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Pennsylvania Gov. Josh Shapiro said the state should play a leading role in the development of AI and data centers but proposed a list of requirements to get through what he described as a “selective” process.

“I know Pennsylvanians have real concerns about these data centers and the impact they could have on our communities, our utility bills, and our environment,” Shapiro said Tuesday during his annual budget address in Harrisburg. “And so do I.”

But Shapiro said the U.S. needs to develop these facilities or risk control by “communist China.”

Energy-hungry data centers run computer servers that generate internet services and artificial intelligence. Proponents, like Shapiro, tout increased tax revenue and job creation. But the growth of data centers has caused increased air pollution and water scarcity locally, and led to rising electricity prices for consumers throughout the country. The region’s grid operator, PJM Interconnection, said data centers have led to a narrowing gap between supply and demand, which has led to increasing costs. The amount of energy required by new and proposed data centers also risks future blackouts.

Shapiro said Pennsylvania is the second-largest energy producer in the country, having generated 240 million megawatts last year. This, along with the state’s higher education resources, makes it poised to house more facilities.

“We have leading researchers in AI and machine learning at Penn State, CMU, and Penn and elsewhere,” Shapiro said. “We have the talent and we’re already investing in the workforce needed to build, maintain, and operate these facilities.”

To address the widespread pushback on data centers from local communities, consumer advocates and environmentalists, Shapiro announced the creation of the Governor’s Responsible Infrastructure Development standards — or GRID.

Along with hiring local residents, he wants data center developers to generate their own power or pay for the additional draw on the grid. Without giving details, he said there would be “strict transparency standards and direct community engagement,” along with environmental protection and water conservation.

“If companies adhere to these principles, they will unlock benefits from the Commonwealth, including speed and certainty in permitting and available tax credits.”