Semiconductor Plant Permit Carveouts Stoke Environmental Worries

A new permitting exemption for semiconductor makers is boxing in environmentalists who say they’ve lost an important tool for challenging an industry with a track record of pollution issues.

The exclusions brought on by the Building Chips in America Act could leave communities worried about heavily polluted water, air, and soil reliant on contract language between chip makers and the federal government—language that doesn’t always materialize, according to Harry Manin, deputy legislative director of policy and trade at the Sierra Club.

The chips law, signed by President Joe Biden in October, exempts semiconductor factories from review under the National Environmental Policy Act if the amount of federal aid the project receives is less than 10% of its total cost, or if the project is an expansion of an existing facility that doesn’t more than double the size of the site.

To the White House, the law—in coordination with a 2022 law that authorizes nearly billions to jumpstart a domestic semiconductor industry—is important to strengthen national security, boost the economy, and shore up global supply chains.

“We cannot build the best infrastructure in the world, we can’t be the leader in the industries of the future, we can’t have fabs constructed on time to do leading-edge semiconductor production, and we’re not going to be able to build data centers fast enough to retain global preeminence in AI without having streamlined permitting processes,” Lael Brainard, deputy director of the National Economic Council, said at an October permitting conference, using the term for fabricators.

The Biden administration’s efforts to spur the industry appear to be working. Since the 2022 CHIPS and Science Act became law, nearly $300 billion has been invested in new semiconductor manufacturing, creating more than 36,000 direct manufacturing jobs, said Jack Conness, policy analyst at Energy Innovation Policy & Technology LLC.

Intel, for example, got final federal authorization on Tuesday for a $7.9 billion award for projects in the US.

Emissions Data

But according to an EPA database, the US chip making sector released 3.8 million pounds of toxic chemicals into the air, water, and land in 2023, which includes disposing of and recycling the chemicals. That’s more than twice as much as the nation’s breweries released, but less than the 6.8 million pounds released that year by the computers and electronic products sector, according to EPA’s Toxics Release Inventory.

The manufacturing process uses gases with high global warming potential such as hydrofluorocarbons (HFCs) and perfluoroalkyl and polyfluoroalkyl substances (PFAS), according to the EPA.

“Exempting the semiconductor industry from NEPA is completely unwarranted, especially considering the projected significant increase use of PFAS and other toxic chemicals by the industry and their track record of releasing these dangerous chemicals into the air and water surrounding the facilities,” Tom Fox, senior legislative counsel at the Center for Environmental Health, said in an Oct. 2 statement.

In issuing CHIPS Act funds, the Commerce Department appears to be trusting corporations that have poor track records on the environment and public health to voluntarily adopt best practices, said Judith Barish, coalition director at CHIPS Communities United, a group of unions, environmentalists, and community groups.

In some cases, the government hasn’t been demanding commitments to best practices in contract language that lays out the terms of the federal grant or award, Barish said.

“This is an industry that needs more public scrutiny, not less,” she said. “We shouldn’t be eliminating any avenues of transparency, accountability, or oversight.”

A White House spokesman told Bloomberg Law that the administration has ensured that chips factories are “built and operated in a way that meets clean water, clean air, endangered species, and other federal requirements.”

The Semiconductor Industry Association has said the industry has built and run facilities in compliance with environmental rules for decades, and that NEPA reviews “could take years, potentially causing delays in completing CHIPS manufacturing and R&D projects, without providing significant additional environmental benefits.”

Signs of Improvement

Some examples of environmental accountability are popping up across the nation.

For example, a huge Micron factory in upstate New York is expected to go through a full environmental review despite the new law, Manin, of the Sierra Club, said.

That factory will also have to adopt sustainability measures that mitigate its greenhouse gas emissions, under a state Green Chips law signed by Gov. Kathy Hochul (D) in 2022.

The Biden administration also put out a competition in October to speed up research into sustainable semiconductor materials.

Separately, a recent CHIPS award to Taiwan Semiconductor Manufacturing Company for a facility in Phoenix was paired with a report detailing the company’s environmental commitments and an agreement for TSMC to post its environmental compliance reports online.

And a Nov. 20 award to GlobalFoundries comes with a community impact report claiming a commitment to 100% carbon-free power by 2030.

Manin called the GlobalFoundries commitment “vague,” saying it’s not clear if the public reporting on waste extends to waste released into the environment or only waste destined for landfills, incineration, recycling, and treatment—spotlighting the need for thorough environmental reviews upfront.

“The permitting process brings important facts to light about a wide range of environmental impacts,” Manin said. “But if projects can move forward without that level of scrutiny, it’s very hard to have a handle on what mitigations are needed. It should be up to communities and the workers who would ultimately be put in harm’s way to make that assessment on their own.”

The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Law is operated by entities controlled by Michael Bloomberg.