Business and Commerce

Plain English Breakdown

The bill text does not provide specific details about penalties or enforcement actions beyond a general civil penalty framework.

Tennessee Data Center Impact Review Act

This act requires data center operators in Tennessee to obtain permits from the Water and Wastewater Operator Board before starting operations, ensuring compliance with water usage and wastewater regulations.

What This Bill Does

• Requires data center operators to apply for a permit before starting operations.
• Sets rules for what information must be included in the permit application.
• Gives the board authority to review applications and enforce compliance with water usage and wastewater regulations.
• Establishes reporting requirements for ongoing monitoring of data centers' water use.

Who It Names or Affects

• Data center operators in Tennessee
• Water utilities providing service to data centers
• The Water and Wastewater Operator Board

Terms To Know

data center

A privately owned and operated physical facility housing computer servers, storage, and networking equipment with a power capacity of more than 20 megawatts.

permit

An official document allowing data centers to operate after meeting certain requirements set by the board.

Limits and Unknowns

• The bill does not specify what happens if a permit is denied.
• It's unclear how existing data centers will be affected and whether they need to apply for permits retroactively.

Official Summary Text

B
eginning January 1, 2027,
this bill
prohibits a person from operating a data center without first being issued a permit by the
water and wastewater operator board of certification ("board"). This bill grants the board oversight in compliance with the permits and the ability to enforce compliance.
As used in this bill, a
"
d
ata center"
means
a privately owned and operated physical facility housing computer servers, storage, and networking equipment to store, process, and distribute data and applications, and that has a power capacity of more than 20 megawatts.

PERMIT APPLICATIONS

In order t
o apply for a permit to operate a data center in this state,
this bill requires
an applicant
to
submit the following to the board, in a form prescribed by the board:



The data center's physical address.


The name, mailing address, telephone number, and email address of the persons having responsible charge for the data center's operation.


An approximation of the data center's power capacity.


The name of each water utility, and any governmental entity if applicable, that will provide service to the data center.


The source of water to be used by the data center.


The projected daily, peak, and annual water usage by the data center.


The impact of such water usage on the effected residential, agricultural, emergency, and public water supplies.


Any drought response plan and other contingency planning to be implemented by the data center.


The cumulative impacts on local and regional water systems to be caused by the operation of the data center.


All conservation, reuse, recycling, or closed-loop system measures to be implemented by the data center.


Proof that the data center will not materially impair, degrade, deplete, contaminate, or adversely affect the availability, quality, reliability, pressure, or reasonable and beneficial use of water for residential or public purposes.


Any additional information required by the board by rule.

This bill provides that t
he requirements
above
apply to all prospective owners and operators of data centers, including data centers that source their water through municipal or private utilities.

After the submission
,
but prior to the approval
,
of the application for a permit, the applicant must notify the chair of the board of a change in any information within 30 days of the change.

Following the issuance of a permit, and for as long as the permit is valid, the owner or operator must notify the board
of any changes in the information within 30 days of the change.

BOARD OVERSIGHT

In addition to its review of the information submitted by the applicant for a permit,
this bill requires
the board
to
evaluate the following as part of the application process:



Wastewater, blowdown, and discharge associated with cooling or operations of the proposed data center.


Chemical composition and thermal impacts of the wastewater, blowdown, and discharge.


The compatibility of the proposed data center's wastewater, blowdown, and discharge with municipal treatment systems.


The potential effects of the proposed data center's wastewater, blowdown, and discharge on consumers of water downstream of the data center.

This bill authorizes t
he board
to
deny an application for a data center, or place conditions on an application that has been approved if the data center that is the subject of the application is the source of wastewater, blowdown, or discharges that, in the board's opinion, are reasonabl
y likely to degrade water quality; interfere with treatment processes; or impose additional treatment or infrastructure burdens without mitigation.

In determining whether an application to operate a data center in this state is approved,
this bill requires
the board to presume that residential water access and the public need for water access take precedence over industrial and speculative uses of water.

Reporting requirements

Upon the start of operations by a data center, this bill requires the board to notify each water utility providing service to the data center that the utility must report to the board the amount of water that it supplied or provided to the data center du
ring the immediately preceding billing period. This bill also requires a water utility to comply with the reporting requirements. The reports must be provided to the board within 30 days of the end of each billing cycle during which the water utility pr
ov
ides service to the data center.

This bill requires t
he owner or operator of a data center
to
notify the board within 30 days of cessation of operation of the data center. A permit issued is valid until the executive director of the board receives notice of cessation of operation of the data center. Upon receipt of a notice of cessation of oper
ation of a data center, the board must notify each water utility providing service to the data center that the reporting requirements will cease with regard to that data center immediately followi
ng submission of the report for the final billing period during which the data center was operational.

This bill requires t
he board to compile the data it receives from reports submitted into monthly reports that clearly state the most recently reported water use of each data center in this state. The department of environment and conservation must publish and maintain the r
eports in a publicly available location on the department's website.

Other responsibilities

In addition to reviewing applications, this bill requires the board to do
all of
the following:



Hold public hearings to receive testimony from members of the public and local governmental entities that may be affected by the approval of an application, with appropriate notice of such hearings being posted on the department of environment and conservation website and in newspapers of general circulation in the county in which the proposed data center is to be located.



Coordinate with the Tennessee valley authority (TVA) and other relevant agencies to ensure that water availability, residential access, cumulative impact, and discharge quality are fully evaluated when reviewing applications for data centers that propose to use TVA-managed waters.



As part of its oversight of data centers and their long-term impact on this state, conduct biennial evaluations of closed-loop or recirculating water systems, including cooling-water reuse; and require the implantation of the systems where technologically and economically feasible, while operating under the presumption that such systems are feasible unless an applicant can demonstrate the infeasibility of the systems. Data centers are prohibited to externalize water treatment, infrastructure expansion, or remediation costs onto public utilities or ratepayers in this state.

ABILITY TO ENFORCE

This bill authorizes a
person
to
file with the board a signed complaint against any person allegedly violating this bill.

The board
may
administratively assess a civil penalty of no more than $1,000 per day up to a maximum of $25,000 in total for any violation of this bill, including the failure of an owner or operator to obtain a permit or to timely update, correct, or otherwise modify
the information provided.
Additionally, the
commissioner of environment and conservation, on behalf of the board, may seek injunctive relief in the chancery court of Davidson County to prevent the owner or operator of a data center from engaging in any continuing violation of this bill.

This bill authorizes a
party to a hearing before the board regarding a revocation or an appeal of an order or assessment of a civil penalty by the board
to
appeal the final order of the board to the chancery court of Davidson County.

RULEMAKING

This bill authorizes the board to promulgate rules to effectuate this bill.

Current Bill Text

SENATE BILL 2653
By Taylor

HOUSE BILL 2392
By Reneau
HB2392
010790
- 1 -

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.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 68, Chapter 221, is amended by adding
the following as a new part:
68-221-1401.
This act is known and may be cited as the "Tennessee Data Center Impact
Review Act."
68-221-1402.
As used in this part:
(1) "Applicant" means a person, including, but not limited to, a
prospective owner or operator of a data center seeking a permit to operate a data
center in this state;
(2) "Board" means the water and wastewater operator board of
certification, created by § 68-221-905;
(3) "Commissioner" means the commissioner of environment and
conservation;
(4) "Data center" means a privately owned and operated physical facility
housing computer servers, storage, and networking equipment to store, process,
and distribute data and applications, and that has a power capacity of more than
twenty megawatts (20 MW);

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(5) "Department" means the department of environment and
conservation; and
(6) "Water utility" means:
(A) A utility, as defined in § 7-51-2301, that provides water
service to customers; and
(B) A public utility that provides water service to customers.
68-221-1403.
(a) Beginning January 1, 2027, a person shall not operate a data center in this
state without first being issued a permit by the board pursuant to the review of such
person's application under this section.
(b) To apply for a permit to operate a data center in this state, an applicant shall
submit the following to the board, in a form prescribed by the board:
(1) The data center's physical address;
(2) The name, mailing address, telephone number, and email address of
the persons having responsible charge for the data center's operation;
(3) An approximation of the data center's power capacity;
(4) The name of each water utility, and any governmental entity if
applicable, that will provide service to the data center;
(5) The source of water to be used by the data center, including, but not
limited to, the name of the body of water or groundwater source;
(6) The projected daily, peak, and annual water usage by the data
center;
(7) The impact of such water usage on the effected residential,
agricultural, emergency, and public water supplies;

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(8) Any drought response plan and other contingency planning to be
implemented by the data center;
(9) The cumulative impacts on local and regional water systems to be
caused by the operation of the data center;
(10) All conservation, reuse, recycling, or closed-loop system measures
to be implemented by the data center;
(11) Proof that the data center will not materially impair, degrade,
deplete, contaminate, or adversely affect the availability, quality, reliability,
pressure, or reasonable and beneficial use of water for residential or public
purposes; and
(12) Any additional information required by the board by rule.
(c) The requirements under subsection (b) apply to all prospective owners and
operators of data centers, including, but not limited to, data centers that source their
water through municipal or private utilities.
(d)
(1) After the submission but prior to the approval of the application for a
permit to operate a data center by the board, the applicant shall notify the chair of
the board of a change in any information provided pursuant to subsection (b)
within thirty (30) days of the change.
(2) Following the issuance of a permit to operate a data center, and for
as long as the permit is valid, the owner or operator shall notify the board of any
changes in the information provided under subsection (b) within thirty (30) days
of the change.
68-221-1404.

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(a) In addition to its review of the information submitted by the applicant for a
permit under § 68-221-1403, the board shall evaluate the following as part of the
application process:
(1) Wastewater, blowdown, and discharge associated with cooling or
operations of the proposed data center;
(2) Chemical composition and thermal impacts of the wastewater,
blowdown, and discharge described in subdivision (a)(1);
(3) The compatibility of the proposed data center's wastewater,
blowdown, and discharge with municipal treatment systems; and
(4) The potential effects of the proposed data center's wastewater,
blowdown, and discharge on consumers of water downstream of the data center.
(b) The board may deny an application for a data center, or place conditions on
an application that has been approved if the data center that is the subject of the
application is the source of wastewater, blowdown, or discharges that, in the board's
opinion, are reasonably likely to:
(1) Degrade water quality;
(2) Interfere with treatment processes; or
(3) Impose additional treatment or infrastructure burdens without
mitigation.
(c) In determining whether an application to operate a data center in this state is
approved, the board shall presume that residential water access and the public need for
water access take precedence over industrial and speculative uses of water.
68-221-1405.
The board shall:

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(1) Hold public hearings to receive testimony from members of the public
and local governmental entities that may be affected by the approval of an
application under this part, with appropriate notice of such hearings being posted
on the department website and in newspapers of general circulation in the county
in which the proposed data center is to be located; and
(2) Coordinate with the Tennessee valley authority (TVA) and other
relevant agencies to ensure that water availability, residential access, cumulative
impact, and discharge quality are fully evaluated when reviewing applications for
data centers that propose to use TVA-managed waters.
68-221-1406.
(a) As part of its oversight of data centers and their long-term impact on this
state, the board shall:
(1) Conduct biennial evaluations of closed-loop or recirculating water
systems, including, but not limited to cooling-water reuse; and
(2) Require the implantation of the systems described in subdivision
(a)(1) where technologically and economically feasible, while operating under the
presumption that such systems are feasible unless an applicant can demonstrate
the infeasibility of the systems.
(b) Data centers shall not externalize water treatment, infrastructure expansion,
or remediation costs onto public utilities or ratepayers in this state.
68-221-1407.
(a) Upon the start of operations by a data center, the board shall notify each
water utility providing service to the data center that the utility must report to the board
the amount of water that it supplied or provided to the data center during the immediately
preceding billing period. Notwithstanding a law to the contrary, a water utility shall

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comply with the reporting requirements of this subsection (a). The reports must be
provided to the board within thirty (30) days of the end of each billing cycle during which
the water utility provides service to the data center.
(b) The owner or operator of a data center shall notify the board within thirty (30)
days of cessation of operation of the data center. A permit issued under § 68-221-1403
is valid until the executive director of the board receives notice of cessation of operation
of the data center. Upon receipt of a notice of cessation of operation of a data center,
the board shall notify each water utility providing service to the data center that the
reporting requirements under subsection (a) will cease with regard to that data center
immediately following submission of the report for the final billing period during which the
data center was operational.
(c) The board shall compile the data it receives from reports submitted pursuant
to subsection (a) into monthly reports that clearly state the most recently reported water
use of each data center in this state. Notwithstanding a law to the contrary, the
department shall publish and maintain the reports required by this section in a publicly
available location on the department's website.
68-221-1408.
(a) A person may file with the board a signed complaint against any person
allegedly violating this part in accordance with § 68-221-915.
(b) The board may administratively assess a civil penalty of not more than one
thousand dollars ($1,000) per day up to a maximum of twenty-five thousand dollars
($25,000) in total for any violation of this part, including the failure of an owner or
operator to obtain a permit or to timely update, correct, or otherwise modify the
information provided pursuant to § 68-221-1403(b).

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(c) A party to a hearing before the board regarding a revocation or an appeal of
an order or assessment of a civil penalty by the board may appeal the final order of the
board to the chancery court of Davidson County in accordance with § 68-221-914.
(d) The commissioner, on behalf of the board, may seek injunctive relief in the
chancery court of Davidson County to prevent the owner or operator of a data center
from engaging in any continuing violation of this part.
68-221-1409.
The board shall promulgate rules to effectuate this part. The rules must be
promulgated in accordance with the Uniform Administrative Procedures Act, compiled in
title 4, chapter 5.
SECTION 2. This act takes effect July 1, 2026, the public welfare requiring it.