The White House’s environmental and manufacturing goals are now on a collision course, after Congress voted and Biden approved the exemption of new microchip factories from extra environmental reviews.
In a tense vote that sparked a bitter back-and-forth Monday night, the Building Chips in America Act passed the House over strident objections from key Democratic committee leaders, with Democratic defectors linking arms with Republicans.
In a statement provided exclusively to POLITICO late on Tuesday, a White House official said Biden will sign the bill, which “will allow us to continue our efforts to ensure Americans across the country can benefit from the promise of the Investing in America agenda while protecting communities and the environment.”
Biden’s decision could widen existing fissures between the Democratic Party’s pro-business and environmental wings. And his approval risks angering environmentalists, which see the bill as a giveaway to the chip industry and a potential threat to the environment.
Monday’s House vote marks a big win for the microchip lobby, which for nearly two years has been trying to dilute the environmental-impact rules attached to the Biden administration’s multibillion-dollar funding program for microchip plants.
The 2022 CHIPS and Science Act provided $39 billion in subsidies to American chip manufacturing projects, an effort to boost U.S. job growth and industrial capacity in a growing global industry while protecting against China. But recipients of that money are required to complete federal environmental reviews under the decades-old National Environmental Policy Act before they can receive funding — a first for an industry unaccustomed to the extra environmental red tape accompanying federal subsidies.
Soon after the ink was dry on the law, industry lobbyists began pressuring Capitol Hill to exempt some projects from NEPA and shorten the litigation timeline for others. They warned that without those changes, construction of chip facilities — and by extension, the high-tech industrial renaissance promised by Biden — could be delayed for months or years.
The result was the Building Chips in America Act, a bill designed to lift or lessen many of NEPA’s requirements on new CHIPS projects. The Senate unanimously passed it in December, and on Monday, GOP House leadership abruptly forced a suspension vote on the bill, clearing the two-thirds threshold with help from Democrats — including many whose states are slated for major chip manufacturing projects.
But several Democratic lawmakers on key committees, including House Energy and Commerce ranking member Frank Pallone (D-N.J.), spoke out against the bill on the House floor. And earlier Tuesday, at least one top Democrat — Rep. Zoe Lofgren (D-Calif.), ranking member on the House Science Committee — called on Biden to reject the legislation. “He should veto it,” she told POLITICO in a statement Tuesday.
And the Sierra Club and other groups — including the more than two dozen environmental organizations who sent a letter on Monday urging House Democrats to oppose the bill — warned Biden that if he signs it into law, it would hurt both the environment and the administration’s own climate agenda.
“President Biden should veto this. I expect he will veto it,” Harry Manin, Sierra Club’s deputy legislative director of industrial policy, told POLITICO on Tuesday.
But Biden also faced pressure from the microchip lobby, which has long enjoyed significant pull at the White House. “It’s our expectation that the president will sign the bill into law,” said one chip industry lobbyist earlier Tuesday, who requested anonymity due to the issue’s sensitivity.
The lobbyist highlighted the national security goals that drove 2022’s CHIPS and Science Act, and warned that environmental reviews could delay construction of chip facilities for months or years — a risk critics of the bill say has not panned out.
A domestic tech-manufacturing resurgence “is a legacy item, and [Biden] understands that,” the lobbyist said.
The Commerce Department did not respond to questions earlier on Tuesday about whether Biden should sign the bill and how CHIPS projects would be impacted if it becomes law. But in response to the House’s passage, a Commerce spokesperson said Commerce Secretary Gina Raimondo is “committed to continue working with stakeholders to ensure CHIPS for America projects preserve their safety and environmental commitments.”
The Building Chips in America Act would waive NEPA reviews for chip projects if they start construction before 2025; take only loans (rather than grants) from the government; or receive a federal subsidy comprising less than 10 percent of the total project cost.
The bill would also make the Commerce Department the de facto lead agency for conducting the reviews — a role it has already taken on for some of the biggest beneficiaries of CHIPS Act grants.
That change also irks environmentalists, who have criticized Commerce for being too hasty in suggesting there are no significant environmental impacts for three project sites — which would shield the companies from soliciting additional public input and going through a more extensive NEPA process.
Some environmentalists believe that dropping environmental protections could turn the CHIPS projects now multiplying across America into a stain on Biden’s legacy. Judith Barish, coordinator of CHIPS Communities United, a coalition of labor and environmental groups, said the bill passed on Monday undermines a range of administration goals — including those around climate, public health and its Justice40 commitment.
“It’s a missed opportunity,” Barish said. “We don’t want to see the legacy of the CHIPS and Science Act being workers getting sick because of toxic chemicals on the job, or children in nearby schools and communities getting sick because of air pollution, or residents with poisoned wells and aquifers.”
In a statement, Semiconductor Industry Association spokesperson Dan Rosso said the chip sector “is a global leader in promoting environmental sustainability and worker safety, and the industry is committed to continuous improvement of our processes.” Rosso said modern chip facilities “feature advanced fabrication techniques and stringent safety standards and emissions controls.
”In a brief interview Tuesday, Sen. Mark Kelly (D-Ariz.), a co-sponsor of the legislation, also downplayed environmentalists’ concerns. “I’ve heard secondhand from folks that had those issues,” Kelly said. He called the bill’s NEPA exemptions “very narrow.”
Brett Hartl, government affairs director for the Center for Biological Diversity, bemoaned the possible follow-on effects of the law.
This “only encourages other industries to use the same tactics,” he said.
But even before the White House’s statement, he seemed resigned to a Biden signature.“I think it’s a done deal, given the votes and sort of how it played out,” Hartl told POLITICO earlier on Tuesday.
