Nearly six months ago in Memphis, before residents or even city council members knew that Elon Musk was building “the world’s largest supercomputer” in his backyard, the billionaire’s team secretly met with a host of local and national law enforcement agencies, including the sheriff’s office, the Memphis Police Department, the U.S. Department of Homeland Security and the Federal Bureau of Investigation.
The undercover meeting, which has not been previously reported, concerned Musk’s growing AI startup, xAI , according to the Greater Memphis Chamber, an economic development group that had been running the deal behind closed doors since March.
“I sincerely appreciate everyone’s time and commitment to this project. We are on the cusp of an incredible moment in Memphis history,” Gwyn Fisher , the Chamber’s director of economic development, wrote to the group in an email. She offered them a tour of Musk’s new facility on one condition: that they sign nondisclosure agreements with an entity called CTC Property, a mysterious shell company controlled by Jared Birchall, Musk’s personal banker .
Birchall, a former financial analyst, has been Musk’s right-hand man for nearly a decade. He became Musk’s wealth adviser several years after he was fired from Merrill Lynch for inappropriate correspondence with a client, Reuters reported. Since then, he has been named an executive at SpaceX, Neuralink, The Boring Company and xAI; manages Musk’s family office and foundation; oversaw the billionaire’s acquisition of Twitter; and controls Musk’s extensive personal security detail.
Forbes was the first to report that Memphis government officials had signed confidentiality agreements with xAI, and subsequently obtained the agreement and other internal documents through a series of public records requests. Scott Banbury, conservation director for the Tennessee chapter of the Sierra Club, says the fact that government agencies agreed to xAI’s confidentiality terms is “unethical” and believes their primary responsibility should be to the citizens of Memphis.
The FBI and Shelby County Sheriff’s Office declined to comment on the meeting with xAI, and other law enforcement agencies did not respond to Forbes’ multiple attempts to contact them. However, documents show that both the police department and sheriff’s office provided signed nondisclosure agreements to xAI ’s head of corporate security , Logan Beach . It’s unclear whether either agency provides protective services to the AI company. Musk has previously used unlicensed security guards to block roads and public beaches near SpaceX ’s launch site in Texas.
In the bones of an empty factory next to the Mississippi River, xAI’s supercomputer was built in just four months. Dubbed Colossus , as first revealed by Forbes , the Chamber publicly announced in June that xAI would have its “new home” in Memphis, boasting about how quickly the “multi-million dollar” deal was finalized. However, councilmembers claimed it was the first they had heard of the project and asked for more time and information to understand the undertaking, which will make xAI one of the city’s largest consumers of energy and water. A month later, the data center was officially online.
Musk’s companies have a long history of using nondisclosure agreements to silence public officials about projects in their cities, and Memphis appears to be no different. xAI is accused by city lawmakers of hiding its dealings with developers and public officials who, for months, discussed its plans for Memphis in private, Forbes previously reported. CTC Property first reached out to the Chamber on behalf of xAI in March, but the City Council and the public didn’t learn about the project until June. Chamber Speaker Ted Townsend told Forbes in July, “Under the nondisclosure agreement, we had to strictly abide by that protocol and only people who needed to know were involved.” The Chamber declined to comment on the meeting it arranged for xAI and law enforcement. xAI did not respond to a request for comment.
xAI’s deployment in Memphis has come with a huge demand for resources in the area. The data center has requested enough power to power 100,000 homes and will draw more than a million gallons of water a day from the Memphis Aquifer to cool its servers. It is currently awaiting approval from the regional power provider Tennessee Valley Authority (TVA) for a total capacity of 150 megawatts (MW), which will require the construction of an entirely new substation. Musk recently tweeted that the number of GPUs making up the supercomputer will double “within months.” And Semafor reported that the facility has managed to run all 100,000 of its Nvidia H100 chips simultaneously.
The artificial intelligence frenzy has led to a rise in “hyperscale” data centers, and with it, fears that local power grids and vital resources could be stretched to the limit. But state privacy laws and confidentiality agreements have often allowed these projects to keep key details such as trade secrets or sensitive information from the public. Data on Google ’s water usage in The Dalles, Oregon, for example, was held in custody by the city until The Oregonian sued for its release under public records law. When Forbes asked TVA about its other data center customers, the company declined to share information about them, citing contractual agreements protecting such “commercially sensitive information.” It declined to say whether it had signed a confidentiality agreement for the xAI project.
Additionally, Memphis’ economic development agency, EDGE, denied Forbes’ request for public records related to xAI, citing trade secrets. EDGE board members are appointed by the city and county, while the board of federally owned TVA is appointed by the U.S. president and confirmed by the Senate.
“It’s unprecedented,” Memphis resident Ward Archer said of the confidentiality agreements. Archer is the president of the nonprofit conservation organization Protect Our Aquifer, which has been lobbying local agencies for detailed information about xAI’s water claims. “How can you do that as an elected or appointed official? I find it bizarre, and what need is there for secrecy? I don’t understand it.”
In Nevada, Tesla has used confidentiality agreements to prohibit state officials from revealing information about tax breaks the company would receive . In Brownsville, Texas, SpaceX also forced several public entities, including a utility board, to sign confidentiality agreements; the contracts were only made public at the direction of the attorney general. And in Bastrop, Texas, where Musk’s tunnel-building venture, The Boring Company , has built a manufacturing plant, one resident claimed the company asked them to sign a nondisclosure agreement before seeing planning documents that were technically public record.
Deborah Fisher, executive director of the Tennessee Coalition for Open Government, told Forbes that confidentiality agreements are not a substitute for the state’s public records law, but have been used to make it difficult to access information.
Additionally, some details may be deemed confidential under trade secret exemptions, as is often the case with economic development agreements. “It’s frustrating for citizens when big companies come in and get all kinds of concessions promised by local officials with taxpayer money,” Fisher tells Forbes. “And yet these companies expect to be able to sail through without anyone knowing anything about what they’re doing.”
Following the official announcement of xAI’s arrival in Memphis, Memphis Light, Gas and Water (MLGW) presented the project at a city council meeting in July, making public for the first time the supercomputer’s water and electricity needs.
It has since dismissed as “misinformation” claims that it was required to obtain city approval before fulfilling xAI’s power requests, writing in a letter to the Tennessee regional utility that it “may not discriminate or withhold or deny service that can reasonably be demanded and provided.”
MLGW records obtained by Forbes show that its president, Doug McGowen, an appointee of the city’s mayor, signed the CTC Property NDA in May, when the project remained secret. An MLGW spokesperson told Forbes that it’s “common for a company to request NDAs to protect proprietary information when working with a government agency ” and that the company’s president is the only employee authorized to sign them. They said MLGW has never withheld information about the supercomputer — and “complies with all [state and federal] public records laws” — noting that xAI is the one holding all the information about the project.
But xAI has refused to engage with the Memphis community it is so eager to join.
In recent months, a coalition of environmental justice groups has sent letters to the boards of TVA and MLGW , as well as the Greater Memphis Chamber, asking them to involve community leaders in decisions that affect them. The facility’s proximity to historically Black neighborhoods already exposed to industrial pollution and chronically lacking in public services has raised fears among residents that it could make those problems worse. Last week, the city approved xAI’s acquisition of 500 acres of land near the data center , which it will lease for free for the first year. No one has disclosed what the property will be used for.
“Because MLGW is a public utility, I am concerned that its ability to keep its board and the public reasonably informed is being limited,” said Amanda Garcia, an attorney with the Southern Environmental Law Center (SELC). The nonprofit also obtained MLGW documents through a public records request, including CTC Property’s confidentiality agreement.
Lately, concerns have focused on the gas-fired generators that xAI uses to supplement its energy needs. At least 18 generators with a combined capacity of 100 MW — enough to power 50,000 homes — sit off-site , according to SELC, which estimated their output by identifying turbine models from photographs.
In an August letter to the Shelby County Health Department , SELC warned that emissions produced by the generators could intensify existing air pollution and cause respiratory harm. The health agency told Forbes that xAI generators do not require permits or oversight unless they are in operation for more than 364 days — an exemption that some community groups have characterized as a loophole.
In a statement to Forbes, a spokesperson for the Environmental Protection Agency said it has begun looking into these claims . All of this secrecy surrounding the xAI facility has some residents eager to learn more. One told Forbes that he parked outside the data center on a public road and attempted to film the site with a drone, before being visited by a pair of armed guards who showed up in an unmarked vehicle. The resident, who didn’t want to give his name for fear of being followed, said they took photos of his license plate before driving off.
