An Inside View of NEPA in Practice

Factory Settings has highlighted many ways the CHIPS program’s setup diverged from standard federal operations. In the CHIPS Program Office, we had a lot going for us:

• Sufficient programmatic resources (between the 25% investment tax credit and our $39 billion in funding)

• Substantial administrative budgets to build our team and procure contractor support

• Special hiring authorities that let us attract great talent and scale rapidly.

• “Other transaction authority” that let us sidestep grant law strictures and negotiate with industry.

• Nimble, dynamic industry engagement models.

• Substantial statutory discretion to design our process and make funding decisions that advanced the national interest.

Today’s post focuses on an area where our “factory settings” initially didn’t diverge from federal baseline requirements: the National Environmental Policy Act, or NEPA.

NEPA created significant risks of delay and litigation for the program. We managed those risks through early engagement with applicants, careful process design, and a highly capable environmental team, but the threat of disruption remained. Ultimately, Congress provided relief by narrowing NEPA’s application to the program, reducing — but not eliminating — the risk that environmental review would derail projects, or the program as a whole.

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What is NEPA?

My first call from Secretary Gina Raimondo about NEPA came a few weeks into my role, while I was cobbling together dinner after putting my toddler to bed. Her inquiries usually followed a formula — raising massive topics that reflected our implementation challenge but for which we had no plan. This call had particular urgency: we needed a plan for NEPA.

The urgency around NEPA stemmed from the dual risks of delay and litigation, each of which represented a source of potential program-level failure. To understand why, it’s helpful to know what NEPA is — and what it isn’t.

Semiconductor fabs, like most industrial manufacturing operations, have substantial environmental footprints. They use land, consume massive amounts of power and water (though they recycle most of the water), emit fluorinated gases and other pollutants, use hazardous materials, and require disposal of hazardous waste. Starting in the 1970s, we enacted a broad regime of environmental laws — laws like the Clean Air Act, Clean Water Act, Endangered Species Act, and the Resource Conservation and Recovery Act. Over time, an extraordinarily complex regulatory regime has grown from these statutes, comprising hundreds of implementing regulations. Layered on top of these laws, state and local governments also have substantial permitting regimes: for example, TSMC’s Arizona fab required more than 600 local permits, compared to around 60 in Taiwan.

NEPA, by contrast, is not a permitting statute: it imposes no substantive requirements, other than those that might emerge through litigation. Instead, it adds a procedural requirement for the government to assess the environmental impacts of so-called “major federal actions.” Early in my tenure, I probed whether our CHIPS investments had to qualify as “major federal actions.” But accumulated regulation and case law made it clear that each of our projects would need to satisfy NEPA before federal support could flow. I also probed for other areas of flexibility — might there be a NEPA exemption for projects critical to national security? — but found none.

NEPA’s requirements hinge on whether an agency’s proposed major federal action will have a “significant impact” on the environment. The baseline requirement is for an agency to produce an “environmental assessment” (EA), which typically take 9-12 months to complete (and often take longer than that).¹ An EA can result in a “Finding of No Significant Impact” (FONSI), or it can condition a FONSI on environmental mitigations (a “mitigated” FONSI). A FONSI or mitigated FONSI allows the agency to proceed (subject to litigation).²

If a major federal action is deemed to have a “significant impact,” the agency must issue an “environmental impact statement” (EIS), evaluating the proposed project’s potential environmental, social, and economic effects. On average, an EIS runs 1,703 pages (including appendices)³ and requires an average of 4.4 years of work.⁴ It must consider “reasonable alternatives” to the agency’s proposed action, including a “no action” alternative, and thoroughly analyze the action’s “reasonably foreseeable” direct and indirect impacts. The agency releases a draft EIS for public comment, then produces a final EIS demonstrating it considered all comments — a major driver of the multi-year timeline. Lawsuits then add more time: the median lawsuit challenging an EIS lasts 1.6 years, but 7% of lawsuits last more than 6 years.

NEPA’s force derives from the fact that anyone with standing can sue the government and challenge its findings. In legal terms, the Administrative Procedure Act gives citizens the right to sue agencies and seek judicial review of any “arbitrary and capricious” decision-making — including any EA or EIS that they can persuade a judge reached incomplete or flawed conclusions in its environmental analysis. For example, an EA lawsuit might contest the finding of no significance and argue that the agency should have to prepare an EIS. An EIS lawsuit might allege insufficient analysis, inadequate consideration of alternatives, failure to assess cumulative impacts, or deficient response to public comments. Worse, the general statute of limitations under the APA is six years from the agency decision — meaning the litigation risk on a NEPA review lives with the agency and project sponsor well after the project is approved and can potentially disrupt implementation at any time.

For CHIPS, the immediate source of potential delay was self-evident: we needed to accelerate the typical timelines for writing EAs and EISs to account for the commercial realities of one of the world’s most dynamic and competitive industries. But cut any corners, and you increase the risk of losing a lawsuit — which could result in an injunction on either the CHIPS funding or the project itself. The looming threat of an injunction is exacerbated by the fact that NEPA itself imposes no objective, substantive requirements. The fate of the “major federal action” — and therefore the project it’s intended to support — depends on a judge’s assessment of the quality of your EA or EIS. As an implementer, there’s no objective way for you to know if you’ve hit the target.

Throughout the program, NEPA consumed significant leadership bandwidth: regular check-ins with my team, periodic principal-level meetings at the White House, and frequent engagement with applicants to manage the process. During one particularly intense stretch in the winter of 2023-24, while we were simultaneously negotiating our four major leading-edge deals, I analyzed my calendar and found I was spending nearly a quarter of my time on NEPA alone.

NEPA in the context of startup industrial policy

While NEPA requires effective execution across government, we faced operational and commercial challenges specific to a startup program doing large-scale industrial policy:

Building the team

To oversee the NEPA process and other environmental issues, we hired Komie Jain, an executive with deep experience in environmental review and permitting across both industry and the federal government. Komie’s background was well-suited to a role that required forcefully representing the government while remaining sensitive to the commercial realities facing our applicants. Komie’s team had two units: one responsible for meeting our obligations under NEPA, and another charged with managing permitting issues — evaluating the permitting readiness of applications, and proactively engaging with applicants and federal, state, and local governments to resolve bottlenecks.

Across both units, we built a team of 12 FTEs quickly, using our special hiring authorities. For the NEPA unit, we generally hired people with prior experience of writing EAs and EISs at other federal agencies — NEPA is a bespoke process with its own internal language and logic, so this experience proved invaluable. We also secured contracting support that gave us access to up to 20 contractors as an additional surge resource that we deployed regularly.

The environmental unit was housed under the Strategy vertical, which comprised teams focused on strategic and policy priorities (economic security, national security, workforce development, and environmental review and permitting) across all deals. By contrast, our Investments vertical organized teams around specific deals.⁵ The environmental team was the largest in Strategy, reflecting the operational intensity required to fulfill our obligations under NEPA.

Industry engagement

A NEPA document is ultimately a government work product, and the government must defend it in court. However, the only practical way to complete several reviews simultaneously on tight timelines is to rely on applicants to do the underlying analysis and drafting. Not all agencies allow this — some insist on keeping the drafting in-house — but given our resource constraints and commercial timelines, we had no choice.

That starts with gathering information. We developed a substantial environmental questionnaire as part of our application to jumpstart the process. Some criticized it as overly burdensome, but its requirements were driven by the requirements of NEPA and the risk of losing a lawsuit.

Because we worried about NEPA driving delays, we wanted to start engaging with industry immediately. This meant beginning environmental review concurrently with negotiations over investment plans and incentive levels — usually while firms were still considering international alternatives. This created a somewhat awkward commercial dynamic that required our environmental team to engage firmly while recognizing applicants’ commercial constraints and international alternatives. Moreover, while we could lay the foundations for an efficient review process early in negotiations, we couldn’t actually begin drafting until we had reached a non-binding term sheet with the applicant. After all, the term sheet would define the scope of the project, which in turn would determine the environmental impacts.

To support the drafting of EAs and the associated underlying analysis, applicants needed to hire environmental consultants who specialize in developing NEPA documents. Then there was substantial back-and-forth between the government, government contractors, the applicant, the applicant’s consultants, and everyone’s lawyers to refine analysis and edit the document until both the government and the applicant were comfortable issuing it. The process’s efficiency depended on the strength of all those parties as well as the underlying facts. One deficient cog could shut down the whole machine until remedied.

The EIS challenge

For an EIS, the challenge intensifies by an order of magnitude. After detailed evaluation of each project, we ended up needing to write just one EIS: Micron’s project in upstate New York, which will build fabs to produce the leading-edge high-bandwidth memory chips at the center of the AI boom — all currently made in Korea, Taiwan, and Japan. Micron’s EIS was triggered specifically by the presence of wetlands and endangered bats on the project site, pulling in the US Army Corps of Engineers and the Fish and Wildlife Service. But it also required detailed chapters covering numerous other impact areas: land use, geology and soils, historic and cultural resources, emissions, solid and hazardous waste, human health and safety, utilities and supporting infrastructure, traffic, noise and vibration, visual effects and community character, community facilities, socioeconomic conditions, and environmental justice — each expanding the surface area of legal attack.

To prepare the EIS in collaboration with our team, Micron had to make an enormous investment into investigation, analysis, and drafting. Within CHIPS, we dedicated multiple FTEs and substantial contracting resources. We also had to coordinate between four federal agencies, nine state agencies, three county agencies, and four town boards.⁶ Within each entity were often both program offices and legal offices, and each chapter generally required separate legal review. I personally held weekly meetings with my White House counterpart (who helped coordinate the other federal agencies involved in the review process at senior levels) and Micron executives to manage the project given its significance to our program.

We signed our preliminary term sheet in May 2024 and set an aggressive schedule to complete the EIS before the spring of 2025 — Micron needed to clear trees before bats returned from winter migration for the nesting season. We ultimately missed the spring 2025 tree clearing window and reset our target for the winter of 2025.

Commerce just posted the final Micron EIS and record of decision. This may seem like a long time, and it is, but compared to the average time to completion of 4.4 years, finishing an EIS in 18 months is a huge accomplishment for the federal government, the state government, the county government, and the company. The final EIS ran 737 pages. Including its 18 technical appendices, the full document is approximately 27,000 pages.

Still, a project initially expected to produce chips by 2028 won’t produce any until 2030, and NEPA as a big part of the reason why. Meanwhile, the company is so supply-constrained selling into the AI boom that it just announced the extraordinary decision to stop selling chips for consumer goods like iPhones.

NEPA in a fiercely competitive industry

Semiconductor manufacturing is among the most fiercely competitive industries in the world, both for the companies within it and for the nations competing for manufacturing investment. NEPA creates specific disadvantages in this environment, including:

• Uncertainty for ongoing construction: Because we were funding projects already under construction, companies sought assurances that continuing to build wouldn’t adversely affect their NEPA evaluation. We were unable to offer clear assurances. This created uncertainty for companies making real-time construction decisions while negotiating with us.

• Commercial agility: Each leading-edge fab represented a $20+ billion investment on schedules tied to customer demand expectations. Product cycles are measured in years, and companies often need to adjust plans or make tough decisions based on the commercial environment. Project delays could divert demand to overseas fabs, or compromise commercial relationships that took years to build.

• International competition: We were also competing with countries like Japan and Taiwan to attract these companies. Both have mandatory environmental reviews, but they proceed with much faster timelines and without the same threat of litigation. Companies trying to maintain a competitive edge can see this difference clearly.

Putting it all together

By the fall of 2024, two years after launching the office, we’d managed the NEPA process as well as we could have hoped. We’d issued draft EAs for public comment for TSMC’s Arizona project and Micron’s Idaho project, and were close to posting drafts for Intel and Samsung. We therefore felt reasonably confident that major projects wouldn’t be delayed by our drafting timelines. Micron’s New York EIS was the one exception, and even getting that on track to completion by the end of 2025 felt like a win. We’d also published a “programmatic EA,” a standardized environmental assessment allowed under NEPA to streamline future project-specific reviews for a broader category of projects. Ours intended to cover a range of smaller-scale fab modernizations and allowed us to greenlight many of our smaller investments.

I’d love to take credit, but I’m struck by how contingent that success was. A few factors were key:

• We hired a great team. As anyone who builds a big startup knows, you get some hires right and some hires wrong. Komie proved to be truly excellent: knowledgeable about the substance, highly effective in project management, and savvy in applicant interactions — commercially sensible yet forceful in explaining what we needed. A poor or even average hire would have set us back months.

• Second, we developed effective working relationships with applicants willing to invest heavily in the contracting support necessary for analysis.

• Third, we ended up with only one EIS — an outcome highly uncertain at the start. At one point Sara Meyers walked into my office and casually told me another high-profile project would be an EIS. She says she’ll never forget the look on my face. (It turned out to be a miscommunication.)

Even with our successes, NEPA’s ultimate impact on the program remained uncertain. Based on comments we received on posted draft EAs, our lawyers expected lawsuits — at that point, our fate would rest with district court judges. Plus, we still had a long pipeline of EAs to draft. The pipeline included remaining projects under our first Notice of Funding Opportunity (NOFO), as well as dozens of projects under a second NOFO that we had issued for smaller supply chain investments. It was probably inevitable we’d fail to keep pace with deal flow.

Congress Intervenes

This is when Congress intervened, passing the Building Chips in America Act in October 2024. The bill exempted the majority of our projects from NEPA by carving projects with certain characteristics out of the definition of “major federal action.” (It didn’t exempt Micron New York — hence the government only recently completing its EIS.)

The bill was driven by Capitol Hill — the administration remained officially neutral — and was championed in particular by Senator Mark Kelly of Arizona and Senator Ted Cruz of Texas. In the Senate, it passed by unanimous consent; in the House, 178 Republicans and 79 Democrats voted for it, while 13 Republicans and 112 Democrats voted against. Though there was internal disagreement within the Administration as to whether the President should sign the bill, he ultimately did. Within Commerce, we had been tracking the legislation for a while and providing technical drafting assistance at the staff level, but I was shocked that it ultimately passed. It’s an example of how sustaining bipartisan support can shape outcomes in unexpected ways.

The shift to substance

The bill’s immediate impact was to substantially reduce (though not eliminate) the probability that NEPA would keep us from meeting our goals. It also changed internal administration dynamics. Before the bill passed, the overwhelming focus within the administration was on the NEPA process — for example, the White House in particular was understandably very focused on ensuring NEPA wouldn’t delay the program’s implementation. After the bill passed, the discussion shifted to substance: what were we doing to mitigate the environmental impact of the fabs we were funding?

We ended up negotiating the mitigations we’d planned to include in our EAs directly into our award contracts with companies. This included provisions around toxic chemical exposure limits for workers, reducing fluorinated greenhouse gas emissions, segregating and disposing of PFAS-containing waste streams, and recycling water. These were generally aligned with established industry practices and standards while accounting for individual operational and environmental considerations of each facility.

Would we have negotiated these provisions if NEPA had never been in place? It’s hard to say definitively, but I think we probably would have. Much of what we required was consistent with existing industry practice, so in many cases we were really cementing commitments, rather than breaking new ground. I’m personally proud that we included them, though the policy merits of including requirements like these in industrial policy awards can be debated — an issue tied to the “everything bagel” critique we’ll address later in Factory Settings.

What’s clear to me is that the cost of NEPA — that dual risk of delay and litigation — was vastly disproportionate to what it achieved. If the goal is to include environmental or other policy terms in awards, Congress has more straightforward tools. The CHIPS Act itself contained provisions related to workforce development, national security, and support for small businesses, none of which created the same combination of delay and litigation risk.

Closing reflections

I’ve spent my career in state and federal government in a range of roles, but if there’s one consistent thread, it’s been trying to show that government can work well and do some big things. At CHIPS, we set out to prove that the government could be nimble, commercial, and dynamic enough to negotiate with industry and onshore production of technology critical for national security. As a country, we’ll have to prove that again and again as our government takes a more proactive role in building resilience and competing with China.

What I struggled with most about NEPA was that, for nearly all semiconductor manufacturing projects in the United States, it only became a stumbling block when our government program got involved. For purely private investment, the array of federal, state, and local laws and regulations that govern construction and manufacturing are deemed sufficient safeguards for building a fab. That remains true if the company takes the investment tax credit from the IRS, which usually totaled more than double the grant funding from our program. But as soon as federal funding touched a project, a “major federal action” was created and NEPA kicked in — a massive undertaking with the looming threat of delay, litigation, and injunction.

To me, that’s a strange policy outcome: no NEPA for private investment; no NEPA for a large tax credit; yes NEPA for a smaller grant. The technical legal reason for this discrepancy is that the definition of “major federal action” excludes “non-discretionary” actions, and a tax credit is non-discretionary. And, to be sure, it certainly wouldn’t make sense to require environmental reviews for actions that the government is legally required to undertake regardless of environmental impact. But, in the context of industrial policy, the practical effect is perverse: NEPA creates a threat of failure precisely where the government is trying to be proactive, strategic, and engaged. For a program trying to prove that the government could operate with commercial speed and sophistication, that was a contradiction we struggled to resolve.

1. There are no comprehensive government-wide figures for EA timelines. Analysis from the Department of Transportation found that environmental assessments initiated and completed between 2021 and 2023 averaged 9.6 months. A study by Resources for the Future, which categorized 13 geothermal, 19 solar, and 9 wind projects, stated that “13 solar projects (out of 19) and eight (of 12) geothermal projects required more than one year to reach a FONSI from their initial action dates.”

2. Over the years, thousands of actions have been deemed to have “no significant impact” by default through agency-specific regulations providing “categorical exclusions” (catex). In those cases, an agency does some paperwork applying the catex and proceeds. A catex is typically justified based on accrued knowledge based past practice; since CHIPS was the first program to fund chip fabs, catexes were generally not available for our projects.

3. Based on analysis of underlying data from 2013-2018, the last time these statistics were reported, averaging the pages across both the final EIS report and the final appendix

4. This is calculated by averaging the number of years for each project that required an EIS between 2010 and 2024 from the Notice of Intent to the Record of Decision. The underlying data is available here.

5. We started with six verticals across the CHIPS office: Investments, Strategy, Risk, Operations, Legal, and External Affairs. We later added two more verticals — portfolio management and portfolio operations — to manage the post-award disbursements and awardee engagement.

6. The state and local coordination was because New York has its own environmental review statute that we were fulfilling with the same document.