Local Tennessee officials are putting data center plans on ice to consider regulations

This story was originally published by the Tennessee Lookout.

Local governments in Tennessee are pausing data center development after outcry from residents while officials determine how to regulate the resource-intensive facilities.

McMinnville and Coffee County, both rural areas southeast of Nashville, each unanimously passed moratoria on data centers on June 9, with other moratoria votes expected in Warren and Knox counties on June 22. In Nashville, more than 150 people attended a Planning Commission meeting to speak against planned data center developments near the Nashville Zoo and Fisk University. The capital city’s council passed a moratorium bill on its first of three readings on June 9, and a bill that would codify restrictions and requirements for data centers will next be considered by the Planning Commission on June 25.

McMinnville, Tennessee resident Kai Sage is one of several locals who recently took up the mantle against a planned 25 megawatt data center that would be located near her home and other residential neighborhoods.

“I think that they’re aiming these at … these smaller places in Tennessee because our land is so cheap, our laws are so lenient, the income isn’t taxed like it is anywhere else, and generally they’re just not going to get a lot of pushback, because a lot of people don’t know what’s going on, and they don’t know anything about this,” Sage said. “Luckily, a lot of people around here were informed, so as soon as we alerted people about this, people quickly reacted.”

Data centers power modern communications, commerce, entertainment and more, and artificial intelligence and cloud computing are driving development of the facilities throughout the country.

Sixty-one data centers are operating or under construction in Tennessee, including 26 in the Nashville area, 13 in Memphis and 11 in Knoxville, according to market intelligence company Data Center Map.

Nearly 90% of existing data centers nationwide are located in urban areas, according to an April report from the Pew Research Center, but 67% of planned centers are in rural areas, many of which don’t have any data centers yet. The South holds the top rank for both the country’s existing number of data centers and planned data centers, Pew reports.

The International Code Council, a nonprofit organization sponsored by building trades that publishes codes and building standards, launched its own committee this month to shape guidelines specific to data centers.

Proponents say the centers can be sources of tax revenue, but detractors cite concerns about immense resource requirements — a large data center can use enough power and water to run an entire city — and environmental impacts.

Elon Musk’s xAI currently faces two lawsuits over air pollution and harmful, “near-constant” noise related to its Memphis-area data centers and the gas turbines that power them.

McMinnville Passes 18-Month Moratorium

In Warren County, the McMinnville Board of Mayor and Aldermen unanimously passed an 18-month moratorium on data center permitting on June 9, buying time for local officials to consider “electrical grid capacity, water and stormwater impacts, environmental and public health concerns, noise and community fit,” McMinnville City Administrator Nolan Ming said in a social media post after the vote.

“A moratorium is not a permanent ban. It is a responsible time-out,” Ming said. “It gives us time to study the issues carefully, update our zoning and land use regulations, and make sure any future decisions are based on solid information, not rushed approvals.”

The proposed 96,064-square-foot Hixson Data Center would have a 25 megawatt output powered by natural gas and diesel generators, according to the project’s website, which estimates an opening date in early 2028.

Alex Hixson, the center’s development director and a McMinnville resident, did not respond to questions about plans for the project after the moratorium vote. Hixson told WKRN earlier this month that he loves the area and wants to “do something good for it.”

Sage said the 14,000-resident city known for its hundreds of plant nurseries is not built for this type of industry, citing concerns over electricity demand, water use and pollution and noise. Now that McMinnville’s moratorium is in place, Sage plans to reach out to neighboring counties and cities that may also want to advocate for moratoriums or local regulations. Her primary goal is to keep data centers out of McMinnville and Warren County.

“We can’t just say in a law, these data centers are banned, right? That wouldn’t hold up in court,” Sage said, but local governments can create codes that make it more difficult or less appealing for data centers to develop there.

Tennessee Data Center Regulations Don’t Contemplate Environmental Impact

About a dozen states are considering statewide moratoria on permitting for data centers, but Tennessee is not among them. Maine’s state legislature passed the country’s first statewide moratorium on data centers, but Gov. Janet Mills vetoed the bill in April.

Tennessee legislators this year enacted a law stipulating that the owners of data centers that require at least 50 megawatts of power must pay for any infrastructure upgrades needed to produce the electricity the center needs. For reference, a large data center capable of supporting Artificial Intelligence can use more than 100 megawatts of power, or enough to support roughly 80,000 households, according to a congressional report.

Sponsors said the law is meant to protect people from larger electricity bills — utility companies are not allowed to use ratepayer funds to pay for upgrades solely associated with data centers, unless those upgrades also benefit other customers.

But the law also allows data centers to produce their own power without state or local oversight using equipment like gas turbines, something opponents say removes important guardrails protecting communities from pollution. Data centers can also purchase power from independent producers. 

Bills that would have set permit requirements for data centers or required the centers to report water, electricity and fuel usage did not garner enough support to make it to a final vote.

Tennessee Lookout is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Tennessee Lookout maintains editorial independence. Contact Editor Holly McCall for questions: info@tennesseelookout.com.