Topline
President Joe Biden is set to sign a bill in the coming days that would exempt some semiconductor chip projects from strict federal environmental reviews, despite concerns from environmental campaigners and House Democratic leaders that the move could allow chipmakers to sidestep safeguards.
The bill would allow qualifying semiconductor projects to bypass stringent federal environmental … [+]
Key Facts
The bipartisan bill, the Building Chips in America Act, introduced by Sen. Mark Kelly, D-Ariz. last July, will limit certain federal environmental reviews and permitting requirements under the National Environmental Policy Act (NEPA) for qualifying microchip projects.
The bill was introduced over concern “unnecessary delays” could stifle the construction of microchip facilities in the United States.
Last October, Commerce Secretary Gina Raimondo warned stringent rules under the NEPA could delay the implementation of grants awarded under the CHIPS and Science Act.
Raimondo later reversed course and said the Commerce Department, in charge of distributing the awards, is on track to complete all reviews before issuing grants after making “a ton of progress.”
Most chip manufacturing facilities from major chip makers Nvidia and Intel are located outside of the U.S.
The law will help “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 to Politico.
Key Background
The bill comes two years after Biden signed the CHIPS and Science Act into law as part of a broader effort to bolster the U.S. semiconductor chip manufacturing sector. The CHIPS Act has already seen more than $30 billion in funding announced in preliminary agreements with 15 companies. The U.S. only accounts for about 10% of global semiconductor manufacturing facilities, despite making up more than half of global revenue , according to a report by the Semiconductor Industry Association. Other major markets include Korea, Europe, Japan, Taiwan and China. Taiwan Semiconductor Manufacturing Company still holds over 60% of the global market for contract chipmaking. In a move boosting cooperation between Chinese companies, ByteDance, TikTok’s parent company, is reportedly developing its own AI model trained with chips from Huawei Technologies, according to Reuters.
Chief Critic
Biden’s plan is a break from House Democrats Rep. Frank Pallone Jr., D-N.J., Rep. Raúl M. Grijalva, D-Ariz., and Rep. Zoe Lofgren, D-Calif., who signed a letter ahead of the House vote last week urging their colleagues to vote no on the bill. “We cannot afford to repeat the mistakes that were made in the past,” they said, citing concerns that eliminating reviews for chip projects could allow companies to sidestep environmental protections for surrounding communities. Kelly, the sponsor of the bill, told Politico the exemptions in the bill were “very narrow.” Environmental groups are advocating for a more transparent process in the initial CHIPS Act. “The troubling lack of transparency in these awards must be addressed,” executive director of the environmental organization Sierra Club Ben Jealous said in a press release.
Big Number
$450 billion. That’s how much private semiconductor chip companies have invested into expanding domestic chip manufacturing across 28 states since CHIPS Act incentives were announced, according to the SIA. Investments are projected to triple by 2032. A NEPA review process could take years – the average time for agencies to complete an environmental impact statement is 4.5 years. This bill would eliminate the delay for projects that have started construction this year and ones where federal financial assistance accounted for less than 10 percent of total cost.
Crucial Quote
The bill is “not a rollback of any environmental laws,” Kelly told the New York Times, noting chip projects still have to comply with requirements outlined by other environment protection laws like the Clean Air Act.
Tangent
Hurricane Helene shut down operations at a quartz mine—an area critical to semiconductor chip manufacturing across the world—in Spruce Pine, North Carolina. The mine, home to super-pure quartz, which is used in the base silicon for manufacturing semiconductor wafers, crucibles and glass products like windows, rods and tubes, has been closed since Sept. 26.
Further Reading
Biden meets Vietnam leader to counter Hanoi’s ties with China and Russia (Reuters)
The Role of Semiconductors in the Renewable Energy Transition (Earth.org)
