How the next generation of semiconductor factories kicked up a fight over environmental review

Lawmakers’ push to revive US chip manufacturing has triggered new concerns about pollution regulation, inadvertently subjecting semiconductor factories to federal environmental review for the first time. But while a bipartisan bill would exempt the factories to support a still-struggling American industry, some environmental advocates worry it could weaken the nation’s bedrock environmental law.

Since the 1990s, semiconductor manufacturing has shifted from the US to Asia. Around that time, it was becoming cheaper to build fabs and hire workers in Asia. Studies into hazardous chemicals at fabs and lawsuits over worker exposure to them in the US were also emerging.

Now, a global chip shortage — and a desire to counter China’s manufacturing dominance while drumming up more American jobs — could kick-start a new generation of fabs. After a push by lawmakers to rebuild a domestic semiconductor industry, Joe Biden signed the bipartisan CHIPS and Science Act into law last year, allocating $52 billion in funding for domestic semiconductor manufacturing.

The funding could come with a catch for some companies. By accepting the money, their new fabs could be considered “major” projects subject to federal review under the 1970 National Environmental Policy Act (NEPA). The law requires federal agencies to assess the potential environmental impact of a major new project.

In the past, semiconductor fabs would typically have had to follow a patchwork of state and local laws. Some states have adopted mandates similar to NEPA. The EPA also regulates industrial pollution. But what makes NEPA a unique and powerful statute is that it’s a sunshine law — mandating input from local communities. Unless a major project qualifies for a categorical exclusion, federal agencies need to complete an environmental assessment. If the project is found to have a significant impact, then it must go through a more in-depth evaluation that includes public review.

Public involvement, in particular, has made NEPA a cornerstone for environmental protections in the US and one of the key tools residents have to oppose projects that might impact them. “[NEPA] provides often the only opportunity for public input on these kinds of decisions when taxpayer dollars are at stake, and when community health is at stake,” says Stephen Schima, a senior legislative counsel for the environmental law organization Earthjustice.

Dozens of toxic superfund sites are an ugly legacy of the last US semiconductor boom. From the 1950s to the 1970s, the US dominated global semiconductor manufacturing. Its factories, or fabs, gave Silicon Valley its name. That’s not the only way fabs left their mark. Santa Clara County, where Silicon Valley is nestled, now has more than 23 toxic superfund sites: places so contaminated that the EPA has placed them on a “National Priorities List” for cleanup. That’s more than any other county in the US. A common toxin found there is trichloroethylene (TCE), a chemical used for decades to clean semiconductors until the mid-1990s. Now, it’s a known carcinogen. 

While fabs in the US have phased out the use of toxic substances that came to light in the 1990s, the same safeguards aren’t necessarily in place in newer manufacturing hubs in Asia. A 2017 Bloomberg investigation found that thousands of workers in semiconductor fabs in Asia could still have been exposed to chemicals linked to reproductive health risks and miscarriages. Also, modern fabs still produce hazardous waste that needs to be properly handled. They also use a lot of water and energy, and their greenhouse gas emissions have come under scrutiny as climate change becomes a bigger global threat. Those are issues that could crop up as the Biden administration tries to build up a domestic supply chain.   

The Semiconductor Industry Association declined to speak on the record with The Verge. But some CHIPS Act supporters argue that environmental reviews under NEPA could simply mire the process in delays. The environmental review process can take more than four years, on average, to complete. And NEPA happens to be the environmental statute most frequently litigated in the US. “The idea is that by exempting them from NEPA review, it’s not allowing all of the litigation at every step of the process by private citizens,” says Alexander Kersten, deputy director and a fellow of the Renewing American Innovation Project at think tank Center for Strategic and International Studies (CSIS).

The US can’t afford these extra steps if it wants to compete with other countries where it’s become cheaper to make semiconductors, some proponents of the bill say. “We’re in a very tough contest with China and with our friends, allies, and competitors around the world,” says Charles Wessner, an adjunct professor at Georgetown University and a nonresident expert with CSIS. “We have to take care of our country and the people from an environmental point of view, but we also have to be able to move quickly to get these fabs up and running. It’s extremely expensive for a large project like a semiconductor facility to have a delay.”

To preempt any problems, Sens. Mark Kelly (D-AZ), Todd Young (R-IN), Bill Hagerty (R-TN), and Sherrod Brown (D-OH) introduced the Building Chips in America Act this year. The bill exempts certain CHIPS Act-funded projects from NEPA review, including any that rely on federal funding for a small portion of costs and expansions of existing sites that are less than double the size of the facility. Projects that have already started construction after receiving other state and / or federal permits needed would also be exempt, as would projects that already need to complete a state-level review “at least as stringent as NEPA.” It also gives the secretary of commerce more leeway to lead any federal environmental reviews necessary. The measures made it into lawmakers’ National Defense Authorization Act for 2024, a defense spending bill Congress still needs to finalize by the end of the year.

Environmental advocates, though, maintain that NEPA isn’t the only or even primary cause of project delays. They point to a lack of staffing or limited funding at federal agencies — problems that are outside of the scope of NEPA. And many of the new semiconductor fabs being built might not even have triggered NEPA review in the first place, so it’s baffling to some advocates why a bill exempting them from NEPA is necessary at all. “It’s sort of like looking for a solution to a problem that doesn’t exist … it’s, you know, scapegoating NEPA,” says Brett Hartl, government affairs director at the nonprofit Center for Biological Diversity.

For now, environmental advocates The Verge spoke to are focused on protecting NEPA, not scrutinizing chip makers in particular. NEPA has faced a barrage of attacks in recent years. The Trump administration gutted the law in 2020, imposing strict timelines for environmental reviews, allowing federal agencies to ignore climate change in their assessments, and letting projects that aren’t primarily federally funded to skip the process entirely. Biden has since reversed course and tried to find other ways to speed up NEPA reviews but once again faces Donald Trump in an election season. 

“There’s been this kind of undue focus on NEPA,” says Schima. “The consequence of this is an erosion of government accountability, of transparency, and public input in federal decision making.”