Senate Bill 2653 introduces the "Tennessee Data Center Impact Review Act," which establishes a regulatory framework for the operation of data centers in Tennessee. Starting January 1, 2027, any person wishing to operate a data center must obtain a permit from the water and wastewater operator board of certification. The application process requires detailed information, including the data center's physical address, power capacity, water usage projections, and potential impacts on local water supplies. The board will evaluate the application based on various factors, including wastewater management and the compatibility of discharges with municipal treatment systems. The bill emphasizes that residential water access takes precedence over industrial uses.

Additionally, the bill mandates public hearings for community input on data center applications and requires the board to conduct biennial evaluations of water systems used by data centers. It prohibits data centers from externalizing costs related to water treatment and infrastructure onto public utilities. The board is also tasked with compiling and publishing monthly reports on water usage by data centers. Violations of the act can result in civil penalties, and the commissioner may seek injunctive relief against ongoing violations. The act is set to take effect on July 1, 2026.