Biden to sign bill allowing chip projects to skirt key environmental review

WASHINGTON – More than two years ago, President Joe Biden signed a law that aimed to ramp up the nation’s production of semiconductors by offering generous subsidies and tax credits to companies. Since then, chip manufacturers have invested billions of dollars into new plants across the country.

But industry groups, along with federal officials, have long warned that lengthy federal environmental reviews could delay manufacturing projects for months or years, which could slow the country’s ability to scale up its chip manufacturing capacity.

In the coming days, Biden is set to sign a bill that would weaken federal environmental reviews for certain semiconductor manufacturing projects that receive subsidies through the 2022 CHIPS and Science Act. The bill, which has divided Democrats, underscores the challenges facing Biden as he tries to advance his economic agenda alongside his ambitious climate goals.

The legislation would exempt qualifying chip projects from reviews under the National Environmental Policy Act, or NEPA, which requires federal agencies to assess the potential environmental effects of proposed major federal actions before they can proceed. The House passed the bill last week, and the Senate unanimously passed it in December.

Proponents say the legislation would help to expedite the construction of chip manufacturing facilities, which would strengthen the U.S. economy and help to reduce the nation’s dependence on other countries for critical chips that can power items as varied as smartphones, cars and weapons systems. They say that projects will still have to comply with various federal, state and local environmental regulations and permitting requirements.

Democrats who oppose the bill, however, say it would allow companies to skirt an important step aimed at reducing potential harms to the environment and workers. They argue that taxpayer-funded projects should be subject to a more holistic federal environmental review process, which would allow for more transparency and community input.

Some Democrats and environmental groups are urging Biden to reject the bill. Rep. Zoe Lofgren of California, the top Democrat on the House science committee, said she hoped Biden would veto it.

“I think it was a mistake,” she said.

Lofgren, along with the top Democrats on the energy and natural resources committees, said in a letter late last month that they were concerned about the semiconductor industry’s “legacy of leaving superfund sites” and history of using chemicals that have been linked to a higher risk of miscarriages among chip workers. “History does not indicate that semiconductor manufacturing should be completely absolved from any NEPA reviews,” they wrote.

Lofgren said the chip industry has since made “great strides,” and she supported its further development in the United States. But she said she worried that the bill would result in less transparency about companies’ use of chemicals during the manufacturing process, including PFAS, the so-called forever chemicals.

“Hopefully, there won’t be a time when we look back sorry for this effort,” Lofgren said.

In a statement, Rep. Raúl M. Grijalva, the top Democrat on the Natural Resources Committee, said, “A piece of legislation that allows these facilities to completely bypass NEPA’s critical environmental review and public input processes, while also stripping communities’ right to legally challenge these projects under NEPA, is unconscionable and never, under any circumstances, should have been pushed through the House.”

White House officials say that Biden, whose administration has already announced more than $30 billion in grant awards for chip companies, will sign the bill.

“President Biden plans to sign this bipartisan legislation, which will allow us to continue our efforts to ensure Americans across the country can benefit from the promise of the Investing in America agenda while protecting communities and the environment,” a White House official said in a statement.

Increasing domestic chip production is a key aspect of Biden’s economic policy agenda, which largely focuses on bolstering American manufacturing and bringing back jobs that have shifted overseas. Only about 10% of the world’s semiconductors are currently produced in America, down from about 37% in 1990.

Gina Raimondo, the commerce secretary, said in a CNBC interview last week that it was an “important bill” that would allow companies to more quickly build semiconductor manufacturing facilities and ramp up production of chips on U.S. soil.

“Of course, we care deeply about clean air, clean water and the environment,” Raimondo added. “That being said, this is a national security imperative. We have to act with urgency and go as fast as possible.”

A Commerce Department spokesperson said Raimondo would also work to ensure that projects “preserve their safety and environmental commitments.”

Other Democratic lawmakers defended the bill and underscored that projects would still have to comply with various federal environmental laws.

Sen. Mark Kelly, D-Ariz., a co-author of the bill, said it would help to prevent “unnecessary delays” in building out the country’s chip manufacturing capacity. Arizona has received some of the largest new semiconductor investments, with Intel and Taiwan Semiconductor Manufacturing Co. breaking ground on new facilities there in recent years.

Kelly also said the bill had been narrowly tailored. It would exempt projects from NEPA review if they had started construction by the end of the year or if federal financial assistance did not comprise more than 10% of their total cost. Projects that receive only federal loans, rather than grants, would also be exempt.

Kelly added that the bill was “not a rollback of any environmental laws,” and projects would still have to comply with bedrock environmental protection laws, such as the Clean Air Act and the Clean Water Act.

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“The whole plan behind this legislation was to make sure that the CHIPS and Science Act had the maximum impact on our economy and our national security,” Kelly said.

David Isaacs, the vice president of government affairs at the Semiconductor Industry Association, which lobbied for the bill, said in a statement that the industry “is a global leader in promoting environmental sustainability and is one of America’s safest manufacturing sectors for workers, thanks to advanced fabrication techniques and stringent safety standards and emissions controls.”

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Some Democratic proponents of the bill said it would strengthen national security by helping the United States build a reliable supply of semiconductors. The most advanced ones are critical for artificial intelligence, smartphones and sensitive military hardware. But the bulk of those chips are currently produced in Taiwan. U.S. officials have long had concerns about the economic and national security consequences if China were to invade Taiwan.

Rep. Scott Peters, D-Calif., a co-author of the bill, said he worried that the nation’s dependence on Taiwan’s semiconductors could become a critical issue. He added that some of the concerns about the environmental effects of semiconductor projects were “not sufficient.”

“I was pretty unimpressed with those arguments,” Peters said. “I guess at the end of the day, so was President Biden.”

This article originally appeared in The New York Times.