future development while accounting for their water and electrical requirements.
The Memphis City Council will weigh the proposals despite efforts by the Tennessee General Assembly and Tennessee Valley Authority (TVA) to set standards and procedures for AI data centers.
Earlier this year, Governor Bill Lee signed legislation prohibiting utility companies from absorbing the cost of infrastructure needed to build any data center that will require 50 megawatts of electricity during its first three years. It also prohibits utility companies from providing preferential treatment to data center customers, and requires their policies for data centers be identical to those for normal ratepayers.
More recently, the TVA created a separate rate structure that applies specifically to data centers, who will see their electricity bills start to increase in October. According to the TVA, data centers should expect to see their rates increase by about 10 percent over the next three years. Normal ratepayers will not be impacted.
While Memphis is the home of the SpaceX AI data centers used for Grok, its AI chatbot, it is not the only Tennessee city with a politically contentious data center. Under the guidance of Mayor Freddie O’Connell, Nashville is in the process of using eminent domain to seize private property in order to prevent the construction of a data center.
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Tom Pappert is a 2025 recipient of the Dao Prize and the lead reporter for The Tennessee Star. He also reports for the Star News Network. Follow Tom on X. Email tips to [email protected].
Photo “Memphis City Council” by Memphis City Council.
