Business, Government Legal News from throughout WVHouse advances ethane cracker incentive bill

The West Virginia House of Delegates moved forward with legislation that would provide a tax incentive for construction of an ethane cracker in West Virginia.

The bill would give a 25-year tax break if passed by the Senate. The bill was introduced by Speaker Rick Thompson, D-Wayne, at the request of Gov. Earl Ray Tomblin.

"The hope is this legislation will put West Virginia in a better position to be chosen for a cracker facility location. A $2 billion investment like this doesn't come along every day — we wanted to get the bill moving quickly so the governor has the tools he needs try to make that happen."

The law would cut property taxes for businesses that build an ethane processing plant in excess of $2 billion. The law would apply to non-real estate property.

Personal property, defined in West Virginia as business machinery, furniture, computers, equipment and inventory, is typically taxed at 60 percent. The bill would assess salvage value taxes of 5  percent instead for qualifying investments.

Ohio and Pennsylvania, two other states believed to be in the running for a cracker, do not tax non-real estate property.    

State officials have been attempting to attract a cracker for its potential to revitalize the state's chemical industry. Ethane-rich natural gas from certain areas of the Marcellus shale has become increasingly available with swelling shale gas drilling activity.

Ethane can be used to make a number of materials, including polyethylene or other chemicals used as raw materials to produce a number of materials.

One of the companies considering locating a cracker in Appalachia is Shell, and at least one other company looking at placing a cracker has not yet been named.  

In addition to an expected increase in spin-off jobs from the plant, the cracker itself is expected to generate hundreds of jobs. Total, industry groups have estimated as many as 12,000 West Virginia jobs to be created if a cracker is sited in the state.

The House suspended rules to pass the bill quicker, presumably because a cracker announcement from one of multiple companies looking to site a plant is expected soon.

Only one member of the House, Delegate Jonathan Miller, R-Berkeley, voted against the incentive. Miller could not be immediately reached for comment on Monday.