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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThe U.S. House approved legislation on Monday that would exempt some semiconductor manufacturing projects from federal permitting requirements, addressing concerns that environmental reviews and lawsuits will delay construction of domestic chip factories.
The bill, which is now headed to President Joe Biden’s desk, aims to speed up the build-out of the U.S. semiconductor industry. Chip companies have pledged to invest some $400 billion in factories on American soil, spurred by incentives from the 2022 Chips and Science Act. Companies like Intel Corp. and Taiwan Semiconductor Manufacturing Co. are poised to receive billions of dollars from the legislation, helping pay for major projects across the US.
Those awards, which aren’t yet finalized, subject semiconductor construction sites to review under the National Environmental Policy Act, a requirement that would be eased by the legislation passed Monday. There’s long been concern from industry officials—shared by Commerce Secretary Gina Raimondo—that NEPA review could cause months or years of delays, as well as opening up projects to litigation. But green groups have warned against allowing chipmakers to bypass the process, citing the industry’s increasing emissions and broader environmental toll.
It’s an example of the tensions inherent to Biden’s industrial policy push. On one hand, officials in Washington want to see chip factories built as quickly as possible—part of a bid to reduce reliance on Asia, particularly Taiwan. On the other, the White House has outlined ambitions climate targets, and building semiconductor factories could make it harder to reach those objectives.
The bill spells out three ways for Chips Act-funded projects to qualify for a NEPA exemption. The first is by starting construction before the end of this year, a threshold that most of the major sites should be able to meet. One exception is a Micron Technology Inc. project in New York. In that case, the chipmaker has yet to satisfy permitting requirements under the Clean Water Act and various state-level provisions.
Second, projects that receive only loans—and not direct grant funding—would not undergo NEPA review, a provision that doesn’t apply to any Chips Act incentive packages so far. Finally, facilities would be exempt if their grant funding comprises less than 10% of project costs, down from 15% in an earlier version of the legislation.
Monday’s vote follows more than a year of congressional squabbling over the proposed law, which the chip industry had made a top priority. The Senate originally approved a NEPA exemption for Chips Act-funded projects last summer as part of a broader defense bill, but House Speaker Mike Johnson blocked that provision in December following objections from some Republican lawmakers. They had sought broader permitting reform instead of a single carve-out for chips.
The Senate responded by passing a standalone version of the bill, which is what the House approved on Monday.
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