Data Centers
Overview
Data centers have attracted significant public attention nationwide. Although Tennessee has experienced less rapid buildout of data centers than data center hubs like Virginia, data center operators are increasingly proposing to site facilities in Tennessee. No single government authority in Tennessee regulates all aspects of data center siting, construction, and operation. Instead, oversight is distributed across local and state agencies.
TDEC’s authority is limited to environmental requirements administered by the department. Issues such as local siting, zoning, land-use compatibility, traffic, lighting, noise, vibration, building design, electric service availability, and local infrastructure cost allocation generally fall outside TDEC’s permitting authority and are typically addressed through local government, utility, or other applicable review processes.
This webpage provides a brief overview explaining what data centers are, how TDEC regulates activities related to data center construction and operation, and the aspects of data centers that TDEC does not regulate. TDEC is proactively working to better understand environmental considerations associated with data centers while applying existing regulatory requirements to this emerging sector.
What is a data center?
A data center is a building that contains and runs large computing systems. Data centers include computer servers, data storage devices, and networking equipment to store, manage, process, and transmit large amounts of data. Data centers can range in size from small installations within existing buildings that support a single company to very large hyperscale data centers in newly constructed facilities used to train and operate AI models. Data centers come in several distinct types, each designed to meet different organizational needs.
- Edge data centers are smaller, distributed facilities located closer to end users to reduce latency for time-sensitive applications like streaming or IoT. They are often micro-facilities under 1,000 square feet. Examples include cell towers, retail locations, or small server rooms.
- Colocation (colo) data centers are shared facilities where businesses rent physical space, power, and cooling while bringing their own servers and hardware.
- Enterprise data centers are privately owned and operated by a single organization to support its internal IT infrastructure, offering full control over security and customization.
- Cloud data centers are large-scale facilities operated by providers like AWS, Google or Microsoft, simultaneously.
- Hyperscale data centers are massive facilities, typically 100,000+ square feet, built by tech giants to support enormous computing workloads at scale.
How does TDEC regulate data centers?
TDEC’s role with data center projects is to review and oversee compliance with applicable environmental requirements. TDEC’s permits are not specific to data centers, and TDEC does not approve a data center project as a whole. Instead, TDEC reviews the parts of a project that may be subject to environmental requirements, such as construction stormwater, wastewater, water use, or equipment that produces air emissions.
The TDEC-administered environmental permits or regulatory requirements that may apply to a data center depend on project-specific facts, including the project’s location, construction footprint, water source, wastewater management approach, cooling technology, backup power equipment, fuel storage, waste generation, and potential impacts to waters of the state.
Air Permitting for Data Centers
The Division of Air Pollution Control (APC) regulates sources of air emissions within 91 counties in the state to maintain the purity of the air resources of the State of Tennessee consistent with the protection of normal health, general welfare, and physical property of the people while preserving maximum employment and enhancing the industrial development of the State. APC does not directly regulate data center operations. Instead, APC regulates equipment that emits air pollutants, such as engines, generators, turbines, or boilers, rather than the data center itself.
Local governments may assume regulatory control for sources of air emissions within their borders. Once TDEC approves creation of a local air emissions program, TDEC no longer directly regulates sources of air emissions covered by the local program. Davidson County (Nashville), Hamilton County (Chattanooga), Knox County (Knoxville), and Shelby County (Memphis) each maintain local air programs. If you have questions regarding air emissions from data centers in one of these counties, please contact the local program directly. Contact information for local air programs is available on APC’s website.
Air Permits Potentially Applicable to Data Centers
Sources emitting less than 5 tons/year of any regulated pollutant or less than 1,000 pounds per year of any hazardous air pollutant are exempt from construction and operating permit requirements. An exemption or insignificant activity determination is intended to confirm whether a source’s emissions are low enough that a construction or operating permit is not required. APC requests that new data centers submit insignificant activity determinations to enable the division to verify whether any air permits are necessary.
Available for emergency engines at non-Title V facilities. For grid-connected data centers, backup engines typically qualify for PBR or insignificant activity status unless total facility emissions cross major source thresholds. PBR requirements are intended to ensure that qualifying emission sources are operated and maintained in compliance with applicable air pollution control requirements.
PSD — Prevention of Significant Deterioration
Required before constructing or modifying certain major stationary sources of air emissions that exceed applicable emissions thresholds, including 250 tons per year of a regulated New Source Review pollutant, or 100 tons per year for certain source categories. PSD permitting is intended to protect air quality by requiring review of potential emissions, air pollution controls, and air quality impacts before the emission source is built or modified.
Non-PSD
Required before constructing or modifying certain stationary sources of air emissions that do not trigger PSD permitting but still require air permitting and are not otherwise exempt. Non-PSD construction permitting is intended to ensure that potential emissions and applicable air pollution control requirements are reviewed before the emission source is built or modified.
True Minor
Required for certain facilities with potential emissions below major source thresholds. This generally includes facilities with potential emissions of less than 100 tons per year of any regulated air pollutant, less than 10 tons per year of any single hazardous air pollutant, and less than 25 tons per year of all hazardous air pollutants combined. A true minor operating permit is intended to ensure that smaller emission sources operate in compliance with applicable air pollution control requirements. The Division routinely issues combined construction and true minor operating permits.
Conditional Major
Issued to facilities that voluntarily restrict potential emissions below major source thresholds. Conditional major permits are intended to limit emissions and require monitoring, recordkeeping, reporting, and compliance demonstrations to ensure the facility remains below those thresholds
Title V
Required for major sources of air emissions. This generally includes facilities with potential emissions of 100 tons per year or more of any regulated air pollutant, 10 tons per year or more of any single hazardous air pollutant, or 25 tons per year or more of all hazardous air pollutants combined. A Title V permit is intended to ensure that major sources identify, follow, and report compliance with applicable air pollution control requirements.
Water Permitting for Data Centers
The Division of Water Resources (DWR) issues permits for activities that affect water quantity or quality in rivers, streams, and other surface waters. DWR does not directly regulate the location or operation of data centers but instead regulates activities on a data center campus that may impact water resources. These activities can include stormwater discharges associated with land disturbance as part of data center construction, discharges of wastewater from a data center, construction of a groundwater well, or a data center’s withdrawal of water from a surface stream.
Local governments also play a role in water quality regulation. Local governments generally regulate post-construction stormwater runoff concerns from developed sites. Local governments also maintain pretreatment programs that ensure municipal wastewater treatment plants can effectively treat wastewater discharges from industrial sources such as data centers.
Water Permits Potentially Applicable to Data Centers
Water discharge permits apply when certain wastewater, stormwater, or other water from regulated activities is discharged to waters of the state or to permitted wastewater systems. These permits are intended to protect water quality by establishing requirements for how those discharges are managed, monitored, and controlled.
The following discharge permits may be applicable to data centers, depending on the facility’s construction activities, wastewater management approach, and site-specific conditions.
NPDES Construction General Permit (CGP)
Authorizes the discharge of stormwater from sites of construction activity with one or more acre of land disturbance, regardless of the type of project. The CGP is intended to minimize sediment leaving the construction site and to protect Tennessee surface waters. Permittees must follow CGP requirements, including erosion prevention, sediment control, inspections, and protections for water quality. CGP requirements do not depend on the end use of the construction project and apply equally to construction of a data center, restaurant, or factory.
NPDES Wastewater Discharge Permit
Authorizes facilities to discharge pollutants from point sources into surface waters. The permit is intended to protect water quality by establishing discharge limits, monitoring requirements, and other conditions designed to ensure that wastewater discharges comply with state and federal water quality standards. Potential sources of wastewater in data centers include cooling tower blowdown water, stormwater, and process wastewater discharged directly from data centers into surface waters.
Pretreatment — Significant Industrial User (SIU)
Applies to facilities discharging 25,000 gallons/day or more of process wastewater to a Publicly Owned Treatment Works (POTW), facilities that comprise 5% or more of POTW’s hydraulic or organic capacity, and facilities subject to federal categorical pretreatment standards. Pretreatment requirements are intended to protect municipal wastewater treatment systems by ensuring that industrial wastewater is appropriately managed before entering the sewer system and does not interfere with treatment plant operations, damage infrastructure, endanger workers, or affect the treatment plant’s ability to meet its own permit requirements.
Class V Underground Injection Control (UIC) Permit
Required for discharge of wastewater into groundwater. Includes requirements for well construction, fluid characterization, monitoring, and compliance. UIC requirements are intended to protect groundwater by ensuring that injected fluids are properly characterized and that injection wells are appropriately constructed, operated, monitored, and maintained.
Water withdrawal and transfer permits apply when a facility proposes to withdraw water directly from surface waters or transfer water between river basins. These requirements are intended to help evaluate potential effects on water resources, aquatic habitat, and stream conditions.
The following water withdrawal and transfer permits or requirements may be applicable to data centers, depending on the facility’s water source, location, and site-specific conditions..
Aquatic Resource Alteration Permit (ARAP)
Required for certain activities that alter waters of the state, including some surface water withdrawals, construction of water intakes, or physical changes to streams or wetlands. ARAP requirements are intended to protect water quality and aquatic habitat by evaluating the potential effects of the proposed activity on the affected water resource.
Water Withdrawal Registration
Any user proposing to withdraw 10,000 or more gallons per day from surface or groundwater sources must register the withdrawal with DWR. Water withdrawal registration is intended to help TDEC track water use across the state and better understand demands on Tennessee’s water resources. Registration does not, by itself, authorize or limit the withdrawal.
Well Construction
Any person drilling a water well must use a licensed driller who complies with applicable well-drilling standards and requirements. If the well requires registration, the well driller must ensure that the registration is completed.
Waste Permitting for Data Centers
The Division of Land Protection -Waste Management Branch (DLP-WM) regulates the management of solid and hazardous waste throughout its entire lifecycle, from the point of generation through recycling, treatment, storage, transportation, and final disposal, to protect human health and the environment.
Data centers are subject to the same solid and hazardous waste regulations as other waste generators. Common waste streams generated by data centers include:
- Packaging material (cardboard, plastic, wood pallets, etc.)
- Scrap metal
- Construction and demolition debris
- Retired servers, hard drives, circuit boards, cables, and racks
- Lead-acid or lithium-ion batteries
- Fluorescent lamps containing mercury
- Cleaning chemicals and solvents
- Used oil and fuel filters
- Refrigerants
Waste Permits and Approvals Potentially Applicable to Data Centers
Though not technically a formal permit, this evaluation authorizes disposal of solid wastes that are either difficult or dangerous to manage— including sludges, bulky wastes, industrial wastes, petroleum wastes, friable asbestos, and combustion wastes — into Class I, II, and III landfills.
Hazardous waste permits are required when waste management activities exceed those authorized under the applicable hazardous waste generator category. EPA identification numbers are required for all small and large quantity hazardous waste generators.
What aspects of data centers do TDEC lack authority to regulate?
TDEC lacks the authority to regulate the aspects of data center construction and operations that fall outside state environmental laws. Examples of activities that TDEC lacks authority to permit or prohibit include:
- Decisions on where to site a data center or concerns that a data center is inconsistent with neighboring property uses;
- Local land use and zoning decisions;
- Noise levels from data centers and associated equipment;
- Data center impacts on electricity and water rates;
- Grid reliability & transmission planning;
- Cybersecurity & data privacy;
- Worker safety; and
- Digital content generated or supported by data center operations.
The responsible regulatory authority for these topic areas is listed below:
| Topic | Primary Role |
| Environmental Permits | TDEC, or local program where applicable |
| Zoning / land use / moratoriums | Local government |
| Electricity supply / grid planning | Utility, TVA/local power company, FERC where applicable |
| Water and sewer service capacity | Local utility / water or wastewater provider |
| Noise | Usually local government |
| Worker safety | TOSHA/OSHA |
| Cybersecurity and data privacy | Other state/federal authorities, not TDEC |
What is the impact of a data center moratorium on TDEC’s permitting decisions?
TDEC is aware of calls for moratoriums on data centers in various communities in Tennessee. TDEC’s environmental permitting responsibilities are separate from local zoning, land-use, or moratorium processes. If TDEC receives a permit application that meets applicable environmental requirements, TDEC is required to issue the permit or coverage. However, it’s important to note that a TDEC permit does not supersede local zoning, local moratoria, or other applicable local, state, or federal requirements.