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Defense bill could speed reviews of semiconductor projects

Illustration of hands drawing red lines over the US Capitol. 

Illustration: Shoshana Gordon/Axios

Semiconductor projects may land a win on environmental permitting in this year's defense authorization bill.

Why it matters: Congress could soon deliver a significant change to how the government weighs the environmental impacts of certain tech manufacturing projects so federal money lands more quickly in project developers' hands.

  • Getting CHIPS and Science Act money dispersed quickly and boosting domestic chip manufacturing is viewed by some government officials and lawmakers as key to national security and supply chain resilience.

Driving the news: Sens. Mark Kelly and Ted Cruz successfully led an effort to attach language to the Senate's annual defense policy bill, or NDAA, declaring that some projects funded under CHIPS are not "major federal actions" for review under the National Environmental Policy Act.

  • Industry representatives are concerned that projects getting money under the CHIPS Act would have to receive a NEPA review, which mandates an environmental analysis and public comment period for major federal actions.
  • By stipulating that certain projects getting funding are not "major federal actions," the language would disqualify those activities from triggering a NEPA review.
  • The Kelly NDAA amendment would also create "categorical exclusions" for certain CHIPS-backed projects, meaning that if they do trigger NEPA they would avoid a full analysis.

Of note: The Commerce Department supports the effort, believing it would make CHIPS implementation more efficient for the industry.

  • "We are not in any way suggesting that we should do anything that hurts the environment or is unsustainable. That being said, we do need to — which your amendment would do — streamline the process, speed the process," Commerce Secretary Gina Raimondo said at an Oct. 4 Senate Commerce Committee hearing.

State of play: A senior Senate aide told Axios that House committees with jurisdiction over the issue have not yet raised "any substantive objections to the policy within the amendment" in bicameral conference talks on the NDAA.

  • But the ousting of House Speaker Kevin McCarthy left the matter open. "[The] House leadership struggle is not helpful in providing certainty for negotiations," the aide said.
  • One semiconductor industry insider told us the issue remains unresolved because some members want broader changes to NEPA and aren't in favor of something sector-specific.
  • There's also environmentalists' quiet objections with the Kelly amendment after the debt deal greased the permitting skids, which have been shared with Senate Democrats, said Stephen Schima, senior legislative counsel for Earthjustice.
  • "What we're seeing here is not an approach to permit reform. It is simply deregulation," Schima told Axios.

What they're saying: "Around the country, there's been dozens of projects announced and many are already underway, over $220 billion in private sector capital. This is being done in expectation of CHIPS funding," the industry insider said, cautioning against NEPA reviews halting construction that is already underway.

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