By Mike Tony
Charleston Gazette-Mail
Public outcry over West Virginia political leaders’ pursuit of data center development has reached a fever pitch in recent months, with residents protesting and filing legal challenges against expected data center projects in Mason, Mingo and Tucker counties.
But state lawmakers are ramping up their data center pursuit a year after passing controversial legislation pushed by Gov. Patrick Morrisey aimed at drawing data centers to West Virginia at the expense of local government control and funding.
That legislation, House Bill 2014, prohibited local jurisdiction over “high-impact” data centers and diverts most of any property tax revenue they would generate away from local taxing bodies, a move estimated to cost counties and school districts millions.
Now under West Virginia House Finance Committee consideration is new legislation that would offer data center and “new data” operations and manufacturing projects a significant tax break.
HB 4013, the Mountaineer Flexible Tax Credit Act of 2026, got a less-than-10- minute-hearing in the House Finance Committee last week and has been on the committee’s agenda twice this week, though it hasn’t yet been considered for markup and passage to the full House of Delegates as signaled on meeting agendas.
Led in sponsorship by Delegate Geno Chiarelli, R-Monongalia, HB 4013 would create a multiform tax credit for new data center, telecommunications, “data/information processing,” “technology intensive,” manufacturing, research and warehouse enterprises that invest at least $2.5 million or create at least 10 new full-time jobs in the state.
The size of the tax credit would depend on how much the company spends on machinery, construction, and worker wages at or above 75% of the average state or county wage.
The tax break offered through HB 4013 could be spread over 10 years and amount to millions of dollars — including for developers of data centers.
Expected data center operations have sparked widespread opposition from West Virginia communityand environmental advocates fearing adverse air, water and noise pollution impacts from anticipated data center operations.
“Now the legislature is back with a costly proposal, HB 4013, to give more handouts to dirty data center developments,” West Virginia Citizen Action Group, a progressive advocacy group, said in an email to supporters Tuesday to direct feedback opposing the bill to House Finance Committee members.
Nine months after HB 2014’s passage, West Virginia data center development hasn’t accelerated, and the state still trails Virginia, Pennsylvania, Ohio and other regional states in data center presence.
Houston-based Fidelis New Energy LLC and international industrial investment firm 8090 Industrieson Wednesday announced the launch of a planned Mason County-based platform to develop, own and operate large-scale, fully integrated artificial intelligence infrastructure and power microgrids. The platform is to be anchored by the previously announced Monarch Compute Campus near Point Pleasant. A 2,300-acre Monarch AI Data Center System has been planned for the area.
In 2023, the West Virginia Economic Development Authority approved a forgivable $62.5 million loan with a three-year term for Fidelis subsidiary Mountaineer GigaSystem LLC, which was formed to develop a hydrogen production facility in the area.
Then-Gov. Jim Justice‘s office said Fidelis planned for data centers to be powered by net-zero carbon hydrogen as part of a Mason County hydrogen production plan, with data center capacity potentially reaching 1,000 megawatts when fully built out.
Tax credit eligibility would be broad under HB 4013
No fiscal note has yet been released to project revenue costs and other impacts from HB 4013.
The bill broadly defines investments qualified to garner tax credit eligibility as including “all costs associated with” acquisition, installation, construction of or tenant interest in any buildings and other property improvements, equipment, machinery, landscaping, fire protection, engineering, and design costs.
Such investments wouldnot include acquisition ordevelopment of natural resources,including coal,natural gas, natural gasliquids, oil, rock, sand andstanding timber.
Businesses wishing toapply for the MountaineerFlex Tax Credit would haveto submit an application tothe state Department ofCommerce that includes:
■ A “brief overview” ofthe applicant’s business or industry
■ A headquarters location
■ A project site location
■ The amount of proposedqualified investment
■ The number of newfull-time jobs to be createdfrom the project
■ The average workerwage to be paid for thosejobs
■ The length of timeneeded for the applicant tomeet its qualified investmentand new full-time jobcreation projections
Tax credit calculationswould include:
■ 1.5% of the total valueof all manufacturing orprocessing machinery, includingtotal purchase andinstallation costs, acquired,leased or installed for theproject after the Departmentof Commerce certifiesthe project as eligible forthe tax credit
■ 7% of the total value,including installation costsof any nonmanufacturingequipment
■ 2% of the total contractprice or compensation paidto any contractor for constructionof any buildingstructure, or other propertyimprovement to establishthe project
■ 15-30% of the productderived by multiplying theaverage employer wage bythe number of new fulltimejobs, depending onaverage wages and benefitscompared with state averages
The credit allowed by HB4013 would be allowable forin-state investments madestarting July 1, 2027.
At the House FinanceCommittee’s Friday meeting,Chiarelli framed HB4013 as a way to “bringmore businesses and better-paying jobs to WestVirginia without givingaway money upfront.”
“[HB 4013] really givesour Department of Commerceand [Division of ] Economic Development alittle bit more flexibility tofind those niche companiesthat may want to locatehere and invest in WestVirginia. Is that fair?”House Finance CommitteeVice Chair Clay Riley,R-Harrison, asked Chiarelli.
“I would say so,” Chiarellireplied. “This tax credit isas flexible as putty, and itseems like it’s going to beapplicable in a number ofsituations.”
But Delegate ChuckHorst, R-Berkeley, struck anote of worry, observingthat data centers — computerserver-populatedwarehouses that power artificialintelligence andother computing tasks —often offer few jobs.
“Our big benefit fromthem is going to be revenuegenerated by taxes, byproperty tax,” Horst predictedof data centers. “[HB4013] just gives me pause.”
Bill under fire fromadvocacy groups
The West Virginia Centeron Budget and Policy, aprogressive policy thinktank, published an analysisof HB 4013 Friday calculatingthat a single data centerwould qualify for an almost$145 million tax credit in ahypothetical example of adata center with a $2 billionvalue in equipment andmachinery and constructioncosts of $200 millionemploying 25 full-timeworkers.
Authored by SeanO’Leary, senior policy analystat the West VirginiaCenter on Budget and Policy,the analysis suggestedthat data center developersin some cases “degrade”public services like electricityand water.
Data centers often consumelarge amounts ofelectricity and water,straining power grids andpublic water systems.
“[E] nacting massive taxgiveaways means they getto benefit from these publicservices without contributingfinancially to them likeresidents and small businessesdo,” O’Leary wrote.
The West Virginia CitizenAction Group predicted inan email to supportersTuesday that HB 4013would cost the state hundredsof millions of dollarsannually.
“Now, not only will thecounties not see the taxbenefits of these massivedevelopments, but the statewill not either,” the groupsaid, alluding to the combinationof local tax revenue-diverting HB 2014 andstate tax break-laden HB4013.
HB 2014 would splitproperty tax proceeds fromhigh-impact data centers asfollows:
■ 50% in a fund for reducingpersonal income tax
■ 30% to the county orcounties where a data centeris located
■ 10% to all counties on aper capita basis
■ 5% to the West VirginiaWater Development Authority-administered EconomicEnhancement GrantFund, used for water andwastewater infrastructurebut also economic development
■ 5% to an Electric Grid Stabilization Fund HB 2014 would create to help maintain utility-owned coal and gas electric generation
The West Virginia Citizen Action Group and West Virginia Highlands Conservancy both have urged supporters to submit comments to House Finance Committee members voicing opposition to HB 4013.
“This tax credit is another step in rewarding Big Tech for bringing their resource draining data centers to the Mountain State. But HB 4013 takes it too far,” the West Virginia Highlands Conservancy said in a Monday blog post predicting HB 4013 would “provide free reign for more companies to take advantage of our minimally regulated rural communities, alter their landscapes, pollute their air and rivers, and give nothing to the communities in return.”
Read the rest of the story at the Charleston Gazette-Mail
