(Bloomberg) The U.S. House of Representatives approved a bill to exempt some semiconductor manufacturing projects from federal permitting requirements, addressing concerns that environmental studies and litigation could delay the construction of domestic chip factories.
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The bill, now headed to President Joe Biden’s desk, aims to accelerate the development of the U.S. semiconductor industry. Buoyed by incentives from the Semiconductor and Science Act of 2022, semiconductor companies have pledged to invest around $400 billion in factories in the U.S. Companies such as Intel Corp. and Taiwan Semiconductor Manufacturing Co. (TSMC) stand to receive billions of dollars from the bill, which will help fund major projects across the country.
Those rulings, which have yet to be finalized, subject semiconductor manufacturing sites to review under the National Environmental Policy Act, a requirement that would be relaxed under the bill passed Monday. Industry officials have long worried that NEPA review could cause months or years of delays and even expose projects to litigation, a concern shared by Commerce Secretary Gina Raimondo. But environmental groups have warned that chipmakers should not be allowed to skip that review because of the industry’s growing emissions and widespread negative environmental impacts.
It’s one example of the tensions that are brewing as Biden pursues his industrial policy: On the one hand, Washington officials want to build chip factories as soon as possible as part of efforts to reduce reliance on Asia, especially Taiwan, and on the other, the White House has ambitious climate goals, and building chip factories could make it harder to meet those targets.
The bill spells out three ways projects funded with CHIPS Act funds can qualify for NEPA exemptions. The first is to begin construction by the end of this year, a standard most major facilities can meet. The only exception is a project by Micron Technology Inc. in New York state, where the chipmaker has not yet met permitting requirements under the Clean Water Act and various state-level regulations.
Second, projects that receive only loans rather than direct grants are not subject to NEPA review, a provision that has not been applied to the CHIPS Act incentive packages so far. Finally, facilities are exempt if the grant is less than 10 percent of the project cost, down from 15 percent in the previous bill.
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Monday’s vote came after more than a year of congressional wrangling over a bill that had been a top priority for the semiconductor industry. The Senate initially approved a NEPA exemption for projects funded by the semiconductor act last summer as part of a broader defense bill, but House Speaker Mike Johnson blocked the provision in December after opposition from some Republican senators, who wanted broader permitting reform rather than an exemption just for the semiconductor industry.
The Senate responded by passing a standalone version of the bill, which the House approved on Monday.
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