By Mike Tony
Charleston Gazette-Mail
Data centers share critical information, but West Virginia legislators are moving to further shield their developers from having to share critical information about them.
A panel of state lawmakers has advanced a legislative rule that would keep basic information about proposed “High Impact” data center projects confidential and hidden from public view, casting aside transparency concerns from West Virginians who fear they’ll have adverse financial and environmental impacts.
The state Legislative Rule-Making Review Committee on Wednesday advanced a legislative rule to set the framework for certifying a high-impact data center or microgrid district under House Bill 2014.
HB 2014 is a 2025 state law that has drawn widespread opposition by stripping communities of local control and requiring most of the property tax revenue the projects would generate from local taxing bodies, a move estimated to cost counties and school districts millions.
The planned rule approved by the Legislative Rule-Making Review Committee would deem confidential all petitions seeking certification of a high-impact data center and all letters of intent seeking certification of a microgrid district. A high-impact data center could be any data storage or equipment facility with a critical power demand of at least 90 megawatts. A microgrid district, under HB 2014, would be an up-to-2,250-acre zone where electricity generated is used only within or delivered to the wholesale market.
The Legislative Rule-Making Review Committee recommends the full Legislature sign off on the proposed rule, which would replace a nearly identical emergency rule filed after HB 2014 was enacted to ensure that potential projects had a legal framework while the proposed rule passes through the legislative process.
HB 2014 is designed to ease in-state data center development in part by prohibiting counties and municipalities from enforcing or adopting regulations that limit creation, development or operation of any certified microgrid district or high-impact data center project. The law would split any property tax proceeds from high-impact data centers, with 50% going to a fund for reducing personal income tax.
The emphasis on confidentiality throughout the planned rule advanced by the committee is consistent with HB 2014’s requirement that to become a certified microgrid district, the operation’s representative must present the Department of Commerce secretary with a confidential letter of intent.
Per HB 2014, that confidential letter of intent must have wide-ranging financial and engineering information about the project, including proposed acreage and location, estimated capital investment, evidence of financial capacity, estimated project completion date, estimated generation capacity and estimated power needed from the local distribution electric utility.
And, critically, HB 2014 mandates that any information provided by a data center that it identifies as confidential business information is exempt from the Freedom of Information Act. The law requires the Department of Commerce secretary to make available to the governor and Legislature a list of all certified high-impact data centers “and all relevant information,” with specifically identifying information to be removed to ensure confidentiality.
House Minority Leader Pro Tempore Kayla Young, D-Kanawha, proposed an amendment during the Legislative Rule-Making Review Committee that would have required the Department of Commerce to provide a redacted version of filings for public view when a developer applies for certification.
“[I]f the public wants to appeal, there’s no way for them to appeal something that they don’t know exists,” Young said.
The planned rule advanced by the committee provides for appeal of the Department of Commerce secretary’s actions regarding a request for microgrid district certification, with all parties to be afforded an opportunity for hearing after at least 10 days’ written notice — despite the planned rule’s emphasis on confidentiality.
Department of Commerce Deputy Secretary and Office of Energy Director Nicholas Preservati took issue with Young’s amendment proposal, which the committee subsequently rejected.
“I don’t think it’s good practice for the agency to be determining what’s confidential and what’s not,” Preservati told the committee. “That should be the determination of the company, because it would have a chilling effect on companies that would submit information that they believe is confidential and then have a unilateral process where the agency would be able to say, ‘No, we don’t agree with you. We’re disclosing this information publicly.’”
Preservati said disclosure could create a competitive disadvantage for applicant companies, reporting that companies avoid disclosing the type of turbines they’re seeking because competitors would preempt them by buying them on the market first.
In a response to public comments it received regarding the rule, the Department of Commerce acknowledged a bevy of transparency concerns submitted throughout the 937 public comments, with some commenters calling for a redacted public version of all applications to allow for community oversight and letters of intent and petitions being made accessible to the public.
Community advocates have fought claims of confidential business information by developers of proposed facilities linked to expected data center operations in Mason, Mingo and Tucker counties, appealing Department of Environmental Protection air quality permit approvals for those sites.
Wide-ranging concerns registered against proposed rule
After receiving public comments on the rule, the Department of Commerce modified it by requiring the petitioner to identify “any unique physical or geological condition” on a bordering parcel that could lead to that parcel “having an inordinate burden placed upon it as a direct result of the development of the proposed microgrid project” and what the petitioner proposes, if anything, to offset that potential burden.
“There was a lot of public comments requesting, how can we do this? Where’s the public, where are they involved, and how are they protected?” Preservati told the committee. “So that was in response to that.”
Young voiced concern that people on the receiving end of that potential burden may be unaware of the proposed project and that the existence and extent of that possible burden would be determined by the applicant rather than the would-be burdened recipient.
In response, Preservati cited a rule provision allowing the Department of Commerce secretary to ask for additional information or verification of letter of intent contents the secretary deems necessary for their decision.
“I’m worried about the public not being able to engage in that appeals process, because this is all going to be completely confidential. Are you worried about that?” Young asked Preservati.
“I’m not worried about it,” Preservati replied, predicting that applicants will need to obtain permits and withstand other regulatory scrutiny.
Public commenters requested that applicants be required to disclose details regarding water consumption, discharge and possible impacts on water availability and quality.
Large data centers can consume 3-5 million gallons of water per day — roughly 5-8% of the total amount withdrawn for public water supply throughout West Virginia in 2023, according to state Department of Environmental Protection data.
In October, the American Water Works Association published a study finding the most prevalent impacts of data centers on water systems include increased water demand affecting sources or treatment capacity, stress on water infrastructure and increased costs.
Clustering of data centers can exacerbate the challenge of planning for peak water demand, especially where there are concurrent demands from other sectors or limits in available supply, the American Water Works Association observed, adding that electricity interruptions stemming from data centers can have major impacts on water utilities.
Commenters requested that the proposed rule require disclosure of all air pollution produced by microgrids, including hazardous air pollutants and greenhouse gases. Commenters contended that special protection is needed for areas like Canaan Valley where the topography contributes to thermal inversions that may trap harmful emissions and prolong public exposure.
Commenters called for the proposed rule to require that proposed developments be assessed for their collective impact on noise levels, air pollution and viewsheds to preserve their quality of lifeand scenic areas.
The proposed rule, some commenters said, should require that applicants show their facilities will cover the full cost of their energy consumption and any necessary utility updates, and that existing ratepayers not be tapped to subsidize any grid infrastructure upgrades required by data centers.
Commenters took issue with HB 2014’s diversion of 70% of property tax revenue to the state rather than local governments. 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 as well as economic development
■ 5% to an Electric Grid Stabilization Fund HB 2014 would create to help maintain utility-owned coal and gas electric generation
Commenters also urged that the Department of Commerce rule account for possible negative effects on tourism-based economies, like in Tucker County. Community members in Tucker County have voiced concerns that an expected data center operation planned by Purcellville, Virginia-based Fundamental Data LLC there could harm air quality in area outdoor attractions like Canaan Valley National Wildlife Refuge and Dolly Sods Wilderness.
State sets aside environmental, electric cost objections
But in its response to comments, the Department of Commerce said that some comments “did not respond directly to the substance” of its proposed rule, instead addressing policy decisions already set by the Legislature through HB 2014.
The Department of Commerce said it has no legal authority to change code provisions through the rulemaking process and “does not specialize in environmental regulation.”
In addition to its requirement that applicants identify conditions that could result in bordering parcels “having an inordinate burden,” the agency also noted it added a requirement that its secretary consider proximity to schools, churches, residences, businesses, sites listed on the National Register of Historic Places, and National Historic Landmarks as designated by the National Park Service when evaluating an application.
That consideration would have to include any applicant proposals to offset possible impacts of the microgrid project being developed near those locations.
The Department of Commerce noted that HB 2014 prohibits regulated electric utility customers from bearing costs related to electrical service being provided to a microgrid district.
But critics of HB 2014 have remained unconvinced that HB 2014 would guard effectively against such costs, and Appalachian Power regulatory and finance vice president John Scalzo testified to state lawmakers during the 2025 regular legislative session that HB 2014 wouldn’t ensure against increased rates as intended.
The Department of Commerce broadened its defense of its proposed rule in its response to comments by saying the planned rule is a “foundational piece of the larger administration of multibillion-dollar infrastructure investments in West Virginia,” predicting “significant property tax revenue for the benefit of both the host county and the State at large.”
But the hundreds of comments the Department of Commerce received in response to its planned rule make clear many West Virginians believe the state is inviting risks that aren’t worth taking.
Paula Humphreys of the tiny Monroe County community of Lindside wrote in a Nov. 26 comment that she didn’t want a data center in her backyard or anywhere in the state.
“Our state has been used for years by corporate sponsors and no return to its people,” Humphreys wrote. “We never come out ahead.”
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