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 would not include acquisition or development of natural resources, including coal, natural gas, natural gas liquids, oil, rock, sand and standing timber.
Businesses wishing to apply for the Mountaineer Flex Tax Credit would have to submit an application to the state Department of Commerce that includes:
■ A “brief overview” of the applicant’s business or industry
■ A headquarters location
■ A project site location
■ The amount of proposed qualified investment
■ The number of new full-time jobs to be created from the project
■ The average worker wage to be paid for those jobs
■ The length of time needed for the applicant to meet its qualified investment and new full-time job creation projections
Tax credit calculations would include:
■ 1.5% of the total value of all manufacturing or processing machinery, including total purchase and installation costs, acquired, leased or installed for the project after the Department of Commerce certifies the project as eligible for the tax credit
■ 7% of the total value, including installation costs of any nonmanufacturing equipment
■ 2% of the total contract price or compensation paid to any contractor for construction of any building structure, or other property improvement to establish the project
■ 15-30% of the product derived by multiplying the average employer wage by the number of new fulltime jobs, depending on average wages and benefits compared with state averages
The credit allowed by HB 4013 would be allowable for in-state investments made starting July 1, 2027.
At the House Finance Committee’s Friday meeting, Chiarelli framed HB 4013 as a way to “bring more businesses and better-paying jobs to West Virginia without giving away money upfront.”
“[HB 4013] really gives our Department of Commerce and [Division of ] Economic Development a little bit more flexibility to find those niche companies that may want to locate here and invest in West Virginia. Is that fair?” House Finance Committee Vice Chair Clay Riley, R-Harrison, asked Chiarelli.
“I would say so,” Chiarelli replied. “This tax credit is as flexible as putty, and it seems like it’s going to be applicable in a number of situations.”
But Delegate Chuck Horst, R-Berkeley, struck a note of worry, observing that data centers — computer server-populated warehouses that power artificial intelligence and other computing tasks — often offer few jobs.
“Our big benefit from them is going to be revenue generated by taxes, by property tax,” Horst predicted of data centers. “[HB 4013] just gives me pause.”
Bill under fire fromadvocacy groups
The West Virginia Center on Budget and Policy, a progressive policy think tank, published an analysis of HB 4013 Friday calculating that a single data center would qualify for an almost $145 million tax credit in a hypothetical example of a data center with a $2 billion value in equipment and machinery and construction costs of $200 million employing 25 full-time workers.
Authored by Sean O’Leary, senior policy analyst at the West Virginia Center on Budget and Policy, the analysis suggested that data center developers in some cases “degrade” public services like electricity and water.
Data centers often consume large amounts of electricity and water, straining power grids and public water systems.
“[E]nacting massive tax giveaways means they get to benefit from these public services without contributing financially to them like residents and small businesses do,” O’Leary wrote.
The West Virginia Citizen Action Group predicted in an email to supporters Tuesday that HB 4013 would cost the state hundreds of millions of dollars annually.
“Now, not only will the counties not see the tax benefits of these massive developments, but the state will not either,” the group said, alluding to the combination of local tax revenue- diverting HB 2014 and state tax break-laden HB 4013.
HB 2014 would split property tax proceeds from high-impact data centers as follows:
■ 50% in a fund for reducing personal income tax
■ 30% to the county or counties where a data center is located
■ 10% to all counties on a per capita basis
■ 5% to the West Virginia Water Development Authority- administered Economic Enhancement Grant Fund, used for water and wastewater infrastructure but 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