Over 100 Lawmakers Call for CHIPS Permitting Reform in Final Defense Bill

Letter

Dear Chairman Reed, Chairman Rogers, Ranking Member Wicker, and Ranking Member
Smith:

As you finalize the Fiscal Year 2024 (FY24) National Defense Authorization Act (NDAA), we
request that you preserve Section 1090G of the Senate-passed bill which is based on the
bipartisan and bicameral Building Chips in America Act (S. 2228/H.R. 4549).1 This provision
streamlines National Environmental Policy Act (NEPA) review requirements for semiconductor
manufacturing projects related to the CHIPS and Science Act of 2022. To succeed at reshoring
critical semiconductor supply chains, we cannot impose years-long delays to semiconductor
projects important to national and economic security.

Historically, NEPA reviews apply to projects that receive a significant portion of federal
funding, giving the Federal government sufficient control over the project's outcome. This is not
the case for the CHIPS program. The Commerce Department expects grants to comprise a
minimal share of total project cost, between 5-15%, to spur additional private investment in the
United States. Importantly, semiconductor manufacturing facilities have been privately
constructed in the United States for decades and have not been required to undergo NEPA
reviews.

The Commerce Department will require a NEPA review by considering CHIPS Act projects to
be "major federal actions." This could include projects that have already received all
environmental permits required under federal and state law, 2 and have begun construction. This
could halt or delay commencement of new projects, impacting the United States' ability to
bolster its national security interests, economic growth, competitiveness, and technological
leadership.

1 A modified version of the Building Chips in America Act was included in the Senate-version of the National Defense Authorization Act (S. 2226) as a part of a manager's amendment adopted on the floor of the Senate by a vote of 94-3. See: https://www.senate.gov/legislative/LIS/roll_call_votes/vote1181/vote_118_1_00211.htm
2 Like any other manufacturing facility constructed in the United States, construction on a new semiconductor manufacturing facility must comply with all federal, state, and local permitting and environmental protection laws -- including the federal Clean Air Act, the Clean Water Act, and the Endangered Species Act.

To address this challenge, Section 1090G of the Senate-passed NDAA and the Building Chips in
America Act would clarify the scope of NEPA reviews required under the CHIPS Act. Under
this amendment, a limited scope of projects receiving funding under the CHIPS Act would be
deemed as non-major federal actions. These include projects that have already begun
construction within the next year; projects for which federal funding represents a minimal
amount (10% or less) of total capital investment; and projects that will simply expand or
modernize an existing semiconductor facility. Furthermore, Section 1090G of the Senate-passed
version ensures all states are equally attractive for semiconductor investments.

As Secretary of Commerce Gina Raimondo recently testified to the Senate Committee on
Commerce, Science, and Transportation: "These are national security imperative projects. […]
Environmental concerns matter. We are not in any way suggesting we should do anything that
hurts the environment or is unsustainable. That being said, we do need to […] streamline the
process, speed the process, make the process more efficient and user friendly. […] But without
the [amendment] it's very difficult."3

Interruptions and delays to semiconductor manufacturing projects would undermine the goals of
the CHIPS Act and exacerbate risks to our economic and national security, without providing
additional benefits for environmental protection. Therefore, we urge you to retain Section 1090G
of S. 2226 in the final FY24 NDAA.

Thank you for your consideration of this request and for your ongoing leadership.

Sincerely,

Source