U.S. enacts law to exempt select fabs from environmental reviews

President Joe Biden has enacted a law that exempts certain U.S. semiconductor manufacturing facilities, funded under the CHIPS & Science Act, from undergoing additional federal environmental assessments, reports Reuters. This move is intended to speed up the approval process and prevent potential delays for projects already in progress.

The new law prevents fab projects from being subjected to extra reviews under the National Environmental Policy Act (NEPA) 1969. Proponents of the legislation argue that these projects already comply with existing federal, state, and local environmental regulations, and the added NEPA reviews could have delayed them for years. However, some environmental groups oppose the law, arguing that NEPA reviews are crucial for ensuring things like the safety of workers and communities potentially exposed to hazardous materials used in semiconductor production.

Under the new law, the Department of Commerce has the authority to act as the lead agency for any semiconductor project that qualifies as a significant federal action under NEPA. This centralizes oversight and simplifies the review process when the Department of Commerce approves or regulates a project. The act also lets the DoC rely on prior environmental studies, planning documents, and decisions made by federal, state, or tribal authorities. As long as these studies meet federal standards, they can be used in place of new reviews, preventing unnecessary duplication of efforts.

There are multiple conditions that fab projects must comply with to avoid NEPA review:

• Construction of the fab started or starts before December 31, 2024.
• The project is funded in the form of a loan or loan guarantee, but not a direct grant from the federal government.
• The financial assistance provided in the form of grants and excluding any loan or loan guarantee comprises not more than 10% of the total estimated cost of the project.

The first requirement is the one that many chipmakers are likely to fulfill as multiple fabs, including large projects in Ohio and Arizona, are already underway. However, the remaining conditions will be far more difficult to achieve. Chipmakers need substantial financial assistance to build expensive fabs in the U.S.

Additional exclusions exist for projects on sites with similar construction or expansion. The sites are owned or leased by the company receiving federal financial aid. This means that companies like Intel and TSMC will not need to wait for additional environmental reviews when they expand their Arizona and Ohio sites.

Although there are now exemptions from federal environmental reviews, the White House assures these fabs will continue to meet key ecological standards, including clean water, air quality, and endangered species protections. Also, individual states have their environmental regulations, which will complicate the process. For instance, Micron’s planned campus in New York is an exception to the new rules, as the company still needs to adhere to the permitting processes mandated by the Clean Water Act, along with various state-level environmental laws.