The Tennessee General Assembly introduced seven bills this year aimed at installing guardrails at data centers in the state, but only one passed the finish line.
Data centers house the computers, networking equipment, and cooling systems used to manage digital data. As data centers proliferate across the country and demand for electricity increases; Some states have taken action Control the impact of resource-intensive industries on your infrastructure.
A large data center capable of supporting the development and use of artificial intelligence could consume more than 100 megawatts of electricity, enough to feed 80,000 U.S. households. a parliamentary report. Tennessee Valley Authority is a federally owned electric utility that provides electricity to Tennessee and parts of other states. The contract was approved in February. This will allow Elon Musk’s Memphis-area xAI data center operation to purchase up to 300 megawatts of power.
Both Democrats and Republicans in Tennessee’s government have introduced bills related to the industry, ranging from registration and permit requirements to reporting requirements for water, electricity and fuel usage. One bill would require “high-performance computing facilities” to devote half of their data processing output to “public benefit.”
All but one of these bills either failed or died before reaching a vote.
List of laws sole survivor: A bill that would require owners of data centers (that require at least 50 megawatts of power) to pay for infrastructure upgrades necessary to generate the power their data centers require.
Tennessee loves its data centers. We want to set up a data center, but we want to put guardrails around it to protect ratepayers.
– Rep. Ed Butler, R-Rickman
The idea, the bill’s sponsors say, is to protect people from ballooning electricity bills due to the potential costs of new infrastructure when data centers are built in cities. The law prohibits utility companies from using ratepayer funds to pay costs associated solely with data centers.
However, data centers may still be able to avoid incurring these costs alone.
“Utilities can share costs with data centers only if the upgrades benefit other ratepayers besides the data center or follow normal rules that apply equally to all large customers,” the bill’s Senate sponsor, Sen. Brent Taylor, R-Memphis, told a Senate committee.
The bill would allow data centers to use equipment such as gas turbines to generate their own electricity without state or local oversight, or to purchase power from independent power producers operating outside of utilities.
“In Tennessee, we love our data centers,” Rep. Ed Butler, a Rickman Republican and the bill’s House sponsor, told his colleagues in the just-concluded legislative session. “We want to put in a data center, but we want to put guardrails around it to protect ratepayers.”
Trey Bassey, an attorney with the Southern Environmental Law Center, said the bill does not provide “meaningful protection” from rising rates or environmental concerns because of exemptions added to the bill before it was passed and states’ limited ability to regulate utility rates, which fall under TVA’s purview. Deregulation also means that communities will no longer have a public process to voice their concerns.
“This bill removes the guardrails so that independent gas-fired power plants are not prohibited or regulated,” Bassey said. “What we’re concerned about is that these gas-fired power plants are popping up in people’s communities and backyards, creating new levels of all kinds of harmful air pollution and potentially putting a huge strain on our water infrastructure, all to serve the data centers of some of the world’s biggest tech companies.”
Butler said independent power sources still need to comply with some regulations. federal regulations. He said electricity demand would likely encourage more independent generation, “which I think ultimately will help ratepayers reduce their meter bills.”
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Lawmakers did not discuss pollution concerns associated with this type of power generation.
There are 60 data centers operating or under construction in Tennessee. data center mapa market intelligence company that tracks data center services. There are 25 properties in the Nashville area. There are 13 centers in the Memphis area, including xAI’s supercomputing facilities Colossus and Colossus 2. Power for the center will be provided by an energy plant owned by xAI. More than 24 gas turbines in South Haven, Mississippi.
Those turbines, which power the center behind the company’s AI chatbot Grok, are the subject of a recent lawsuit filed by the NAACP. lawsuit against the company Regarding suspicions of illegal air pollution.
According to , data centers that provide the computing power needed to run generative artificial intelligence models have proliferated in recent years. Pew Research Center.
The increase in data centers means a significant increase in electricity demand.
The International Energy Agency estimates that data centers will account for more than 4% of U.S. electricity consumption (approximately 183 terawatt-hours) in 2024. For comparison, Pakistan’s electricity demand in 2025 totaled 196 terawatt-hours, says an October 2025 Pew Research Center article.
Data centers also generate a lot of heat and require power and cold air or water for cooling. One estimate from the International Energy Agency suggests that a 100-megawatt data center (large enough to support AI applications) could consume as much water as 2,600 U.S. homes.
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SB2584 (Jackson)/HB2047 (McAlmon): Data centers receiving certain tax credits must certify that they have not violated Worker Adjustment and Retraining Notices, the Fair Labor Standards Act, or federal immigration law in the past year. The bill stalled in a Senate committee and was ignored in the House.
SB2653 (Taylor)/HB2392 (Renault): The Tennessee Data Center Impact Review Act requires data centers to obtain a permit from the Water and Sewerage Board before they begin operations, and to report information such as water sources and daily, peak, and annual water usage. The bill came with a fiscal memo of about $120,000 a year. It was postponed multiple times and was finally relegated to a general subcommittee, but no vote was taken.
SB2128 (Taylor)/HB1847 (Butler): The bill would allow data centers to generate their own power (using gas turbines or other methods) or purchase power from independent power producers operating outside of utility companies. If a data center purchases power from an electric utility, the bill states that the data center owner would be required to pay for any infrastructure upgrades necessary to support the data center. Upgrades and new infrastructure cannot increase rates for ratepayers unless the infrastructure also benefits other ratepayers. The bill passed the House on April 21 by a vote of 76-14 with one member present and no vote. The Senate passed the bill 28-0 on April 22 with two members present and no vote. The bill has not yet been sent to Gov. Bill Lee’s desk.
SB2112 (Campbell)/HB2456 (Pearson): Data centers must register with the Department of Revenue and report their fuel, electricity and water usage. The bill failed in the House Business and Utilities Subcommittee on March 18 and was referred to the Senate General Subcommittee on March 24.
SB1682 (Lamar)/HB2061 (Towns): Data centers must register with the Public Utilities Commission and report electricity and water usage and charges. The bill failed by a second margin in the Senate Commerce and Labor Committee on March 3 and was not notified in the House on March 11.
SB1999 (Lamar)/HB2054 (Camper): The Data Centers, Artificial Intelligence, and Clean Transition Pricing Accountability Act would authorize rates for large energy-intensive users and require funding for incremental power generation and grid upgrades based on usage. The bill included a fiscal memo of $138,800 for FY26-27 and $128,800 annually going forward. It broke down in early March and did not proceed to a vote.
SB1832 (Yarbro)/HB1461 (Clemons): High-performance computing facilities would be required to devote 50% of their computing or data processing output to “public interest.” They are also required to report annually on their carbon footprint and conduct annual internal compliance audits. The bill failed in the House Agriculture and Natural Resources Subcommittee on March 3 by a 2-6 vote and was assigned to the General Subcommittee on March 10.
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