Data centers in Tennessee

📜 State laws

Public Chapter 961 (HB 1847 / SB 2128, 2026): data centers pay for their power lines · May 18, 2026
This law covers data centers expected to use 50 megawatts or more in their first three years. A city or electric utility may not pay for, or pass on to other customers, the cost of power lines, substations and other equipment built only to serve such a data center. It also lets data centers buy power directly from private power producers in Tennessee, including a plant right next to the data center, and lets that power travel over utility or TVA lines (subject to federal law). Critics said this lets data centers make their own power with little state or local oversight. The House passed it 76-14 and the Senate 28-0. The governor signed it and it took effect on May 18, 2026. It applies to deals made or changed on or after July 1, 2026. Source

HB 2392 / SB 2653 (2026): Tennessee Data Center Impact Review Act (did not pass) · March 18, 2026
This bill would have required data centers to get a water and wastewater permit before opening and to report where their water comes from and how much they use each day and year. It was put off several times and sent to a 'general subcommittee' without a vote, so it died when the session ended. Source

Other 2026 data center bills that failed · April 2026
Lawmakers filed seven data center bills in 2026; only HB 1847 passed. Bills that failed would have: made data centers register and report fuel, water and power use to the Department of Revenue (SB 2112/HB 2456) or the utility commission (SB 1682/HB 2061); set special power rates for energy-heavy users (SB 1999/HB 2054); and required data centers to give half their computing to 'public benefit' and report carbon (SB 1832/HB 1461, failed 2-6 in a House subcommittee). Source

Proposed for 2027: 3-year pause on data center tax breaks · Sept 9, 2026
State Rep. Aftyn Behn (D-Nashville) plans to file a bill in the 2027 session to stop new data center sales tax exemption certificates for three years. It would also make the Department of Revenue report each year how much tax is lost and which data centers get the break. It has not been voted on. Source

💡 Who pays for the power

TVA, not the state, sets most power rates · Nov 14, 2025
Almost all electric utilities in Tennessee (city power boards, energy authorities and co-ops) buy their power from the Tennessee Valley Authority (TVA), a federal agency. TVA's contracts with these local power companies set the rates they charge homes and businesses. The state utility commission (TPUC) does not set those rates. So most decisions about data center power costs are made by the TVA Board, not by a state agency. Source

TVA's new data center rate (from October 1, 2026) · Oct 1, 2026
On August 20, 2026 the TVA Board moved data centers out of the manufacturing rate class into their own rate class, with four groups by size. New or growing data centers using more than 5 megawatts must also pay a 'capacity commitment charge' of about $1.5 million per megawatt, paid over 3 to 5 years. TVA expects data center bills to go up about 10% on average, phased in over three years. Home rates were not changed in this decision. Before the vote TVA said there was no formal public comment period; it talked with the local power companies. Some details (for example who pays if a data center closes) were not made public. Source

State law: other customers may not pay for data center power lines · May 18, 2026
Under Public Chapter 961 (2026), a city or electric utility may not pay for, or pass to other customers, the cost of power lines and substations built only because of a data center of 50 MW or more. A utility may share costs only for upgrades that also serve other customers, under its normal rules. Source

💵 Tax breaks

Sales tax break on data center equipment and electricity · Sept 9, 2026
A 'qualified data center' that invests more than $100 million within 3 years and creates at least 15 new full-time jobs paying at least 150% of the state's average wage pays no sales tax on computers, software, backup power and cooling equipment. It pays only 1.5% sales tax on the electricity it buys. In September 2026, 15 companies held 25 active exemption certificates. The Department of Revenue says it cannot say how much tax the state gives up. Source

🤐 Secret deals and public records

Public Records Act: only Tennessee citizens have a right to records · Oct 7, 2026
State, county and city records are open to any citizen of Tennessee. Agencies may refuse people who are not Tennessee citizens (they may still choose to help). The agency must answer within 7 business days: give the records, deny in writing with the reason, or give a time estimate. Source

Business recruitment records can be kept secret · April 1, 2014
State law lets the Department of Economic and Community Development keep records secret if releasing them would hurt the state's ability to compete for a business. Signed deals are usually released after they are final, but some details, like tax credit amounts, may never be released. Source

No state limits on data center NDAs · July 8, 2026
Tennessee has no law limiting secret deals (NDAs) between officials and data center companies. Public Citizen, an advocacy group, says xAI had Memphis-area officials sign NDAs, and residents learned of the Colossus project only weeks before it started running. No 2026 bill to limit NDAs passed. Source

💧 Water

Big water withdrawals must be registered (not permitted) · Oct 7, 2026
Anyone taking 10,000 gallons or more of water on any day from a river, lake or well must register it with TDEC's Division of Water Resources. Non-public users report once a year (by February 15). This is a registration, not a permit with limits. Data centers that buy water from a city water system do not register their own use. A 2026 bill (HB 2392) to require a data center water permit and public water-use reports did not pass. Source

🌫️ Air and generators

Air permits: TDEC, or a local air agency in 4 counties · Oct 7, 2026
TDEC's Division of Air Pollution Control issues air permits for things like gas turbines and big backup generators. New permits get a public notice and a 30-day comment period; comments go by email to air.pollution.control@tn.gov. In Davidson, Hamilton, Knox and Shelby counties, a local air program does this job instead. Source

Shelby County: xAI gas turbine permit and appeal · Dec 15, 2025
In July 2025 the Shelby County Health Department gave xAI an air permit for gas turbines at its Colossus data center in South Memphis. Local groups appealed to the Memphis and Shelby County Air Pollution Control Board, which dismissed the appeal as moot on December 15, 2025. This shows where to appeal a local air permit in Shelby County. Source

🙋 How to have your say

Who decides a data center near you · Oct 7, 2026
In Tennessee, cities and towns decide zoning inside their limits (the city or town council, called the 'chief legislative body'). For land outside cities, the County Commission decides, where the county has zoning. In both cases the planning commission reviews a rezoning first. Power rates are set mostly by TVA; air permits by TDEC (or the local air agency in Davidson, Hamilton, Knox and Shelby counties); tax breaks by the Department of Revenue. Source

How a rezoning works · Oct 7, 2026
Counties: the change goes to the planning commission first, which has 30 days to approve it or suggest changes. The County Commission must then hold a public hearing with at least 15 days' newspaper notice (30 days in Shelby County). If the planning commission says no, the County Commission can still pass it by majority vote. Cities: every zoning change must go to the planning commission; the city council can override a 'no' only with a majority of all its members. Watch the newspaper notice and speak at the public hearing. Source

Going to court: 60 days for permit and zoning board decisions · April 30, 2026
Decisions by a board of zoning appeals or other administrative decisions (like a permit or variance) can only be challenged with a sworn petition for a 'writ of certiorari' filed within 60 days of the decision (T.C.A. 27-9-102). A rezoning vote by a council or commission is a law-making act; it is challenged with a 'declaratory judgment' lawsuit, and courts let it stand if there is any rational basis for it. Source

How to ask for public records · Oct 7, 2026
Tennessee citizens can ask any state, county or city office for records, for example data center agreements, NDAs, emails or meeting packets. The office must answer within 7 business days. If you are denied, you can file a petition in the chancery or circuit court of that county. The state Office of Open Records Counsel (Comptroller) answers questions and can help with problems for free. Source

How to comment on an air permit · Oct 7, 2026
TDEC posts draft air permits under 'Air Notices & Hearings'. You have 30 days from the notice to send written comments to air.pollution.control@tn.gov or by mail to the Division of Air Pollution Control in Nashville. In Davidson, Hamilton, Knox and Shelby counties, comment to the local air agency instead. Source

How to raise power cost concerns · May 18, 2026
TVA sets most rates and held no formal public comment period on its 2026 data center rate; the TVA Board votes on rates at its public board meetings (in 2026: August and November). You can also ask your local power company (city power board or co-op) how it applies the 2026 state law on data center power line costs, or use the Tennessee Public Utility Commission's online utility complaint form. Source

🧾 Help with your bills

LIHEAP: help with energy bills · Oct 7, 2026
The Low-Income Home Energy Assistance Program is run by the Tennessee Housing Development Agency (THDA) with local agencies in every county. It pays a one-time amount ($174 to $750 in the 2025-26 program) straight to your power or heating company. Applications are online through THDA's SmartSimple system; the 2025-26 program opened November 1, 2025. Your local LIHEAP agency can help you apply. Source

📞 Who to contact

Tennessee Valley Authority (TVA) · Oct 7, 2026
Federal power company that sells power to almost all Tennessee utilities and sets their rates, including the 2026 data center rate. Its Board meets in public. Source

Tennessee Public Utility Commission (TPUC) · Oct 7, 2026
State utility regulator. Has an online utility complaint form and a public docket. Most Tennessee power rates are set through TVA, not TPUC. Source

Tennessee Department of Environment and Conservation (TDEC) · Oct 7, 2026
Air permits (Division of Air Pollution Control) and water withdrawal registration (Division of Water Resources). Posts public notices and hearings. Source

Tennessee Department of Revenue · Oct 7, 2026
Approves qualified data center sales tax exemption certificates. Source

Office of Open Records Counsel (Comptroller) · Oct 7, 2026
Free help with public records requests and problems. Source

Tennessee General Assembly · Oct 7, 2026
Find your legislators and follow data center bills. The 2027 session starts in January. Source