What does Louisiana’s AI Data Center Boom Mean for the State?

Meta is expanding its Richland Parish artificial intelligence (AI) data center to a planned 5 gigawatts of computing capacity, while questions involving new power generation, utility regulation, water use, environmental permitting, tax incentives and public disclosure have all made headlines. Tulane Law’s Haley Gentry, Assistant Director of the Institute for Water Resources Law & Policy, looks at what these centers mean for communities and the state. Gentry is an environmental lawyer who focuses on water resource management and public decision-making processes.

AI data centers are arriving in Louisiana on a scale we haven’t seen before. What makes Louisiana attractive for these projects, and what does a facility of this size actually mean for the state’s economy, energy, water and other infrastructure?

Through recent legislative measures and statewide economic incentives, Louisiana’s government has signaled that data centers are a priority sector for economic growth. There are multiple major proposed data center projects in Louisiana – Meta’s Hyperion facility in Richland Parish, multiple Amazon Web Services data center campuses in the Shreveport/Bossier City area, Anthropic in West Feliciana Parish, and a recently announced large data center project in Rapides Parish.

Many factors contribute to the current economic development trends across the state. For one, Louisiana has promoted large tracts of industrial and agricultural land across the state already zoned for development. In 2024, Louisiana lawmakers passed generous sales and use tax exemptions related to data center equipment. Entergy’s interest in expanding its power generation capacity in connection with data centers played a crucial role in early negotiations with Meta. Most recently, utility regulators are using an expedited process to review utility applications for new generation to serve large load customers. 

Louisiana is likely considered an ideal region because of its access to energy infrastructure and transit corridors, like the Mississippi River. Plus, there is a historical abundance of water resources, making Louisiana attractive from a development standpoint, as water shortages are constraining economic activity, especially in Western states. However, there is much more to the water question, which we can get to in a moment. 

AI data centers pose risks to the grid due to the amount of power they require. They also can create localized water issues. It is difficult to encompass the wide range of potential impacts (primarily related to water usage, but also from a water quality perspective) because the type of cooling system employed, energy source, surface versus groundwater sourcing, and whether facilities rely on municipal water services, or are using on-site private water wells, can alter the inquiry. Even more, it is critical to acknowledge tradeoffs in various types of cooling technologies. Evaporative cooling is the most water-intensive type of cooling process and poses the biggest risk to local water supplies. Air cooling uses a minimal amount of water but much more energy. So, if coal, gas, or nuclear generation is used to power a hyperscale data center, water is still being consumed, just in a different location.

Some data centers are tapping into municipal water services. While it certainly would be easier to get a sense of water usage if going through a public entity, this raises a set of related concerns. First, the physical infrastructure needed to deliver larger volumes of water (and the effluent water that would be treated after it’s used for cooling) strains aging drinking water infrastructure. Moreover, there is something to be said about using pretreated municipal potable water for cooling rather than domestic use.

What are the biggest legal and regulatory issues surrounding the development of AI data centers — and where does authority lie among federal, state, and local governments?

There are many critical questions about the regulation of artificial intelligence technology itself and what role governments should play in the actual oversight and use of the large language models as they are integrated into all facets of society and what protections workers/creators will have into the future. Yet in terms of governance, a key legal issue is the widespread use of nondisclosure agreements (NDAs) between officials and developers. In Louisiana, even elected officials, members of the cabinet, and the governor himself signed NDAs with Meta. That means that there has been little public input or comprehensive review across agencies or between jurisdictions.

There is not much by way of federal regulatory oversight for data centers. Most of the land-use and water resource decisions fall primarily to state agencies, and various federal review processes that come into play for components of data centers (pipelines and transmission lines through waters and wetlands) have been expedited in response to several of President Trump’s executive orders.

A key legal issue is the protection and management of water resources. Water for public use is the highest priority under both state law and U.S. Supreme Court jurisprudence. However, Louisiana currently does not have the frameworks in place to comprehensively manage water resources and prevent conflicts. For example, a company relying on groundwater can drill wells on their site, register the wells and estimated withdrawal rates with Louisiana’s Department of Conservation & Energy (LDCE), but from then on does not have to monitor, report or restrict usage absent a formal emergency declaration for that region or aquifer. However, LDCE is currently taking steps toward groundwater oversight through an ongoing rulemaking, but more robust authority will likely be needed to ensure local water supplies are not compromised.

Local government authorities are primarily focused on zoning and land use decisions. Most municipal entities have the authority to designate what kinds of economic and commercial activities are compatible with existing land uses. For example, the New Orleans City Council passed a temporary moratorium on data centers to give regulators time to understand what controls and oversight might be needed.

Power may be the biggest issue. Data centers can require enormous amounts of electricity and significant new generation and transmission infrastructure. Legally, how do regulators determine who should pay for that expansion, and what protections exist to keep those costs from being shifted to ordinary ratepayers? 

Regulation of utilities is unique from other industries. In Louisiana, this authority lies with the Louisiana Public Service Commission (LPSC), a constitutionally created body. In Orleans Parish, that authority lies with the New Orleans City Council. Three new gas plants in connection with the Meta facility were approved in August 2025. Last fall, the Governor signed Executive Order 25-102, aimed at expediting project development for large load users. In response, the LPSC adopted an expedited review process called the “Lightning Amendment” which it is now using to review Entergy’s application to build seven additional gas plants in connection with the Meta project.

While LPSC’s decisions often have major implications for natural resources and the environment, they are not robustly considered in the LPSC’s review process, which is primarily focused on ensuring the utility is acting prudently and that future costs will not negatively impact customers. Environmental considerations come up through integrated resource planning, but resource planning does not dictate whether LPSC will approve or deny a proposal. Rather, it functions as a periodic planning and disclosure mechanism. 

There have been efforts to address concerns about protections built in for ratepayers, but they are not absolute. Meta has agreed to finance the initial energy infrastructure at around $2.6 billion under a 20-year contract, but the life cycle of these facilities can be upwards of 30 years. Despite another executive order from the governor in the summer of 2026 seeking to alleviate concerns about ratepayer protection, local communities and affordable energy advocates on the whole do not feel that key concerns surrounding this unprecedented buildout have been addressed. The Lightning Amendment does not require Entergy to prove this proposal is the “least cost option” to meet Meta’s power demands, which is typically part of the review process.

What environmental questions should Louisiana be considering as data centers expand, from water use and air emissions to the construction of new natural-gas generation? Are existing environmental laws and permitting processes equipped to handle projects of this scale?

There are real concerns that there are not sufficient environmental safeguards in the approval process for facilities and associated energy infrastructure. Hyperscale AI data centers differ from previous kinds of data centers and cloud services. Because there is little federal oversight of data centers themselves, classic environmental statutes, like the National Environmental Policy Act, do not apply to the whole project, reducing understanding of the potential impacts and limiting opportunities for public input. Further, because most of the air pollution impacts, especially for data centers relying on fossil fuels, are offsite, they are not fully encompassed when studying the data center itself.

These gaps in regulatory oversight are very important to address, as Louisiana does not have more protective environmental standards beyond minimum federal requirements. States have primary oversight over water supply and allocation. Most states have assumed authority from the EPA to administer water pollutant discharge permits under the Clean Water Act. Louisiana’s Department of Environmental Quality is responsible for issuing water pollution discharge permits and any air permits associated with new power plants. In addition, gaps in water information regarding data centers and power generation should be studied. LDCE has authority over data collection for water resources. Currently, there is not a regulatory framework for surface and groundwater withdrawals, but users must register groundwater wells with LDCE and estimate daily water use. It is only in specially designated areas that groundwater use might be monitored or restricted. 

The governor recently signed Executive Order 26-078 in an attempt to further expedite environmental review and permitting. Though the extent of this executive order and what the governor and state regulators can actually accomplish toward that goal without accompanying legislation or additional federal rollbacks is unknown, it indicates a lack of concern for public health and ecological needs amid emerging industrial developments.

Environmental and health impacts from the dramatic increase in pollution burdens associated with natural gas power generation cannot be overlooked. The LPSC has already approved three new gas plants for Meta’s project, and in December, it will decide on approval of seven additional gas plants. It certainly raises questions on the status of renewable energy goals and efforts to diversify the grid to improve energy security.

Louisiana is offering significant incentives to attract data centers, with the promise of local investment and jobs. From a legal and public-policy standpoint, what should the state require in return, and how should we measure whether these projects ultimately benefit Louisiana communities?

Louisiana lawmakers could consider measures that improve transparency surrounding water use and disclosure mechanisms. Initial investments in energy and water infrastructure upgrades by these companies are certainly welcome, but little is known about the long-term costs that could be pushed onto local ratepayers. Other states have slowly begun adopting measures requiring companies to disclose water and energy demand for proposed facilities and subsequent reporting measures once operational. Moreover, policymakers need to consider decommissioning. What happens if some of these projects are scrapped mid-construction? What happens when a data center reaches the end of its life cycle? Without additional standards or rules in place, this could create real problems for local governments and adjacent communities.

To ensure economic development incentives align with sustainable natural resource management, legislators and policymakers could consider a robust interagency review or consultation process, as well as limiting what information can be protected under NDAs as confidential business information, like water use for cooling. These kinds of measures would provide more access to information for decision-making, as well as help restore public trust between officials and their constituents. There is also a conversation to be had about who can sign NDAs and how expansive they can be, particularly when it comes to elected officials at state and local level.

Lastly, and though unrelated to environmental measures, legislators could consider strengthening the enforceability of commitments on data center companies to hire locally to help to ensure that project benefits flow to local Louisiana communities rather than remote or out-of-state workers.