AN ACT to amend Tennessee Code Annotated, Title 5; Title 6; Title 7; Title 10; Title 62; Title 65; Title 68 and Title 69, relative to the Tennessee Data Center Impact Review Act.
SB2653 creates the “Tennessee Data Center Impact Review Act,” establishing a new permit system for large data centers beginning January 1, 2027. A data center with more than 20 megawatts of power capacity could not operate in Tennessee without first obtaining a permit from the water and wastewater operator board of certification. To apply, operators must disclose detailed information about the facility, including location, ownership contacts, power capacity, water source, projected water use, drought planning, wastewater and discharge impacts, conservation measures, and proof that the facility will not materially harm water availability or quality for residential or public use.
The bill requires the board to evaluate water supply, wastewater, blowdown, discharge, and downstream impacts, and it authorizes denial or conditions if the facility is likely to degrade water quality, interfere with treatment, or burden infrastructure. It also creates ongoing reporting obligations for water utilities and data center operators, requires public hearings, directs coordination with TVA and other agencies, and mandates public posting of monthly water-use reports. The board must also study closed-loop and recirculating water systems and require them when feasible, while prohibiting data centers from shifting treatment or infrastructure costs to utilities or ratepayers. Enforcement tools include complaints, civil penalties, and injunctive relief.
The bill’s impact on Tennessee law is significant because it adds a new regulatory framework in Title 68 for a specific class of industrial facilities and expands the oversight role of the water and wastewater operator board. It also affects water utilities, public utilities, local governments, and prospective data center owners and operators by imposing disclosure, reporting, and compliance obligations, as well as potential permit denial. The act would take effect July 1, 2026, with the permitting prohibition beginning January 1, 2027.
No committee transcripts or vote history were provided, so there is no recorded discussion or roll-call record to gauge legislative sentiment. Based on the bill text alone, the measure appears to reflect a precautionary and regulatory approach focused on protecting water resources, residential access, and public infrastructure from the growth of large data centers.
The main likely points of contention are the scope of state oversight over private data center operations, the burden of permitting and reporting requirements, and the presumption that residential and public water needs take precedence over industrial and speculative uses. Data center developers may view the bill as restrictive or costly, while water utilities, environmental advocates, and communities concerned about water supply and wastewater impacts may support the added protections and transparency.
The bill adds a new permitting and oversight regime in Tennessee Code Annotated Title 68 for large data centers, requiring pre-operation approval, ongoing water-use reporting, public disclosure, and board review of wastewater and water-supply impacts. It also authorizes penalties and injunctive relief for violations, and it imposes obligations on water utilities to report data-center water deliveries, thereby affecting both private operators and public or municipal water providers.
No committee discussion or voting record was provided, so there is no direct evidence of legislative debate or recorded support/opposition. The bill’s structure suggests a generally cautious, regulatory sentiment aimed at protecting water resources, public access, and infrastructure from the impacts of large data centers.
The likely areas of contention are whether the state should require a permit for large data centers at all, how burdensome the application and reporting requirements will be, and whether the presumption favoring residential and public water access over industrial use is too restrictive. Another likely dispute is the requirement for closed-loop or recirculating systems when feasible and the prohibition on shifting treatment or infrastructure costs to ratepayers, which could be opposed by data center operators and some utilities but supported by environmental and consumer advocates.