CHIPS Act Contract with Polar Semiconductor Fails Workers and the Environment

Washington, DC – CHIPS Communities United (CCU), a coalition of unions, environmental, social justice, civil rights, and community groups, raised concerns about the contract between the CHIPS Program Office (CPO) and Polar Semiconductor company of Bloomington, MN. This morning, the Commerce Department announced it had signed a contract with the company to accompany a CHIPS Act incentive grant of $123 million – the first CHIPS Act contract to be finalized. 

The coalition expressed disappointment that the finalized award to Polar does not identify benchmarks the company has to meet or require public reporting. As the first CHIPS Act contract to be announced, the lack of transparency, accountability, and public oversight are a grave sign of things to come.

The Commerce Department has not made commitments in the contracts public, and contracts are exempted from the Freedom of Information Act, making it impossible for host communities to learn what Polar has agreed to in exchange for public money.

“CHIPS and Science Act funds could be an important part of the Biden-Harris Administration’s investment in creating good, sustainable manufacturing jobs that revitalize our communities, but the final contract with Polar Semiconductor does not reflect those priorities,” said Carl Kennebrew, President of IUE-CWA, the industrial division of the Communications Workers of America. “We know that the semiconductor industry has a well-documented history of low pay for production workers, lax standards for exposure to toxic chemicals, and union busting. Addressing those issues requires transparency and public reporting on enforceable commitments, which appear to be entirely absent in the Polar contract.”

"The CHIPS and Science Act is a chance to make the semiconductor industry sustainable and safe, with companies like Polar Semiconductor producing chips critical for clean energy,” said Ben Jealous, Executive Director of the Sierra Club. “Yet the troubling lack of transparency in these awards must be addressed. As contracts with Micron, Intel, Samsung, and TSMC loom, the Commerce Department must enshrine strict standards to limit pollution and protect worker health. Only transparency and rigorous standards will keep companies accountable to environmental and public health promises."

Based on the information the Commerce Dept. has released, the coalition fears the final agreement is inconsistent with the recent Biden-Harris Executive Order on Investing in America and American Workers (EO 14126) and the commitments outlined in the Notice of Funding Opportunity on public reporting. CCU calls for future contracts to be made public and to address the following concerns:

Concerns about transparency

• The Commerce Department’s announcement does not specify that Polar will be required to publicly report on commitments to worker health and safety, protecting workers’ right to organize, wage and benefit standards, and use of chemicals. Communities deserve to know how public funds are being spent, and workers deserve to know what commitments were made about their jobs. Access to that information will enable communities to work with the government to hold Polar accountable to the workforce and other job quality commitments they make.

Concerns about working conditions

• Based on the announcement, the contract lacks job commitments from the company including: minimum number of full-time equivalent jobs to be created or retained, minimum hourly wages to be paid, minimum hourly benefit levels to be given, and annual cost of training provided for each job classification of construction workers, production workers, and engineers, including information on which classifications will be temporary workers, contractors, or direct employees of the recipient.
• The announcement does not include a commitment from Polar to allow its workers to join a union free from intimidation, captive audience meetings, exposure to anti-union consultants, fear of retaliation, and other obstacles.
• The announcement says that Polar will adhere to the administration’s Good Jobs Principles, but does not specify what that will involve nor require the company to report publicly on its compliance.
• The contract does not specify workplace exposure standards to protect workers from toxic chemicals. (OSHA and DOC acknowledge that OSHA’s exposure standards don’t adequately protect workers.) 

Concerns about the environment

• Given that the US Congress passed legislation yesterday exempting most CHIPS Act recipients from NEPA review, the contract remains one of the few vehicles for requiring companies to hold to best management practices, use clean energy, and protect workers and neighboring communities from toxic air and water pollution.
• The announcement does not make clear if Polar will be required to be transparent with the Commerce Department, workers, unions, or the public about the chemicals and chemical combinations used in the chip manufacturing process.
• Although semiconductor manufacturing uses vast quantities of energy, there is no indication that the contract requires Polar to power operations with new, around-the-clock renewable energy, located nearby or onsite. Polar purportedly powers its fab with low-carbon electricity, but the apparent lack of requirements in the contract portends poorly for future contracts with companies that do not meet power needs with new renewable energy.
• Despite the threat that PFAS (toxic “forever chemicals”) pose to communities near semiconductor plants, there is no indication that the contract requires Polar to pretreat wastewater and other emissions for PFAS before releasing it, nor that it mandates testing, monitoring, and public reporting of fluorinated compounds in the air and wastewater. 
• There is no evidence that the contract requires Polar to recycle its wastewater.
• The announcement does not specify guardrails in place to ensure that this project was prioritized by the Commerce Department because it promotes and protects worker health and safety, per Executive Order 14126.
• There is no indication that the contract requires Polar to use low-carbon and domestic building materials or make use of labeling funded by the Inflation Reduction Act. This omission portends poorly for future contracts with companies like Micron and GlobalFoundries that have made such promises.

Enforcement:

• It appears the contract lacks penalties or clawbacks for failing to meet workforce, health and safety, and environmental milestones and metrics. 
• There is no clarity on the conditions under which Polar would incur penalties for non-compliance with workforce or environmental commitments or if the company violates federal law.

The coalition praised the department for including the following standards in the contract, which we hope will be replicated in future CHIPS for America contracts:

• Polar has agreed to a Project Labor Agreement for building its facilities, which means that construction will be carried out by union construction workers. CCU celebrates this announcement.
• The agreement commits Polar to refrain from stock buybacks for five years.
• Polar commits to make $500,000 in community investments. We call on Polar to work with CHIPS Communities United to identify impacted communities and negotiate an enforceable community benefits agreement.