▶ 0:17:43>> good morning three the committee will come to order to rate secretary lutnick -- good morning. The commit me -- the committee will come to order. Thank you for joining us today. Congress authorized the bead program providing telecommunications information within the department of commerce.
▶ 0:18:16The bead program is the largest ever single investment in broadband deployment and was intended to connect americans lacking reliable broadband connectivity. If we fail after we put some eight dollars into broadband availability and we still have places in the country that do not have broadband we have really failed. There should be significant resources for this to be accomplished.
▶ 0:18:43Four years later not a single bead funded project has been initiated and not a single underfunded american has connected to broadband via the bead program. Under the biden administration implementation was prohibited by complication -- by complicated regulations and hurdles current climate and environmental objectives, rate regulations and convoluted permitting processes
▶ 0:19:14Dissuaded many providers, especially those in rural areas from participating. In june 2025 ntia issued a beat policy notice aimed at rolling back the burdensome requirements and aimed at implementation of the bead program.
▶ 0:19:35That policy notice outlined several changes with the goal of maximizing the benefit of the bargain that american should expect from investment under the bead program. I commend your efforts to relieve undue burdens on state broadband offices. I am concerned that certain changes to the bead program may jeopardize the efficiency and effectiveness of the program.
▶ 0:20:05Following the june restructuring , state broadband offices worked diligently with -- to relied their plants according to the guidance issued by an tia. -- by ntia. Broadband offices were urged to revisit many projects to find additional cost savings. The resulting final bead plans saw drastic reduction in bead fund requests.
▶ 0:20:37Bead secured $352 million in its allocation. After the benefits of its bargain reduction the final bead requests in late 156 point $6 million of the initial allocation leaving a little clarity on the department of commerce and how those funds may be used.
▶ 0:21:00This uncertainty has caused concern among state broadband offices unable to plan broadband initiatives that relied on the balance of their bead allocations. I am concerned a worthwhile code of maximizing the impact of taxpayer dollars has prioritized achieving the lowest cost rather than the best value for bead projects and this risks repeating the errors of previous federal broadband projects that have failed to account for connectivity needs in each of
▶ 0:21:30Our states. I would also like to discuss your outlook for the bead program in the future federal broadband deployments. We will also just got broadband deployment -- we will also discuss broadband deployment envisions. Sec. Lutnick, thank you for being here and I'll now recognize senator van hollen.
▶ 0:21:58Sen. Van Hollen: Thank you for calling this on an issue important to americans in every state in the union, getting connected to high-speed internet at an affordable price. I had hoped to spend the entire hearing focused on that subject and I intend to get to it. Since this hearing was scheduled another matter has arisen around the epstein files that goes to the heart of the credibility and honesty of our witness, sec. Lutnick.
▶ 0:22:26Sen. Van Hollen: I hope during the course of your testimony can get answers to some of those questions. As you know the issue is not that you engaged in any wrongdoing in connection with jeffrey epstein, but that you totally misrepresented the extent of your relationship to the congress and to the american people and to the survivors of his despicable criminal and predatory acts.
▶ 0:22:54Sen. Van Hollen: You told us when you and your wife first encountered jeffrey epstein in his apartment in 2005 he used sexual innuendo to explain why he had a massage table in the middle of the room. You said it disgusted you and you hurried out and vowed never to set foot in the same room as him again and suggested you never had anything more to do with him. I remember thinking that for all our disagreements you had good instincts. Now it turns out not to be true.
▶ 0:23:26Sen. Van Hollen: The information recently revealed from the epstein files shows your statements work at best highly misleading. The file show you had interactions with epstein over the next 13 years, including long after he was convicted in 2008 of soliciting the prostitution of a minor. Mr. secretary, that does call into question your fitness for the job you now hold and the question of your credibility before this committee and the congress.
▶ 0:23:57Sen. Van Hollen: It also relates to testimony on the subject the chairman raised because at the confirmation hearing last year you seem to fully appreciate the need to get construction underway on the broadband bill to get our constituents connected. Yet here we are a year later and as far as I can understand it not one person in this country has been connected through the program.
▶ 0:24:25Sen. Van Hollen: States have jumped through every hoop they were asked to jump through, repeated federal view reviews, only to be told by the trump administration of new rules to navigate and to wait longer. Meanwhile families and small businesses are still without service, communities are losing patience. In my state of maryland we have been told we will only get $79 million, a reduction of 70% from the total of $267 million that has already been obligated to the state.
▶ 0:24:56Sen. Van Hollen: Let me be clear. Members of the subcommittee expect all bead funds to flow to the state as congress intended. It is not a suggestion, it is the law. I am also concerned about the executive order on artificial intelligence indicating broadband funding may be conditioned on states action on the unrelated issue of ai regulation.
▶ 0:25:22Sen. Van Hollen: Using broadband dollars to leverage that dispute is not what congress intended it risks turning a bipartisan infrastructure program into a political weapon. Sec., you are not the author of these statutes. You are responsible for administrating them.
▶ 0:25:40Sen. Van Hollen: Today is the opportunity to explain how the department of commerce will comply with the law and ensure critical infrastructure funds reach the communities they were meant to serve and to answer certain questions regarding your credibility face and what you meant of the epstein files. Thank you Mr. chairman.
▶ 0:25:59Chair Moran: Mr. secretary, you are recognized for your statement. Please proceed.
▶ 0:26:06Sec. Lutnick: Thank you chairman moran, ranking member van hollen and members of the subcommittee. Thank you for having me today. I appreciate your leadership and partnership with the department of commerce and ntia. I am here to discuss the $42 billion bead program which insures communities across the united states, predominantly in rural areas can successfully connect to high-speed internet.
▶ 0:26:39Sec. Lutnick: From day one our approach has been straightforward. This money belongs to the american taxpayers and they deserve the benefit of the bargain. When we took responsibility for bead the program was not delivering value, it was burdened by red tape and slowed by unlawful conditions and skewed towards a one-size-fits-all approach that
▶ 0:27:10Sec. Lutnick: Will cost geography and practicality. Many members of the subcommittee raised concerns bead had become biased towards one technology regardless of whether it was the most efficient way to connect americans. When we change that course, under the trump administration bead is now technologically neutral pump it is competitive and disciplined and exactly what congress intended. Fiber makes sense.
▶ 0:27:38Sec. Lutnick: Fixed wireless where it works better. Satellite were geography demands at. Every geography must meet the performance standards you have set. There are no favors. The objective is simple. The same or better standards but much better cost and much better results. When you contrast what the states were forced to do under the biden administration and what they were able to do now that difference is striking.
▶ 0:28:06Sec. Lutnick: Louisiana was represented on this committee. Under the biden administration louisiana was tasked to spend $1.3 billion to do what it is doing now for under $500 million. That means in louisiana alone the american taxpayer has saved more than $800 million delivering better economic results all while advancing the same performance standards you have set.
▶ 0:28:36Sec. Lutnick: We are delivering for the state of louisiana and all american taxpayers. Louisiana reopened its bidding competition, embraced technology and neutrality and drove costs down dramatically. Under the biden administration fiber mandate the cost to serve a single house, a single house in louisiana was $120,000 of fiber to connect one single house.
▶ 0:29:09Sec. Lutnick: Today the highest cost location in the state of louisiana is closer to $7,000 with an average cost of $4000. Doing this all while achieving universal coverage. This is the difference between a program designed around her waist and abused in a program designed around value. Louisiana is not an outlier.
▶ 0:29:31Sec. Lutnick: Working with states across the country we have seen the same pattern delivering for the american people, states operating under the prior framework consistently facing higher costs and fewer bidders and weaker private sector participation. States operating under the trump administration's benefit of the bargain framework pursing lower costs, faster timelines without sacrificing performance or coverage.
▶ 0:29:55Sec. Lutnick: As of today we estimate these reforms have generated over 21 billion dollars in tax savings for the american public while advancing universal broadband nationwide. That is not a projection, that is the direct results of competition and disciplined execution. Savings alone are not the goal. Execution and long-term success matter even more.
▶ 0:30:19Sec. Lutnick: To many past broadband programs failed because projects defaulted and providers walked away and communities were left stranded and we cannot allow that to happen again. That is why ntia is forcing clear guardrails to streamline permitting and protections from regulatory uncertainty that would undermine projects after they are made. We are now near the end of this approval process.
▶ 0:30:49Sec. Lutnick: 50 out of 56 states and territories have been approved and are moving forward with bead programming. This is no longer about promises or projections. Americans are getting connected, taxpayer dollars are going further and we have a broadband program that works. Chairman moran, ranking member van hollen, this is what responsible stewardship looks like. Universal broadband delivered efficiently with accountability, competition, and respect for the taxpayer and the law.
▶ 0:31:21Sec. Lutnick: Thank you and I look forward to your questions.
▶ 0:31:23Chair Moran: Thank you. As of january 27 56 states and territories submitted their final bead proposals to ntia. 43 have received approval.
▶ 0:31:42Chair Moran: According to updated bead guidance ntia has 30 days from approval to assure they perp -- they comply with cybersecurity requirements. What has been obstacles to states receiving approvals for final proposals?
▶ 0:32:01Sec. Lutnick: The process is ntia associates with the states. We have approved 50 of the 56 and two of them are on the one yard line. Then there is a grand process that we go through, and ordinary governmental process to make sure all of the I's are dotted and the t's are crossed. Then the funding begins.
▶ 0:32:33Sec. Lutnick: We are at the funding stage for dozens of states and territories in the process is underway. We are at the very end and we expect this to go smoothly from here.
▶ 0:32:42Chair Moran: I indicated in my opening statement my concern about the outcomes and you talk about long-term success at your solution to making sure long-term success occurs is guidelines and guardrails you talk about in your opening sentence.
▶ 0:33:03Chair Moran: One of my concerns is long-term success is really going to occur and part of that is this idea of which technology is being used to allow consumers to access and utilize broadband. I have always tried to be neutral in my choice of what is the method by which broadband should be delivered. I want to make sure that what kansans are receiving is not a short-term benefit but in the long term takes care of them and their rural needs.
▶ 0:33:35Chair Moran: The second concern I have that I want to highlight is what is to happen to the unused broadband funds? You and the department have issued a statement. Would you clarify for me and the committee the unspent broadband money will do what? Those two questions.
▶ 0:34:17Chair Moran: [no audio]
▶ 0:34:22Sec. Lutnick: Each and every state can cover every single person they put in for at the performance standards you set for $21 billion less. Now we are listening to what are the best ideas to spend that money? We are going to spend that money. We are going to use the best ideas. What are the best ideas? We are going to listen starting tomorrow because we've executed this plan.
▶ 0:34:53Sec. Lutnick: Kansas has done a great job in examining the right technology for kansas. They decided that with kansas fixed wireless was the best-performing service. 67% fixed wireless. Fiber was 29.5% and for kansas satellite was only best for 3%.
▶ 0:35:15Sec. Lutnick: Kansas did a great job analyzing and examining in your broadband office did a wonderful job and really deliver the best performance metrics for the right price for america and I commend that.
▶ 0:35:32Chair Moran: My follow-ups, you say the money is going to be spent, would you finish that sentence by saying on the deployment of broadband? That will be spent on broadband deployment across the country?
▶ 0:35:45Sec. Lutnick: The money will be spent according to the statute.
▶ 0:35:49Chair Moran: I assume the statute tells you to spend it on broadband deployment?
▶ 0:35:55Sec. Lutnick: I do not have the statute in front of me right we are going to eat here exactly to the statute. -- we are going to it here exactly to this -- we are going to adhere exactly to the statute.
▶ 0:36:11Chair Moran: I've heard about money going to the treasury. That is not the plan?
▶ 0:36:16Sec. Lutnick: That is not the plan.
▶ 0:36:19Chair Moran: You indicated kansas did well and money went to each category and that was a decision made by kansas and not forced on them by the department of commerce?
▶ 0:36:28Sec. Lutnick: That is correct. Each state chose to do it their best way for their state and kansas did a great job.
▶ 0:36:39Chair Moran: Thank you. Senator van hollen?
▶ 0:36:43Sen. Van Hollen: Sec. Lutnick, as I said in my opening statement, you lead people to believe that you had cut off all contact with jeffrey epstein after the 2005 encounter you and your wife had in his apartment. As I am sure you know the epstein files show a different record of interaction.
▶ 0:37:12Sen. Van Hollen: Why did the epstein files show you coordinating a meeting and planning a visit with jeffrey epstein on his private island in december 2012?
▶ 0:37:22Sec. Lutnick: Thank you for the question. I am glad to be here to make it clear that I met jeffrey epstein when I moved to a house next door to him in new york. I met him then. Over the next 14 years I met him two other times that I can recall. None for six years.
▶ 0:37:50Sec. Lutnick: Six years later I met him in a year and a half after that I met him and never again. Probably the total -- you've seen all of these documents, these millions and millions of documents. There may be 10 emails connecting me with him. Probably about 10 emails connecting me with him over a 14 year period. I did not have any relationship with him. I barely had anything to do with that person.
▶ 0:38:21Sec. Lutnick: Ok?
▶ 0:38:24Sen. Van Hollen: I think you understand the root of concern. It is the way you described very emphatically your first encounter with him. You said you were disgusted and never had any contact with him again. Did you make the visit to jeffrey epstein's private island?
▶ 0:38:47Sec. Lutnick: I did have lunch with him as I was on a boat when we crossed on a family vacation. My wife was with me as were my four children. I had another couple and they were there as well and their children and we had lunch on the island. That is true. One hour and then we left with all of my children, with my nannies and my wife altogether on family vacation. We were not a part.
▶ 0:39:19Sec. Lutnick: To suggest there is anything untoward about that in 2012. I do not recall why we did it.
▶ 0:39:25Sen. Van Hollen: As I said, there is not an indication you yourself engaged in any wrongdoing with jeffrey epstein. It is the fact you misled the country and the congress based on your earlier statements suggesting you cut off all contact when in fact you had not. When you visited the private island, did you see anything inappropriate during that visit?
▶ 0:39:52Sec. Lutnick: The only thing I saw with my wife and my children at the other couple and their children was staff who worked for Mr. epstein on that island.
▶ 0:40:07Sen. Van Hollen: And you realize this visit took place after he had been convicted. You made a very big point of saying you sensed this was a bad person in 2005.
▶ 0:40:25Sen. Van Hollen: In 2008 he was convicted of soliciting prostitution of a minor and yet you went and had this trip and other interactions. Did you have a dinner in epstein's new york city home in 2011?
▶ 0:40:42Sec. Lutnick: No.
▶ 0:40:45Chair Moran: The information that suggest there was a dinner with woody allen woody allen spouse at the epstein residence -- there is nothing to that, is that right?
▶ 0:40:55Sec. Lutnick: I don't know what you are referring to. I looked through the millions of documents for my name just like everybody else. What I found was there was a document that says I had a meeting with him in may for an hour at 5:00. Not dinner or otherwise, for an hour at 5:00.
▶ 0:41:25Sen. Van Hollen: There is also a reference to the fact that epstein had expressed an interest in meeting your nanny. Do know whether jeffrey epstein ever met with your nanny?
▶ 0:41:36Sec. Lutnick: I saw that. I had no idea what was about. I had nothing to do with that.
▶ 0:41:43Sen. Van Hollen: Would you be willing to share with this committee and the congress your own records company records you have thoroughly to jeffrey epstein?
▶ 0:41:57Sec. Lutnick: I will surely talk about that. I had not thought about that. I have nothing to hide. Absolutely not.
▶ 0:42:05Sen. Van Hollen: Thank you, Mr. chairman. I think this goes to the heart of the question of credibility based on the secretaries earlier statements. I hope to pursue some of the other issues from the hearing as we go on. Thank you.
▶ 0:42:20Chair Moran: Senator kennedy?
▶ 0:42:24Sen. Kennedy: Thank you for being here. The census bureau is under your jurisdiction, is it not?
▶ 0:42:32Sec. Lutnick: Yes it is.
▶ 0:42:36Sen. Kennedy: The census bureau is in charged with defining what it means to be poor or in poverty in america. Is that correct?
▶ 0:42:46Sec. Lutnick: I think it does economic analysis for america.
▶ 0:42:51Sen. Kennedy: It also defines the poverty level, does it not?
▶ 0:42:56Sec. Lutnick: I don't know if it is the defining.
▶ 0:43:01Sen. Kennedy: You need to look because it does. If you know, this is not a quiz, what is the percentage of americans who live at or below the poverty level?
▶ 0:43:13Sec. Lutnick: I don't know the percentage.
▶ 0:43:16Sen. Kennedy: It is around 11%. It has been constant. When the census bureau defines poverty they do it by income. You are aware of that. When the census bureau defines poverty using income they only count income the individual earns or cash income the individual gets from the federal government. Is that correct?
▶ 0:43:49Sec. Lutnick: It includes all sources of their income.
▶ 0:43:55Sen. Kennedy: Their income and cash income from the federal government. Is that correct?
▶ 0:44:02Sec. Lutnick: You meet doesn't include income they receive from the federal government? I think so.
▶ 0:44:08Sen. Kennedy: So if a person makes $11,000 a year that is considered towards the poverty level but if the person gets a cash payment in the form of ssi or taneth that counts too. Is that right?
▶ 0:44:29Sec. Lutnick: I am not certain.
▶ 0:44:32Sen. Kennedy: It does. Are you aware your agency does not count non cash payments from the federal government defining poverty?
▶ 0:44:44Sec. Lutnick: I am not.
▶ 0:44:47Chair Moran: Are you aware --
▶ 0:44:49Sen. Kennedy: Are you aware of your agency does not cap refundable earned income tax credits or food stamps or housing subsidies or utility bills subsidies or medicaid or free school meals? They do not count that. They call it a non-cash payment and it does not count. Are you aware of that?
▶ 0:45:12Sec. Lutnick: Sounds like you and I will spend some time together and change it. I did not know that and it sounds like something we should end.
▶ 0:45:20Sen. Kennedy: The purpose of my question is not to punish people who need help. The american people are the most generous in the world. It is why we spent 1.4 trillion dollars a year helping people that other countries would allowed to die in a ditch. Your census bureau says it is 11% who live at or below the poverty level. That is a lie. It is 1%.
▶ 0:45:49Sen. Kennedy: If you count, as any person with a brain above a single celled organism would, cash and non-cash payments, they are above the poverty level and we ought to be honest with the american people and thank them for getting the poverty level down to 1% instead of giving them a curb stopping and calling them selfish. Let me give you a real-life example. But suppose you have a moment two kids.
▶ 0:46:17Sen. Kennedy: According to your census bureau the poverty level is $27,000. She makes $11,000 a year. She is below the poverty line. She also qualifies for $3400 in refundable tax credits based on her $11,000 salary. $9,200 in food stamps. $9,500 in housing subsidies.
▶ 0:46:47Sen. Kennedy: $900 and utility bills subsidies. $16,000 in medicaid. $3100 a year in free school lunches and $6,600 a year in taneth. That is $64,100 a year tax-free. She living in poverty?
▶ 0:47:11Sec. Lutnick: It does not sound like it.
▶ 0:47:14Sen. Kennedy: No. But your census bureau counselor as being poor. I'm not saying take away her benefits, I'm saying give the american people a little credit. I think you need to change the definition. To a definition that looks like somebody designed the dam thing on purpose. Final question. Why don't you just use satellite internet service?
▶ 0:47:45Sen. Kennedy: Why don't you just use globalstar or star link? You said the cost is $4000 per person in louisiana. For $600 you can buy a starling terminal. Why don't you just do that and do it across america and save a bunch of money?
▶ 0:48:04Sec. Lutnick: The states were responsible for determining the best outcome and sometimes fiber in a dense location and be economically better, sometimes satellite does not work.
▶ 0:48:15Sen. Kennedy: It cannot be cheaper, that is not possible.
▶ 0:48:20Sec. Lutnick: Each of the states did their best, we worked it out with them and we moved on.
▶ 0:48:25Sen. Kennedy: I don't understand. Throw it out for bid. $600 for a terminal versus $4000 for cyber optic -- for fiber-optic? This is taxpayer money. I am done. I am sorry. Adam chairman. -- madame chairwoman. Senator shaheen?
▶ 0:48:56Sen. Shaheen: In your opening statement you say the states chose to do it meeting the bead program the best way for their states. In 2023 ntia allocated bead bead funding to the state of new hampshire based on a five year plan that were approved and submitted in 2024 and the state plan to develop a broadband infrastructure by prioritizing fiber-optic cables and hybrid
▶ 0:49:27Sen. Shaheen: Fiber coaxial technologies and I appreciate senator kennedy's question about satellite transmission because in some places it does make sense as you pointed out. The reality is there a lot of places where it does not make sense. States like new hampshire satellites are unreliable in severe weather.
▶ 0:49:53Sen. Shaheen: I have a shorter lifespan and they require more maintenance and fiber-optic cables. As you pointed out also and a lot of places it is better long term to use those fiber-optic cables.
▶ 0:50:08Sen. Shaheen: One of the reasons new hampshire submitted a new plan was because on june 6 your office said they had to come up with a low technology neutral approach required by the new guidelines. That approach was not with the state had determined was the best way to connect.
▶ 0:50:33Sen. Shaheen: Now we see that space-x in june 2026, who was in negotiations with new hampshire has sent a letter to states with a set of demands that would ensure star receives federal grant money even when residents do not purchase starling broadband service.
▶ 0:50:55Sen. Shaheen: The demands would also guarantee space-x gets paid even if it does not reserve large portions of starlike network capacity for homes in the areas that are supposed to receive bead funded internet service. My question is given the concerns we are seeing in the state of new hampshire, are states going to be able to renegotiate with isp's on the requirements of the program if
▶ 0:51:29Sen. Shaheen: They are dealing with a company like space-x that is not agreeing to what has been determined to be the requirements of their grant?
▶ 0:51:38Sec. Lutnick: Thank you. New hampshire, we agreed with new hampshire in november 2025. They were one of the first and fastest to go for the new guidelines and they did an excellent job. 67% is fiber because they determined that was the best outcome. 21.5% was satellite, and the fixed wireless was about 11%.
▶ 0:52:11Sec. Lutnick: They used a technology neutral approach and saved a lot of money just your broadband office did a great job.
▶ 0:52:18Sen. Shaheen: There is no doubt about that. The percentages are not totally accurate because in a state like new hampshire where we have a lot of small communities and rural populations the percentages do not accurately reflect the households we need to reach if we are going to ensure 100% access to broadband service. That is the issue I am raising with you. Right now we have a plan that has been revised and as you point out it has been approved.
▶ 0:52:49Sen. Shaheen: The reality is over 1000 households or 1000 locations, about 1106 depend on accurate, adequate connections to starling. Right now we are engaged -- to star link. Right now we are engaged in a debate whether or starlink will provide the service we are contracted for.
▶ 0:53:18Sen. Shaheen: If we have an isp not willing to abide by the terms of the agreement can states go out and get a new isp that is actually going to provide by the terms of the agreement?
▶ 0:53:28Sec. Lutnick: It is my understanding that space-x as you correctly say sent you a writer. They sent it to a number of states. That rider is outside of our guidelines and outside the statute and it is rejected by us.
▶ 0:53:47Sec. Lutnick: There will be no rider and if space-x does not want to live without the rider you will definitely find an alternative means of execution so you can deliver broadband to each and every one of the people in your state as you are entitled to and as we will deliver. We are on the same side.
▶ 0:54:08Sen. Shaheen: I appreciate that. >> I will proceed with questioning. Thank you for coming today and approving west virginia's plan in november. You and I talked several times about this as we have been historically one of the lowest employed broadband states. Our estate in the initial offering and this is five years through no fault of your own.
▶ 0:54:39Sen. Shaheen: It was so slow coming out of the last administration that when you asked to have it rebid it appeared like you are putting the slow tracks on it. It had been slow walked all the way through. All of us are telling our constituents it is here. There is a lot of anxiousness for us to get this really done. I appreciate you moving as quickly as you did under the new framework.
▶ 0:55:10Sen. Shaheen: We have $1.2 billion which is one of the largest awards in our little state of west virginia. On the rebid we should have about $576 million remaining. I joined with senator wicker on the success for bead act on the redeployment of the funds. There are 76 locations that may not be served.
▶ 0:55:40Sen. Shaheen: We are extremely interested in trying to keep those dollars within the state borders to be able to meet those needs that are still going to arise once we do the initial bead deployment. Would you commit to keeping leftover funds from the bead program within states or what are you looking to do with those leftover funds? There is still great need beyond what is in the state plan?
▶ 0:56:12Sec. Lutnick: Thank you. I want to start by saying west virginia was swift and fast. Your broadband office did a superb job. They went to the guidelines and they got it done swiftly. I want you to know you should be proud of them.
▶ 0:56:29Sen. Capito: I am. The idea for this administration is to listen to the best ideas. I am happy to meet with anyone on this committee who wants to talk about the best ideas. We have a listening tour tomorrow which is the launch of that process. We have over 900 people signed up. I want to hear what is the best idea.
▶ 0:56:54Sen. Capito: We have executed universal broadband for 21 million and saved $21 billion of american taxpayer money. This is an excellent problem to have. We will sit together and assign the best use of this program.
▶ 0:57:10Sen. Capito: One of the things you hear is the high cost of permitting. Many states and hours included -- this is a political battle I don't need to get into from this position -- the cost of attaching to the poles with your utilities. It is state-by-state in some cases and has not been settled.
▶ 0:57:35Sen. Capito: I think the redeployment funds as the price of permitting goes up and some of the cost goes up in the cost of pole attacher's is something you will hear tomorrow. I did have questions similar to what senator shaheen asked about potential defaults.
▶ 0:57:51Sen. Capito: If we have small isps or the satellite providers decide they cannot do what they have committed to do and if I understand what you said that you're going to be looking at this so we can have a reuse -- so we can reach those locations and our state will be able to rebid on that. Is that what you are saying?
▶ 0:58:16Sec. Lutnick: We have seen providers try to bully the states with riders outside of our guidelines. They will not be accepted. If a provider cannot live up to their promise to you we will work together. We will replace that provider and we will make sure you can do that.
▶ 0:58:39Sen. Capito: I can answer cindy kennedy's question on why you were not to satellite -- I can answer senator kennedy's question on why you cannot do satellite everywhere. You have mountains anywhere in louisiana? You can drive down a mountain and lose line of sight on a satellite quickly. I know the technology is moving much quicker and faster than five years ago when we were first developing these plans.
▶ 0:59:08Sen. Capito: I appreciate you taking that into account looking at our terrain. It is a difficult terrain to build, there is a lot of rock. That was one of the things we went back-and-forth on with ntia to try to figure out the best way to do it. I appreciate the broader look at the circumstances of the state that has terrain and geographies such as mine. I thank you for being here. We will go to senator coons.
▶ 0:59:35Sen. Coons: . We are here to talk today about the bead program. Delaware is the lowest elevation state in america and one of the flattest states in the country. Delivering broadband has not faced and of the challenges for rural and mountainous states and my comments on bead are simple. The plan for delaware is approved and moving forward quickly and this is from my state a success that came out of the bipartisan infrastructure built.
▶ 1:00:06Sen. Coons: Since I have a secretary of commerce in front of me I will touch on ip, ai chips, and tariffs if I might. I am impressed with the director squires leadership at the patent and trademark office. I voted for him. And his efforts to restore the process to what congress intended the american vets act come a faster and cheaper alternative to going to district court.
▶ 1:00:30Sen. Coons: I support and I led a bipartisan letter in support of his regulatory efforts and I are due in the administration to support my prevail act with senator tillis so we can codify legislatively what director squires is trying to do with legislation. I am very concerned with reports you are considering a value-based patent tax that would charge inventors different fees based on the pto's valuation.
▶ 1:01:00Sen. Coons: As a holder yourself of hundreds of patents I found this puzzling. It is complex and difficult to evaluate patent. I was in house counsel to a global company that had a large patent estate and in figuring out how we would administer our patent system and impose a crushing tax on american innovation, something no other major country does suck me as puzzling. The ip community never agrees.
▶ 1:01:26Sen. Coons: From small inventors to big tech they agree on this, that this proposal would be a real negative. Can you update me on whether or not the consideration of a value-based patent fee system is live and how it would roll out if so and how you would avoid harming innovation?
▶ 1:01:42Sec. Lutnick: We will avoid harming innovation by not doing a value fee or tax on patents. That is not a plan. That is not going anywhere. We are totally on the side. That is not a thing the patent office will do is try to say this patent is worth x. How could we do that?
▶ 1:02:10Sen. Coons: It struck me as a completely unworkable proposal.
▶ 1:02:15Sec. Lutnick: We are on the same side with that.
▶ 1:02:19Sen. Coons: Let's move to the defining technology of the century, artificial intelligence. The nvidia ceo said that if U.S. ai companies could have twice as much compute the revenues would go up four times. These guys are so compute constrained -- I cannot agree more on this.
▶ 1:02:39Sen. Coons: Nvidia's own ceo admitting that while they are making as many chips as they can they are unable to fill the dramatic levels of demand from american companies like anthropic or openai or google. In that context I was glad to see your department issue regulations on january 13 that said commerce would not grant licenses for chip sales, particularly ai chip sales, to china if that export would delay nvidia's ability to meet U.S. demand.
▶ 1:03:11Sen. Coons: You are committed to not exporting ai chips to china until our own world-class american firms agree they have all of the chips they need for the terms of that regulation. Is that what you are intending question mark -- is that what you are intending?
▶ 1:03:27Sec. Lutnick: Nvidia does not make chips, it designs chips and they are primarily made in taiwan. We agree that demand by american firms is vast with those chips and we do not want to do anything that stands in their way.
▶ 1:03:45Sen. Coons: I think selling ai chips to chinese companies, allowing the licensure of the sale of ai chips to chinese companies like deepseek or 10 sent, which dod has classified as a chinese military company, would dramatically harm our national security interests. The cost of housing is one of the things I hear about the most from delaware. The cost of housing is not going down.
▶ 1:04:14Sen. Coons: Need to build millions more homes in the home building boom we need is not happening because of tariffs on lumber, drywall, kitchen cabinets, bathroom vanities. Homebuilders estimate they are the raising the cost of a new home by $17,000. Would you support legislation to temporarily halt or provide for a tariff exemption process for specific tariffs on whom building supplies?
▶ 1:04:42Sec. Lutnick: It is a broad and complex issue. If you want to make furniture in america you have to protect furniture makers. That type of question is a very detailed and complex one and worthy of discussion and I will be glad to sit with you in your office to talk about it. What we want to make in america and whatever we don't want to make in america we should try to do inexpensively to the extent we can.
▶ 1:05:11Sen. Coons: My concern is overwhelmingly the supply of things like lumber from canada and chips from mexico are being constrained by tariffs. These are close allies that work with us through the usmca framework. They have pushed back hard on the tariffs being imposed on their products exported into our market. Canada's largest export market for most american states.
▶ 1:05:37Sen. Coons: At a time there is very little we can actually do in the short term to reduce the cost of housing, this is something we might work together on. A closing comment, Mr. secretary. Senator van hollen asked about your engagements with your former neighbor Mr. epstein. I was encouraged to see your declaration that in 2005 you concluded he was a disgusting man with whom you should have no contact. I wish many others reach that conclusion upon meeting him.
▶ 1:06:06Sen. Coons: It troubles me you took your family to lunch on his island, that you had appointments with him. Disclose everything, put this to rest. This is an issue of grave concern to my constituents. President trump ran on releasing the epstein files. You said I looked at my name and how it appeared in them as does everyone. Everyone is not worried about their names being in the epstein files. I know he was your neighbor. That was a coincidence.
▶ 1:06:35Sen. Coons: Please disclose everything that is relevant that we have a chance to work together and move on.
▶ 1:06:39Sec. Lutnick: To the best of my memory I met him when he moved next door to me and I met him two other times in 14 years. None within six years of that first meeting and then a year and a half later another after.
▶ 1:06:56Sec. Lutnick: In the presence of my wife and as senator van hollen said, under no circumstances is there a single word I did anything remotely wrong in any possible regard. I did not have anything you call a relationship, anything you could call an acquaintance. I literally met him three times there 14 years with widespread in between. That is all I can remember. It is all there is in the documents.
▶ 1:07:27Sec. Lutnick: I did not look through the documents with any fear whatsoever because I know and my wife knows I have done absolutely nothing wrong in any possible regard.
▶ 1:07:37Sen. Coons: Thank you for answering my questions today.
▶ 1:07:41Chair Moran: Senator marshall.
▶ 1:07:45Sen. Marshall: We are finding in oregon that in places where we are trying to get microwave relays it is now a workable to use satellite and people are starting to give reports and strategies are adjusting but still a variety of strategies as you pointed out.
▶ 1:08:07Sen. Marshall: The federal -- the federal poverty level, my colleague suggested 11% is an overstatement of people in poverty. I would suggest the exact opposite. That federal poverty level calculation, are you familiar with how that is put together?
▶ 1:08:24Sec. Lutnick: Not exactly.
▶ 1:08:28Sen. Markey: It is based on food times three. That is the calculation. Over that time the other components necessary for life like housing and health care and daycare have gone up enormously. When you take those into account the 11% really understates dramatically the number of families in america that are struggling with the fundamentals.
▶ 1:08:57Sen. Markey: I would like to encourage you to take a look at the formula. It should be rewritten to reflect what the basket of goods are necessary to have a basic life in america so we can have a much more accurate picture. This formula explains why folks say not very many people are struggling when the reality of the ground -- I live in a blue color community and travel to every part of my state. A tremendous number of families are struggling.
▶ 1:09:27Sen. Markey: If we do not have an accurate way of calculating that we are failing to understand the basic economics and challenges of families in america.
▶ 1:09:38Sec. Lutnick: I am happy to sit with you and go through the details on that. More knowledge and more specificity is always helpful and I appreciate to share that with you.
▶ 1:09:49Sen. Merkley: I encourage you to have your team look at that formula and look at what it much better formula would be to reflect what is going on in our country. Last time we talked we talked about the manufacturer extension program and you agreed to get together for a meeting. Before that meeting was planned -- that was great.
▶ 1:10:17Sen. Merkley: Small business striving to do manufacturing is essential to a vibrant economy. Only part of that money has been dispersed in oregon and some of the grants have not been dispersed at all. We are now in a situation where in fiscal year 2025 we had 175 million allocated to the program. You know my best you know how much has been dispersed now?
▶ 1:10:45Sec. Lutnick: I do not know offhand.
▶ 1:10:50Sen. Merkley: Can you try to get the rest out the door?
▶ 1:10:54Sec. Lutnick: I will be glad to look at it and get together with your office. I would like to see for what we are now doing for fy 2026. I'm not sure where the disconnect is. The president talks about wanting to have manufacturing.
▶ 1:11:11Sec. Lutnick: I have done a made in oregon manufacturing tour of my state and a number of times over different years and these small businesses that do all kinds of different things are great employers in small towns and medium towns and sometimes they become big businesses over time. Why is it the program has not been a shining star in the first thing you wanted to get out the door?
▶ 1:11:39Sec. Lutnick: The problem has been the inspector general's office, many of these locations have had problems with the offices that executed that. There has been more than you would expect issues of waste and fraud and abuse from these offices and I think the objectives of the program are sound and the execution needed better oversight and that is one of the things we are deeply focused on is trying to clean that up and that has been an
▶ 1:12:10Sec. Lutnick: Issue we have had to address.
▶ 1:12:14Sen. Merkley: I appreciate you taking a close look at that. Last time we were planning to meet you took action before we met. That was great. I want to summarize the reason. I can hear the angst in your voice over the epstein files.
▶ 1:12:36Sen. Merkley: The reason people are bothered is because last year you said you would cut off all contact but there are eight incidences of interaction in the files after 2005. In 2009 you asked for epstein phone number. In 2011 there was the appointment for drinks. In 2012 we were planning a trip to the private island with your family.
▶ 1:13:08Sen. Merkley: That sounds like somebody you know well enough to call up and say let's get our families together, let's visit each other. In 2013 the exchange of information about an article related to topics you have an interest in. You both signed up for an investment. It is not clear if you had conversations but your neighbors and made the same investment. Maybe, maybe not.
▶ 1:13:39Sen. Merkley: And then in 2015 Mr. paulson, in 2017 Mr. john paulson wrote to epstein saying why don't you contribute to this, you are a close friend of the lutnick's and it is honoring lutnick.
▶ 1:14:04Sen. Merkley: I know for many events when people are raising money they say who you know that might be contributing and one supplies a list. Collectively it suggest when you said you cut off all contact in 2005 that was probably not a full and complete accounting. No suggestion of wrongdoing on your part or impropriety if you will.
▶ 1:14:28Sen. Merkley: I think restating that and clarifying to people you understand the statement you made last year might not have accurately portrayed. Then there was also the communication regarding the museum across the street being put up in this actionthat is eit instances. I encourage you to be completely frank and open with everyone.
▶ 1:14:58Sen. Merkley: Again, no wrongdoing on your part.
▶ 1:15:01Chair Moran: Thank you.
▶ 1:15:01Chair Moran: Chair moran: thank you. >> welcome Mr. secretary. Look forward to being able to visit with you. Thank you for being here.
▶ 1:15:15Chair Moran: In december I wrote to ntia with more than a dozen of my colleagues, urging the agency to ensure that states would be allowed to retain and maximize their be funding allocation in compliance with the bipartisan infrastructure law which are supported.
▶ 1:15:37Chair Moran: I know chairman moran has also touched on this but first and foremost, do you agree that states should be able to retain those broadband infrastructure dollars as is consistent with the law?
▶ 1:15:55Sec. Lutnick: We will appeal to the law. We have saved the american taxpayers between $1 billion. I think it behooves us to work hard to measure the next use of those funds are the best they can be for the american taxpayer.
▶ 1:16:19Sen. Fischer: I agree that you need to follow the law. But with the bipartisan infrastructure law, I think it was laid out pretty clearly on how those funds need to be maximized. I happen to think that states are the places that we experiment.
▶ 1:16:44Sen. Fischer: I am a strong supporter of federalism and every state is different to be able to use those funds in a way that address the differences in our state. I look forward to being able to visit with you more about that and make a good case to you about it. Thank you.
▶ 1:17:03Sen. Fischer: In december I also wrote a separate letter to ntia and I encouraged the agency to allow precision agriculture connectivity to be an eligible use of the non-deployment dollars. Optimizing is critical for agricultural states like nebraska.
▶ 1:17:29Sen. Fischer: This eligibility would leverage the deployment plans that ntia has already approved, enhancing networks and driving economic development throughout rural america. These are goals that the infrastructure law explicitly outlines. Will you work with me to ensure that precision agriculture considerations are addressed within eligible use is for the remaining funds?
▶ 1:17:56Sec. Lutnick: I look forward to talking with you and addressing precision agriculture. It sounds something worthwhile and we will spend time together learning it and figuring out the best way to do things.
▶ 1:18:08Sen. Fischer: Wonderful. I would love to host you in nebraska with the university to be able to see all the really cool stuff that technology can do with precision agriculture and how that is going to not just benefit ag producers in states like mine, but how it will be able to manage our resources whether it is water or land, the world.
▶ 1:18:39Sen. Fischer: Let me host you in nebraska.
▶ 1:18:41Sec. Lutnick: Sounds like fun.
▶ 1:18:44Sen. Fischer: Mr. secretary, after the benefit of the bargain rounds, there is estimated to be over $20 billion in uncommitted bean funding remaining. As you imagine for senators like me who strongly supported the infrastructure law, we believe that funding needs to be put to death use again by staying in states to close that divide.
▶ 1:19:13Sen. Fischer: I know you have talked about how ntia has a public listening session tomorrow to inform determinations. But would you please discuss some of the initial proposals that the department is considering at this time for using those non-deployment funds?
▶ 1:19:32Sec. Lutnick: Sure. The department has received ideas to invest in polls in places that do not have sufficient polls to get access to therapeutic communities. That would be an example.
▶ 1:19:54Sec. Lutnick: Another example is to invest in public safety so that the police, the firemen and local community can do a better job of communicating with each other in times of crisis. That would be another example of how you can do better investing in the communication infrastructure. Those are two examples that come to mind quickly.
▶ 1:20:21Sec. Lutnick: Tomorrow we will get a broad group of examples and we will be much better served just talking to you and yourselves and your staff, if they would like to talk to us, we would be glad to learn their ideas.
▶ 1:20:35Sen. Fischer: I think telehealth is a wonderful investment to be able to help communities across the board, cybersecurity. Obviously you are very well aware of the issues that businesses, communities, government faces with regard to being hacked, interfered with on our systems. Cybersecurity I think is another great area to take a look at as well.
▶ 1:21:05Sen. Fischer: I look forward to having conversations with you and I appreciate your work. Thank you. >> hello, secretary lutnick. I have couple of questions. One of your principal responsibilities as secretary of commerce and conducting the U.S. census, I am ranking member of homeland security and government affairs and oversee that.
▶ 1:21:34Sen. Fischer: It is a monumental undertaking that requires a lot of effort. Last week some information came to my attention that I'm concerned about is that the census bureau announced it will cancel four of the six sites for the 2026 since his test which was supposed to start next month .
▶ 1:21:54Sen. Fischer: Canceling these tests and firing the people in your department who are already hired to complete it, with no advance notice, first off is wasteful at best and at worst, it seems there could be an effort to sabotage this effort which I hope is not the case. I believe we cannot have an accurate 2030 census, it is one of the largest most complicated tasks in our federal government without proper preparation.
▶ 1:22:24Sen. Fischer: We have seen this over many years. We need an accurate count of everyone living in america to ensure that communities and families receive the funding that the need for schools, for healthcare, first responders, infrastructure and so much more. Fully carrying out these tests is a necessary part of making sure that we are able to pull that off. Given these facts, I just need a yes or no answer.
▶ 1:22:48Sen. Fischer: Will you commit to undoing the cancellations of these four testing sites and commit to completing a complete census test which is an essential step in being able to do the full-blown version a few years from now?
▶ 1:23:02Sec. Lutnick: I appreciate the question and I agree with you that the test is vital and important. But I would like you to understand, we are for the first time ever going to use the post office, united states post office is going to execute the 2026 test and the survey we are going to use is the american community survey.
▶ 1:23:28Sec. Lutnick: We are going to go out with a more sophisticated census and we are going to use -- we have made a deal with the post office and we are going to pay the post office to execute that. You can imagine the efficiency of already having hundreds of thousands of people who already work for the federal government, who already have cars, who have already paid for the gas and they already know where everybody lives. This is one of my big moves for efficiency.
▶ 1:23:56Sec. Lutnick: We are testing 2026 to see can the post office do it because our objective is I think the post office can do the senses in 2030, do a better job because they go to 169 million homes every day. They should be able to do the senses brilliantly and far more efficiently. And the task is coming very shortly as you pointed out, in 2026.
▶ 1:24:24Sec. Lutnick: I'm happy to talk to you about it and go through it so you can understand what our plan is.
▶ 1:24:28Sen. Peters: I appreciate that. This is a big change. If it doesn't go well, it has a catastrophic effect. I would hope that you also commit as you are doing this, that he would make all the planning results of the 2026 census test available to the public and to congress so we can fully evaluate this together so that we can perform our oversight function. Is that something you can agree to today? Fully transparent --
▶ 1:24:54Sec. Lutnick: I will take that under advisement but it makes perfect sense for us to talk about it and make sure this is a test of a new idea. We will see how it goes. I would be happy to meet your staff and go through it because that makes sense.
▶ 1:25:07Sen. Peters: I appreciate that. If it is not going well, time is wasted. It is important for us to have a sense of what is going on.
▶ 1:25:15Sec. Lutnick: That is why it is vital to do the test in 2026 for the 2030 senses. That is why this test is vital.
▶ 1:25:23Sen. Peters: It is also vital that we assess to make sure it is actually working so we can make a course correction, if necessary. It has been reported that your department plans to add a question to the census test asking people their citizenship status. The supreme court has already overturned fast efforts to include a citizenship question on the senses and it is because the constitution, the great document, the U.S.
▶ 1:25:47Sen. Peters: Constitution requires the census bureau to count the whole number of persons in each test -- state regardless of citizenship status. The census bureau research, your own research has shown that asking immigrant questions on the senses will make it less accurate by making people including citizens, less likely to participate.
▶ 1:26:11Sen. Peters: That will be especially true given the racial profiling, and violence that americans are witnessing on the streets right now. Given the hard evidence that asking immigration related questions actually sabotages the success of the census and the constitutional questions related to that as well, yes or no, will you commit to leaving a citizenship question off of the questionnaire? Will you take that off?
▶ 1:26:40Sec. Lutnick: -- senator, that is a longer answer. It is not a yes or no.
▶ 1:26:48Sen. Peters: Without objection, can he answer the question, chairman? It is an important one.
▶ 1:26:58Sec. Lutnick: You correctly point out that citizenship is not in the constitution for the apportionment. The most important thing which is the 435 seats and the 435 electoral votes are not predicated on citizenship. It is not a necessary factor to determine apportionment.
▶ 1:27:23Sec. Lutnick: Whether what the questionnaire is, I don't know and we have not decided but I agree with you, citizenship is not in the constitution for apportionment.
▶ 1:27:33Sen. Peters: For the questionnaire part, your own department has evidence to show that it has a chilling effect on people even participating in the census including citizens. And if they are not participating, that will have an impact on their local communities ability to access public health benefits, education benefits and a long list which I know you are aware of. It is troubling and it is based on objective studies done by the census bureau.
▶ 1:28:01Sen. Peters: Having that on that test is going to undercount citizens based on research. Doesn't that trouble you?
▶ 1:28:11Sec. Lutnick: I'm not familiar with that being true but we will look into it.
▶ 1:28:16Sen. Peters: Thank you Mr. chairman.
▶ 1:28:21Sen. Reed: Thank you very much, Mr. chairman. Mr. secretary, you referenced that dozens of states have submitted complete plans of deployment dollars and signed final agreements. Rhode island, my state, has done that. They signed nearly two months ago but they have not gotten any funding and they have no indications of what lies ahead. Can you clarify the situation?
▶ 1:28:53Sen. Reed: What is the hold?
▶ 1:28:54Sec. Lutnick: Your state has signed an agreement, they should be able to draw funds. Once we send you the document, if you sign it, you can draw funds from the grant process. There should be nothing in the way. I'm happy as I live here -- leave here, how I can help you fix that because if you sign that, there should be nothing in your way to proceed to the grant proceeds.
▶ 1:29:20Sen. Reed: If you want a place to deliver, newport is a nice place to deliver it.
▶ 1:29:27Sec. Lutnick: Yes, it is.
▶ 1:29:29Sen. Reed: Until you became secretary, you that the investment bank and it is still maintaining a significant business size with tether, a stablecoin issuer in el salvador. Under the genius act, tether can freely offer and sell its stablecoin token in the U.S.
▶ 1:29:55Sen. Reed: Without needing a license from U.S. regulators and without needing to meet any U.S. anti-money laundering and sanctions compliance requirements or obtain an audit. All it needs to do is demonstrate that el salvador's stablecoin regulations are similar to the united states.
▶ 1:30:15Sen. Reed: I think this is a huge risk because tether has been identified as helping to fund thomas -- fund hamas, ransomware attacks, etc. You said in your confirmation hearing, "I believe U.S.-backed stablecoins should be fully audited." does this include tether and if so, why has tether not been audited?
▶ 1:30:42Sec. Lutnick: Two things. I am completely digested from all things business. I am just learning about the united states of america. My understanding is that tether has launched a U.S. fully approved under the genius act stablecoin. I think the only tether stablecoin in america and the fully approved under the genius act stablecoin.
▶ 1:31:13Sec. Lutnick: Generally speaking I agree with you, tether should be audited. I don't have anything to do with it but I agree, tether should be audited.
▶ 1:31:21Sen. Reed: We both agree. It is an indication that perhaps the genius act has to be sharpened up a bit because there is no legal requirement for them to be audited and they can still operate freely in the united states. But that is a topic probably for another hearing. Let me move on to the value of the dollar. It has a four year low. It has fallen 10% since the administration took office.
▶ 1:31:52Sen. Reed: How do we maintain our economic promise in the world with a weakening dollar? Some people say that is good in some respects because it brings investment to united states jobs. In addition to a weaker dollar we have seen manufacturing jobs falling too. What is your response to the issues about the falling dollar?
▶ 1:32:14Sec. Lutnick: The dollar over many years has been manipulated higher in order to keep the U.S. economy from exporting to the rest of the world. That is the idea. It is more expensive for everyone else in the world to buy our products and it is cheaper for us to buy theirs.
▶ 1:32:34Sec. Lutnick: When the trump administration and the president called out this fact, that we were running $1.2 trillion trade deficits, the rest of the world was selling us stuff will using our dollars to buy our country from beneath us. Remember, in 1985, we owned more of the rest of the road than they owned of us. Now the rest of the world owns $26 trillion more of us than we owned of them.
▶ 1:33:03Sec. Lutnick: The dollar where it is now is just more natural. We are exporting more and that is why our gdp has grown so much. We had 4% gdp growth in the third quarter. I think we can get over 5% in the fourth quarter and reasonably we can get 6% because our exports are growing and our imports have shrunk.
▶ 1:33:32Sen. Reed: When you say that our economy has been stepping back from foreign investment but the president touts every time he meets with a foreign leader how much money they are going to invest, ie, buy american products, facilities, etc., is there a contradiction?
▶ 1:33:52Sec. Lutnick: Building in america rather than those buying debts rather than us -- rather than --you're going to the
▶ 1:34:23Sec. Lutnick: Enormous growth over the course of 2026.
▶ 1:34:24Sen. Reed: I have not seen it yet. The trump administration's approved the sale of nvidia h 200 ships to china, I just came from the office of foreign affairs committee, I served on that committee for years. They are quite concerned, in fact, they believe this is a very dangerous situation of giving china literally a leg up in technology.
▶ 1:34:57Sen. Reed: Congress is requiring nvidia to self-certify that the h 200 ships sold to china are not for military intelligence use. How will you at the department of commerce to the use of these chips to ensure that they are not used for military intelligence and how will you enforce these conditions?
▶ 1:35:18Sec. Lutnick: A license terms are very detailed. They have been worked out together with the state department. Those terms nvidia must live with.
▶ 1:35:34Sen. Reed: Do you believe the chinese will live with them? Do you trust the chinese to follow up and to be -- the contract they have executed with nvidia?
▶ 1:35:47Sec. Lutnick: I will leave that opinion to the president of the united states.
▶ 1:35:51Sen. Reed: Wow. I think that is a tragic, difficult and wrong decision because again, not only will the chinese exploit as they have demonstrated for the last several decades, any type of intellectual property they get their hands on, but this might apply to those sales from the united arab emirates because it is possible to include the
▶ 1:36:24Sen. Reed: Device, sell it to china and the chinese get their chip. I think we have a serious problem here and without oversight, real oversight, these chips can be misused to the detriment of our military forces. Thank you.
▶ 1:36:43Chair Moran: Mr. secretary, I will ask a question or two. Then senator van hollen and then we will be done. You have used the phrase "ny by law" a few times. There is a long list of items under use of funds. The last one is number six.
▶ 1:37:13Chair Moran: Any use determined necessary by the assistant secretary to facilitate the goals of the program, is that what you refer to when you say anything allowed by the law? Is that discretion?
▶ 1:37:24Sec. Lutnick: I think the idea is to meet with the constituencies yourselves and tried to develop the smartest use of the funds. Make sure it stays within the statute. What is the smartest use? We have proven to this committee that we are good stewards of the american taxpayers dollar and we will continue to do that. We will work together to develop the best ideas.
▶ 1:37:54Sec. Lutnick: I suggested a few that can just come to us but I think we will work it out in a way that is smart.
▶ 1:37:58Chair Moran: Do you have any doubt what will still be significant portions of the country that when bead is fully implemented, absent the unspent funds, there will still be plenty of opportunities to provide broadband to the american consumer or do you think bead will meet the needs of the country for broadband services?
▶ 1:38:24Sec. Lutnick: My understanding is each state gave us the complete list of, the complete total of those who needed to be served and we are serving universal broadband access. So this is to cover every single person as of the day we did it. That is the objective and that is what I think we are going to achieve.
▶ 1:38:48Sec. Lutnick: We are going to give broadband internet connectivity to every single person that every state said was in need, we will deliver.
▶ 1:38:56Chair Moran: And that does not necessitate the use of the unspent funds to reach that goal?
▶ 1:39:01Sec. Lutnick: It does not and each of the broadband states, the broadband offices of the states agrees.
▶ 1:39:08Chair Moran: In my opening statement I talked about the money allocated to kansas originally and with the change and direction of the policy, that much less was demanded. That less money presumably meets the goal of providing everything that kansas needs. It just took less money to do it?
▶ 1:39:29Sec. Lutnick: Correct because we used competition. Biden administration selected one way to do it and then there was very little competition and a huge amount of red tape. If you bring in competition between fiber, fixed wireless and satellite, you get much better economics as we all know. So we got much better economics for solving the same performance standards and covering every single person.
▶ 1:40:01Sec. Lutnick: This is universal coverage at a much better deal.
▶ 1:40:03Chair Moran: I think my final question and then senator van hollen. The bead program or any federal broadband deployment program, those resources, those dollars are taxable to the provider that receives the funds.
▶ 1:40:22Chair Moran: Under current law, when a broadband deployer or provider is initiating the plan to rely upon federal funds, that provider has to account for 21% of that or more being paid back in federal taxes. I introduced with a number of my colleagues the broadband grant tax treatment act which excludes certain grants including bead from those dollars being taxable.
▶ 1:40:53Chair Moran: I think you testified or indicated before that you support that legislation. I am back making the effort to see if we can get it passed and I want your reaction to see if my understanding is that you are supportive of eliminating the tax on the proceeds of grants to those providers. Do you still support that position?
▶ 1:41:14Sec. Lutnick: That kind of opinion is best served with yourself. Whether you choose -- on an appropriation that you have given, we have executed it. Whether you think we should tax it or not, I will leave it to your committee.
▶ 1:41:29Chair Moran: Unfortunately we have to leave it to another committee. But it does diminish the dollars that are available and the interest in participating in the program is diminished as you try to figure out how you make this profitable for the provider.
▶ 1:41:44Sec. Lutnick: If you let us give it out tax free, I promise you, I can do it for less than $21 billion.
▶ 1:41:53Chair Moran: That is another option. Senator van hollen.
▶ 1:41:58Sen. Van Hollen: Thank you. I want to start by sharing their concerns made by the chairman. You heard it from other members of this committee as well. The benefit of the bargain was struck at the time we passed the infrastructure bill. I heard you refer to new ideas on a number of occasions. Having worked with the state including my state of maryland for a long time on this, the important thing is to make sure that they get the benefit of the bargain.
▶ 1:42:30Sen. Van Hollen: I think you are hearing on a bipartisan basis this committee will scrutinize that very closely. There are a couple of questions I have before we close. One is just to follow-up on one of your responses with respect to the epstein files specifically the visit you and your family took to epstein's private island in 2012 and I think you also said he went on
▶ 1:43:00Sen. Van Hollen: His boat?
▶ 1:43:02Sec. Lutnick: No.
▶ 1:43:04Sen. Van Hollen: At that time you mentioned you were accompanied by your wife and kids and nannies. My question is do you know whether the nanny you had on that trip was the same nanny that jeffrey epstein expressed interest in meeting?
▶ 1:43:21Sec. Lutnick: I have no idea about that whole thing. I don't recall having anything to do with that.
▶ 1:43:32Sen. Van Hollen: This guy was a convicted sex offender and obviously not a great place for kids and nannies. Was ghislaine maxwell on the island at the time?
▶ 1:43:42Sec. Lutnick: No.
▶ 1:43:44Sen. Van Hollen: Turning now to the issues of the high-speed internet and broadband, I appreciated your emphatic response to senator shaheen about spacex or any other entity not being able to change terms of the deal after the fact. I thought that was a really clear defined statement. I want to ask you about another writer. You described that as a writer.
▶ 1:44:17Sen. Van Hollen: That seems to have been referenced at least in the president's executive order with respect to a.I. The order directs you, the secretary of commerce, to study but of the department can withhold federal rural broadband funding from states with unfavorable a.I. Laws. That would be a writer. Is there any place in the wall that you have seen that could be a condition of providing the funds we are talking about here today?
▶ 1:44:46Sec. Lutnick: I am not sufficiently familiar to answer unfortunately.
▶ 1:44:51Sen. Van Hollen: I appreciate if you can get back to us. You probably described what starlink is trying to do is a writer after the fact. This would be a clear writer after the fact. There is just no justification or legal grounds for applying these conditions when the condition did not exist in the underlying law. Let me ask you about the gal let me ask you about the gao.
▶ 1:45:19Sen. Van Hollen: The gao has informed the committee that the department of commerce is declining to answer questions regarding certain investigations and audits. As you know gao is empowered by congress as a congressional watchdog to look into waste, fraud and abuse. They have very broad jurisdiction.
▶ 1:45:44Sen. Van Hollen: Can you commit that your apartment -- department will work and cooperate with gao around their work?
▶ 1:45:54Sec. Lutnick: My understanding is driven by our general counsel who has instructed us how to respond and we will respond according to whatever the rules are as informed by my general counsel.
▶ 1:46:06Sen. Van Hollen: Ok. I hope we have a shared interest in making sure that gao can conduct a proper oversight of the department. This comes with every administration. It seems to me that is something the department should comply with. Let me just briefly follow-up on questions from senator coons and senator reed regarding the export of very high-end U.S.
▶ 1:46:36Sen. Van Hollen: Technologies. High-end chips, which are important to power a.I. I was very concerned. First of all, I was happy to see early in the administration the adoption of affiliates.
▶ 1:46:56Sen. Van Hollen: When you say we will not allow the export of a high-end technology to one entity, that we also make sure we don't export those same high-end technologies to their subsidiaries or other related entities. It makes sense that if you close the front door, you should not open the back door. For the life of me, Mr. secretary, I cannot understand why that was repealed.
▶ 1:47:23Sen. Van Hollen: Can you take a moment to let me know why and whether you plan to reinstate the affiliates rules reinstate the affiliates rule?
▶ 1:47:29Sec. Lutnick: The complex relationship between the united states and china is in the hands of the president of the united states. The secretary of state, they help us and instruct us and we follow their lead.
▶ 1:47:45Sen. Van Hollen: It is interesting, Mr. secretary. We had our trade ambassador here. I asked him questions about this and he said to ask you. Now you are telling me I should ask secretary rubio or the president.
▶ 1:48:06Sen. Van Hollen: You are in charge ultimately -- well, the president is ultimately in charge but the export controls policies of this administration have been very confusing when it comes to chips. We all know about the episode that the president went to the u ae after his sons traveled there and the deal that went down. But I am focused now on china. So you are asking me to go ask the secretary of state about why the affiliates rule has dropped?
▶ 1:48:37Sec. Lutnick: What I'm saying is it is a very nuanced and complex relationship between the united states and china. The president is driving that relationship. We are all familiar with the weaponization of critical minerals and rare earths and magnets.
▶ 1:48:59Sec. Lutnick: And so the resolution of those topics is really with the president of the united states and secretary of state as they work through the broad relationship between china and the united states. That is why I'm saying it is not a particularly topic. It is a broad, very nuanced topic that rests in the hands of the president of the united states. He has handled that situation brilliantly.
▶ 1:49:26Sen. Van Hollen: We will have to disagree. The chairman has his finger on the button. I will submit questions regarding the issue of the trump administration's decision to take a stake in the rare earth sector. I think it was U.S. rare earth and I will be following up for the record on that.
▶ 1:49:45Chair Moran: Senator murkowski.
▶ 1:49:49Sen. Murkowski: Thank you, Mr. chairman. Welcome to the committee, Mr. secretary. Good to see you. I want to talk to you about the pending bead final proposal. Alaska is one of the states that has not yet been approved by ndaa -- by ntia.
▶ 1:50:19Sen. Murkowski: I am told we have until february 11 of this week to get three undecided projects under the bsl threshold. Just a couple of questions in this vein this morning.
▶ 1:50:35Sen. Murkowski: As I have shared with you in the communications we have had in my office, alaska has looked at the bead program as this one time opportunity to try to address the digital divide that we see in very rural spaces. The restructuring notice that came out last year has made it a little bit difficult for the alaska broadband office.
▶ 1:51:05Sen. Murkowski: This is what they are telling me in terms of what they feel are some of the changing goalposts. They are trying to figure out how we again get maximum yield out of this very important program. As you know, construction seasons are not 365 days per year.
▶ 1:51:30Sen. Murkowski: I need your commitment that we will see approval of alaska's proposals promptly so that we can get to work in this upcoming construction season.
▶ 1:51:39Sec. Lutnick: I'm happy to make such a commitment.
▶ 1:51:41Sen. Murkowski: I appreciate that. The nonstatutory cause pressure old -- cost threshold for bsl has shifted a number of times. Can you tell me what per bsl cost threshold is being used in alaska with regard to the final aid proposal?
▶ 1:52:08Sen. Murkowski: What we need to know is what is the threshold and can we count on the fact that it is not going to be changing on us yet again?
▶ 1:52:15Sec. Lutnick: My understanding that actually alaska is on the one yard line. Meeting just about there. The only issue was that island.
▶ 1:52:24Sen. Murkowski: There are three islands. Paul, st. Lawrence --
▶ 1:52:33Sec. Lutnick: My understanding is that conversations were with respect to the island and that we were very close to a solution between us. So my expectation was in fact it might be resolved today or tomorrow.
▶ 1:52:47Sen. Murkowski: Ok, that would be great. I'm sure your teams will be working with us to give more information. Let's talk just a sec about the unspent funds. It is my understanding that the final provisional awards approved by ntia will award to states much less than their original bead allocations. I don't know how much is actually left on the table.
▶ 1:53:18Sen. Murkowski: The question that I have is what happens to it. Is it given back to the treasury? How much is intended to be given back to the treasury? What are the plans for the funds? We are looking at it from the perspective of, look, everything in alaska -- and you know this. Everything is high cost. Every dollar matters. We get it.
▶ 1:53:49Sen. Murkowski: We were operating under the assumption that congress intended the funds to be dispersed in a wise way. We get that. But a question for you in terms of what the plans are for unspent funds and just a commitment that these remaining funds be allocated in a way that are used two do exactly what we
▶ 1:54:19Sen. Murkowski: Intended with this program which is to strengthen all aspects of communication particularly when it comes to emergency, public safety communication in these rural areas where you have these incredible gaps but also within the critical mile infrastructure. We know we want to be smart with our money but these were funds that were directed for a very specific reason.
▶ 1:54:48Sen. Murkowski: The need is huge and in many cases it is a little more expensive then maybe in the lower 48.
▶ 1:54:57Sec. Lutnick: We have no plans for rescission.
▶ 1:54:59Sen. Murkowski: Ok. There is a difference between rescission and unspent funds.
▶ 1:55:04Sec. Lutnick: We have $21 billion. So we have executed universal broadband, god in every state covering each and every person that every state has asked to cover, yours included. We will have $21 billion remaining. We are starting tomorrow a listening tour. We have 900 people signed up for tomorrow. We will meet with your office and your staff, but are the best ideas. You have said it very well. Let's do it smart.
▶ 1:55:35Sec. Lutnick: Let's do it efficiently. Let's do it effectively. We have covered everybody who needed it in the united states universally at that high performance standard that you set for $21 billion less. We now have a great opportunity. We have $21 billion. Let's design together the smartest thing to do with that money for the benefit of your state and for all of the states of america. That is our objective and we start tomorrow.
▶ 1:56:03Sen. Murkowski: I will look forward to those follow-up conversations both with regard to the alaska-specific projects and ongoing forward. I recognize that we are, the way I see it, we have never been the benefit of the bargain in many cases because we are just so high cost. And it is not because it is waste, fraud and abuse. It is just far out there.
▶ 1:56:34Sen. Murkowski: This is an opportunity that we have two really do right by all alaskans even in the most remote of remote places and we look forward to work with you to address their needs as well. Thank you, Mr. chairman.
▶ 1:56:48Chair Moran: Mr. secretary, anything you would like to add?
▶ 1:56:51Sec. Lutnick: I just appreciate you having me here and thank you.
▶ 1:56:54Chair Moran: Thank you for being here. Thank you for accepting our invitation. Thank you for your attention to issues that are really important to the country. There are no further questions. Senators may submit additional questions for the hearing record. We request that ntia responses occur within 30 days. The subcommittee stands in recess subject to the call of the chair.
▶ 1:57:33Chair Moran: [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap.org]