Hearings to examine a review of broadband deployment funding at the Department of Commerce.

[Gavel sounds.] Good morning. Committee will come to order. Secretary Lutnick, thank you for accepting our invitation to join us today to discuss the Department of Commerce's broadband deployment efforts, including the implementation of the Broadband Equity, Access, and Deployment, or BEAD program. Four years ago, Congress authorized the BEAD program, providing the National Telecommunications and Information Administration within the Department of Commerce with $42.5 billion to provide grants aimed at bridging the digital divide. The BEAD program is the largest, the largest ever single federal investment in broadband deployment and was intended to connect Americans lacking reliable broadband connectivity. If we fail after we put so many dollars into broadband availability and we still have places in the country that don't have broadband, we have really failed. There should be sufficient resources for this goal to be accomplished. But four years later, not a single BEAD-funded project has been completed, much less initiated, and not a single unserved or underserved American has connected to broadband service through the BEAD program. Under the Biden administration, implementation was encumbered by complex and often unworkable regulatory and financial burdens and hurdles for states and for providers. Stringent labor and workforce provisions, climate and environmental objectives, effective rate regulation imposed by low-cost plan requirements, and convoluted permitting processes dissuaded many providers, especially those in rural areas, from participating. In June of 2025, NTIA issued a BEAD restructuring policy notice aimed at rolling back these burdensome requirements and expediting implementation of the BEAD program. That policy notice, NTIA identified obstacles to deployment under existing BEAD guidance and outlined several changes with the goal of maximizing the benefit of the bargain that Americans should expect from the investment in broadband deployment under the BEAD program. Secretary Lutnick, I commend your department's and NTIA's efforts to relieve undue burdens on state broadband offices and providers. However, I am concerned that certain changes to the BEAD program implemented under the revised guidance may jeopardize the efficiency and the effectiveness of the program. Following the June restructuring, state broadband offices worked diligently with NTIA and providers to modify proposals and realign their BEAD plans according to the guidance issued by NTIA. As part of that process, state broadband offices were urged by NTIA to revisit many projects and locations to find additional cost savings. The resulting final BEAD plans submitted by many states saw drastic reduction in BEAD fund requests. As an example, in my home state of Kansas, BEAD secured roughly $452 million in its BEAD allocation. After the benefit of the bargain reduction, Kansas's final BEAD plan requests only $166.6 million of the original allocation, leaving over $200 million in unspent funds and little clarity from the Department of Commerce and NTIA on how those funds may be used. This uncertainty has caused concern among state broadband offices who are unable to plan broadband initiatives that rely on the balance of their BEAD allocations. Additionally, I'm concerned that the worthwhile goal of maximizing the impact of taxpayer dollars has prioritized achieving the lowest cost rather than the best value for BEAD projects. This approach risks repeating the errors of previous federal broadband deployment programs that failed to account for the unique connectivity needs in each of our states. I'd also like to discuss your outlook for the BEAD program and the future of federal broadband deployment efforts, including how unspent funds should be treated. We will also discuss broadband deployment provisions included in recently enacted appropriations legislation produced by this subcommittee and other subcommittees of the Appropriations Committee. Secretary Lutnick, again, thank you for being here, and I now recognize the ranking member, Senator Van Hollen, for his opening statement.

Thank you, Mr. Chairman. Thank you for calling this hearing 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 do intend to get to it. But since this hearing was scheduled, another matter has arisen from the Epstein files that goes to the heart of the credibility and honesty of our witness, Secretary Lutnick. Mr. Secretary, I hope during the course of your testimony we can get answers to some of those questions. As you know, Mr. Secretary, 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 with him to the Congress, to the American people, and to the survivors of his despicable criminal and predatory acts. You told us that 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 that you hurried out and vowed never to set foot in the same room with him again, and you suggested that you never had anything more to do with him. I remember thinking that for all our disagreements, you had good instincts. But now that turns out not to be true. The information recently revealed from the Epstein files show that your statements were at best highly misleading. The files show that 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. And 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. It also relates to the testimony here on the subject that the chairman raised because at the confirmation hearing last year, your confirmation hearing, you seemed to fully appreciate the need to get construction underway on the broadband buildout to get our constituents connected. And yet here we are, as the chairman said, a year later and as far as I can understand it, not one person in this country has been connected through the program. States have jumped through every hoop they were asked to jump through: planning, mapping, repeated federal 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've been told we will only get $79 million, a reduction of over 70 percent from the total of $267 million that has already been obligated, already been obligated to the state. So let me be clear: members of this subcommittee expect all BEAD funds to flow to the states as Congress intended and directed. It's not a suggestion, it's the law. To that end, I'm also concerned about the executive order on artificial intelligence indicating that broadband funding may be conditioned on states' action on the unrelated issue of AI regulation. Using broadband dollars to leverage that dispute is not what Congress intended and it risks turning a bipartisan infrastructure program into a political weapon. Mr. Secretary, you are not the author of these statutes. You are responsible for administering them. Today is an opportunity to explain how the Department of Commerce will comply with the law and ensure that critical infrastructure funds reach the communities they were meant to serve and to ask answer certain questions regarding your credibility based on what came out of the Epstein files. Thank you, Mr. Secretary. Thank you, Mr. Chairman.

Thank you, Senator Van Hollen. Mr. Secretary, you are recognized for your statement. Please proceed.

Thank you, Chairman Moran, Ranking Member Van Hollen, and members of the subcommittee. Thank you for having me here 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 ensures communities across the United States, predominantly in rural areas, can successfully connect to high-speed internet. 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, slow, slowed by unlawful conditions, and skewed towards a one-size-fits-all approach that ignored cost, geography, and practicality. Many members of this subcommittee raised serious concerns that BEAD had become biased towards one technology regardless of whether it was the most efficient way to connect Americans. But we changed that course. Under the Trump administration, BEAD is now technologically neutral, it's competitive, it's disciplined, and it's exactly what Congress intended. Fiber where fiber makes sense, fixed wireless where it works better, satellite where geography demands it. Every technology must meet the statutory performance standards that you have set. There are no favorites. Our objective is simple: same or better standards, but at much better cost and much better results. When you contrast with states were forced to do under the Biden administration and what they were able to do now, that difference is striking. I'll give you one example: Louisiana, and it's represented on this committee. Under the Biden administration, Louisiana was tasked to spend more than $1.3 billion to do exactly what it's doing now for under $500 million. That means in Louisiana alone, the American taxpayers saved more than $800 million, delivering better economic results all while advancing the same performance standards that you have set. We are delivering for the state of Louisiana and all American taxpayers. Under the benefit of the bargain reforms, Louisiana reopened its bidding competition, embraced technology 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. Today, the highest cost location in the state of Louisiana is closer to $7,000 with an average cost of $4,000. And they're doing this all while achieving universal coverage. This is the difference between a program designed around waste and abuse and a program designed around value. And Louisiana is not an outlier. Working with states across this country, we are seeing the same pattern delivering for the American people. States operating under the prior framework consistently were faced with higher costs, fewer bidders, and weaker private sector participation. States operating under the Trump administration's benefit of the bargain framework are seeing lower costs, higher matches, faster timelines without sacrificing performance or coverage. As of today, we estimate that these reforms have generated over $21 billion in tax savings for the American public while advancing universal broadband nationwide. That's not a projection, that's the direct results of competition and disciplined execution. But savings alone are not the goal. Execution and long-term success matter even more. To many, past broadband programs failed because projects defaulted, providers walked away, and communities were left stranded before BEAD, and we cannot allow that to happen again. That's why NTIA is enforcing clear guardrails to minimize defaults. Our framework demands skin in the game from providers, streamlined permitting, and protections from regulatory uncertainty that would undermine projects after they are made. We're now near the end of this approval process: 50 out of 56 states and territories have been approved and they're moving forward with BEAD programming. This program is no longer about promises or projections, it's about outcomes. Americans are getting connected, taxpayer dollars are going further, and we have a broadband program that actually works. Chairman Moran, Ranking Member Van Hollen, members of the subcommittee, this is what responsible stewardship looks like: universal broadband delivered efficiently with accountability, competition, and respect for both the taxpayer and the law. Thank you, and I look forward to your questions.

Secretary, thank you. As of January the 27th, just a week or so ago, 56 states and territories had submitted their final BEAD proposals to NTIA. 43 have received approval by NTIA. According to updated BEAD guidance, NTIA has 30 days from approval to make certain that states' approved BEAD plans comply with existing technical, cybersecurity, and financial requirements. What have been the primary obstacles toward states receiving approvals for their final proposals?

So the process is that NTIA negotiates with the states and we have approved 50 out of the 56 states and territories. And two of them are on the one-yard line, meaning I think they'll be solved maybe today or tomorrow. Then there's a grant process that we go through, the ordinary sort of governmental process to make sure all the I's are dotted and the T's are crossed. And then the states sign that document and dozens of states have approved that, and then funding begins. So we are at the funding stage for dozens of states and territories and the process is underway. So we are at the very, very end and we expect this to go rather swiftly from here.

Mr. Secretary, I indicated in my opening statement my concern about the outcomes, and you talked about long-term success and your solution to making sure long-term success occurs is guidelines, guardrails that you talked about in your opening sentence. So that one of my concerns is long-term success, is it 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. And I've always tried to be neutral in my choice of what is the method by which broadband should be delivered, but 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 particularly their rural needs. The second concern that I have that I want to highlight is again what is to happen to the unused broadband funds? I think 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.

Alright, so the last question is starting tomorrow, we are having a listening tour. Each and every state can cover every single person that they put in for at the performance standards that you set for $21 billion less. So now we are listening to what are the best ideas to spend that money. We are going to spend that money, that money you have appropriated, and we're going to use the best ideas. What are those best ideas? We're going to listen starting tomorrow because we have executed this plan. Kansas has done a great job in examining the right technology for Kansas, right? They decided that with Kansas, fixed wireless was the best performing service. 67 percent fixed wireless, fiber was 29.5 percent, and for Kansas, satellite was only best for 3 percent. So Kansas did a great job analyzing and examining, and your broadband office did a wonderful job, worked hard, competed this out, and really delivered the best performance metrics for the right price for America, and I commend them.

My two follow-ups would be you say the money is going to be spent. Would you finish that sentence by saying on the deployment of broadband? That money will be spent on the broadband deployment across the country, true?

The money will be spent according to the statute, of course.

And I assume the statute tells you to spend it on broadband deployment?

I don't have the statute in front of me, but we are going to hue closely or exactly, actually, the easiest way to say it is we are going to hue exactly to the statute.

And there were comments from the Department of, I think, Commerce and others about the money would be returned to the Treasury. That is not the plan?

That is not the plan.

And then finally, you indicated Kansas did well and you indicated the percentages of technology which were used in each category, and that was a decision that I can be assured was made by Kansas, not forced upon them by the Department of Commerce?

That is correct. You will hear when we talk about other states, they've done it completely differently. Each state chose to do it their best way for their state, and Kansas did a great job.

Thank you. Senator Van Hollen.

Thank you, Mr. Chairman. Secretary Lutnick, as I said in my opening statement, you led 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. But as I'm sure you know, the Epstein files show a very different record of interaction. Why do the Epstein files show you coordinating a meeting and planning a visit with Jeffrey Epstein on his private island in December 2012?

Thank you for the question. I'm glad to be here to make it clear that I met Jeffrey Epstein when he moved, when I moved to a house next door to him in New York. And I met him then. Over the next 14 years, I met him two other times that I can recall. Two times. And that is none for six years. So six years later, I met him, and then a year and a half after that I met him and never again. Probably the total, and you've seen all of these documents, of 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, okay?

Secretary Lutnick, I think you understand the root of concern here. It's the way you described very emphatically your first encounter with him in his apartment, said you were disgusted, would never have any contact with him again. Did you in fact make the visit to Jeffrey Epstein's private island?

I did have lunch with him as I was on a boat going across on a family vacation. My wife was with me, as were my four children and nannies. I had another couple with, they were there as well with their children, and we had lunch on the island. That is true, for an hour, and we left with all of my children, with my nannies, and my wife all together. We were on family vacation, we were not apart. To suggest there was anything untoward about that in 2012, I don't, I don't recall why we did it, but we did it.

Mr. Secretary, again, I as I said, there's not an indication that you yourself engaged in any wrongdoing with Jeffrey Epstein. It's the fact that you believe that you misled the country and the Congress based on your earlier statements suggesting that you'd cut off all contact when in fact you had not. When you visited the private island, did you see anything inappropriate during that visit?

The only thing I saw with my wife and my children and the other couple and their children was staff who worked for Mr. Epstein on that island.

And you realize that this visit took place after he'd been convicted, right? I mean, you made a very big point of saying that you sensed that this was a bad person in 2005. And then of course 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?

No.

So the information that suggests that there was a dinner with Woody Allen and Woody Allen's spouse at the Epstein residence, that's, there's nothing to that, is that right?

I actually don't know what you're referring to. There was, look, I, I've looked through the millions of documents for my name just like everybody else. And what I found was there was a document that says that I had a meeting with him on in May, I think, for an hour for at 5:00. Not dinner or otherwise, for an hour at 5:00.

Alright. There's also a reference to the fact that Epstein had expressed an interest in meeting your nanny. Do you know whether Jeffrey Epstein ever met with your nanny?

No, I saw that. I had no idea what that was about. Had nothing to do with me as far as I know.

Would you, Mr. Secretary, be willing to ensure that the file is complete to share with this committee and the Congress your own records, any records you have that relate to Jeffrey Epstein?

I will surely talk about that. I hadn't thought about that. I have nothing to hide, absolutely nothing.

Alright, well thank you, thank you, Mr. Chairman. Again, I do think this goes right to the heart of the question of credibility based on the Secretary's earlier statements. I hope to pursue some of the other issues in front of the hearing as we go on. Thank you.

Thank you, Mr. Chairman. Thank you, Mr. Secretary, for being here. Mr. Secretary, the Census Bureau is under your jurisdiction, is it not?

Yes, it is.

And the Census Bureau is in charge of defining what it means to be poor or in poverty in America, is that correct?

I think it does economic analysis for America.

But it also defines poverty level, does it not?

I don't know if it's the defining...

Well, you need to look, because it does.

Okay.

How, if you know, this isn't a quiz, if you know, what's the percentage of Americans who live at or below the poverty level?

I don't know the percentage.

Okay. It's around 11 percent. It's been constant. Now, when the Census Bureau defines poverty, they do it by income. You're aware of that. When the Census Bureau defines poverty using income, they only count income that the individual earns or cash income that the individual gets from the federal government. Is that correct?

Well, it includes all sources of their income. I mean, that is the purpose.

Yeah, their income and cash income from the federal government. Is that correct?

Oh, meaning does it include income that they receive from the federal government? Cash? I think so.

Yeah. So, so if a person makes $11,000 a year, that's considered toward poverty level, but if the person gets a cash payment, let's say in the form of SSI or or TANF, that counts too. Is that right?

I'm not certain.

Yeah, it does. Okay. Are you aware that your agency doesn't count non-cash payments from the federal government in defining poverty?

I am not.

Are you aware that your agency doesn't count refundable earned income tax credits, or food stamps, or housing subsidies, or utility bill subsidies, or Medicaid, or free school meals? They don't count that. They call it a non-cash payment and it doesn't count. You aware of that?

It sounds to me that you and I are going to spend some time together and we're going to change it, but I did not know that and it sounds like something that we should add.

And and the purpose of my question is not to punish people who need help. The American people are the most generous people in the world. That's why we spend $1.4 trillion a year helping people that other countries would allow to die in a ditch. But your Census Bureau says it's 11 percent who live at or below the poverty level. That's a lie. It's 1 percent. If you count, as any person with a brain above a single-cell organism would, cash and non-cash payments, they're 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 percent instead of giving them a curb stomping and calling them selfish. Let me give you a real-life example here. Let's suppose you've got a mom and two kids. According to your Census Bureau, the poverty level for her is $27,000. She makes $11,000 a year, let's say. So she's below the poverty level. But she also qualifies for $3,400 in refundable tax credits based on her $11,000 salary, $9,200 in food stamps, that's for her and her two children, $9,500 in housing subsidies, $900 in utility bill subsidies, $16,000 in Medicaid, $3,100 a year in free school lunch, and $6,600 a year in TANF. That's $64,100 a year tax-free. Is she living in poverty?

Doesn't sound like it.

No. But your Census Bureau counts her as being poor. I'm not saying take away her benefits. I'm saying give the American people a little credit. And I really think you need to change the definition to to a definition that looks like somebody designed the damn thing on purpose. Final question, I'm going to hurry, Mr. Chairman. Why don't you just use satellite internet service? Why don't you just use Globalstar or Starlink? You said the cost is $4,000 per person in Louisiana. For 600 bucks, you can buy a Starlink terminal. Why don't you just do that? And do it across America and save a bunch of money?

The states were responsible for determining the best outcome, and sometimes fiber in a dense location can be economically better. Sometimes satellite does not work best on geography.

It can't be cheaper. That's impossible. It can't be cheaper.

Math, math is each of the states did their best. We worked it out with them and we moved on.

I just don't understand. You can buy a, I'm not saying do Musk, there are others that throw it after bit. But 600 bucks for a terminal versus $4,000 for cyber optic, I mean for fiber optic. This is taxpayer money. I'm done. I'm sorry, Mr. Chairman. Madam Chairman. I should have known it's you, Shelley. You're much nicer than Jerry. He would have cut me off.

Senator Shaheen.

Thank you, Madam Chairman. Mr. Secretary, thank you for being here. In your opening statement, you say that states chose to do it, meaning the BEAD program, the best way for their states. In 2023, NTIA allocated $196.5 million in 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 broadband infrastructure by prioritizing fiber optic cables and hybrid fiber coaxial technologies. And I appreciate Senator Kennedy's question about satellite transmission because in some places it does make sense, and as you pointed out that in your opening statement. But the reality is there are a lot of places where it doesn't make sense because in states like New Hampshire, satellites are unreliable in severe weather. They have a shorter lifespan and they require more maintenance than fiber optic cables. So as you pointed out also, in a lot of places, it's actually better long-term to use those fiber optic cables. And one of the reasons that New Hampshire submitted a new plan was because on June 6, your office said they had to come up with a low-cost technology-neutral approach that's required by the new guidelines. But that approach was not what the state had determined was the best way to connect. And now we see that SpaceX in June 2026, who had was in negotiations with New Hampshire, has sent a letter to states with a set of demands that would ensure Starlink receives federal grant money even when residents don't purchase Starlink broadband service. The demands would also guarantee that SpaceX gets paid even if it doesn't reserve large portions of Starlink network capacity for homes in the areas that are supposed to receive BEAD-funded internet service. So my question, Mr. Secretary, is given that and given concerns that we're seeing in the state of New Hampshire, are states going to be able to renegotiate with ISPs on the requirements of the program if they're dealing with a company like SpaceX that is not agreeing to what has been determined to be the requirements of their grants?

Thank you. New Hampshire, we agreed with New Hampshire in November of 2025. So they were one of the first and one of the fastest to go for the new guidelines and they did an excellent job. 67 percent is fiber because they determined that was the best outcome. 21.5 percent was satellite and then the fixed wireless was about 11 percent. So they used a technology-neutral approach. They saved a lot of money and they've done a, your broadband office did a great job. So I just wanted to...

There's no doubt about that. But 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 don't accurately reflect the households we need to reach if we're going to ensure 100 percent access to broadband service. And that's the issue that I'm raising with you because right now we have a plan that has been revised and as you point out, it has been approved. But the reality is over 1,000 households or 1,000 locations, it's about 1,106 I think, depend on accurate, adequate connections to Starlink. And right now we're engaged in a debate over whether Starlink is actually going to provide that service that we're trying to contract for. So what I want to know is if we have an ISP that is not willing to abide by the terms of the agreement, can states go out and get a new ISP that's actually going to provide by the terms of the agreement?

It is my understanding that SpaceX, as you correctly say, sent you a rider to modify the terms. They sent a number of states. That rider is outside of our guidelines, is outside the statute, and it is rejected by us. There will be no rider. And if SpaceX does not want to live without the rider, then you will definitely go 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. So we are on the same side.

Thank you. I appreciate that.

Thank you. I'm going to proceed with the questioning and thank you for coming today and thank you for approving West Virginia's plan in November. I know you and I talked several times about this as we are and have been historically one of the lowest deployed broadband states. Our state in the initial offering, and I think I need to remind everybody, this is almost five years, through no fault of your own, it was so slow coming out of the last administration that when you all then asked to have it rebid, it appeared like you were putting the slow tracks on it. It had been slow-walked all the way through and all of us here on the dais are telling our constituents it's here, we're going to get connected. So there's a lot of not anxiety but a lot of anxiousness for us to get this really done. So I appreciate you moving as quickly as you did under the new parameters. But anyway, we got 1.2 billion, which is one of the largest awards in our little state of West Virginia. But on the rebid, we should have about 576 million remaining. So I joined with Senator Wicker on the Success for BEAD Act on the redeployment of the funds. And there are still even we're going to have 76 locations that still may not be served. And we are, I think, 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. So I guess would you commit to keeping leftover funds from the BEAD program within states or what are you looking to do with those leftover funds? And there's still a great need beyond what's in the state plan.

So thank you. I want to start by saying West Virginia was swift, fast. Your broadband office did a superb job. They went to the guidelines and they got it done swiftly and I just want you to know you should be proud of them. The idea for this administration is to listen to the best ideas. Listen to yourselves and I'm 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 from them what is the best idea. We have executed universal broadband for 21 billion and saved $21 billion of American taxpayer money. This is an excellent problem to have. We're going to sit together and we're going to design the best use of this money.

Yeah, I think one of the things you're going to hear repeatedly is the higher cost of permitting. Obviously to permit some of the deployment of the broadband. Many states and ours included are, and this is a political battle that I don't need to get into from this position, is the cost of attaching to the poles with your utilities. It's state by state in some cases and hasn't been settled. So I think the redeployment funds as the price of permitting goes up and some of the costs go up and the cost of pole attachments I think is something that you're probably going to hear tomorrow. I did have a question similar to what Senator Shaheen asked about potential defaults. If we have some small ISPs or maybe it's the satellite providers decide that they just can't do what they've committed to do. And if I understand what you said, that you are going to be looking at this so that we can have a reuse kind of so that we can reach those locations and our state's going to be able to look at a rebid on that. Is that what you're saying?

We have seen providers try to bully the states with riders that are outside of our guidelines. They will not be accepted. Okay, so therefore if a provider cannot live up to their promise to you, we will work together, you will replace that provider, and we will make sure you can do that.

Yeah, and I can answer Senator Kennedy's question for you on why you wouldn't do satellite everywhere. Does he have one mountain or valley in the state of Louisiana? I mean, you can drive down the side of one of our mountains and totally lose any kind of line of sight on a satellite pretty quickly. I mean, we'd love, but I know the technology is moving much quicker and much faster than five years ago when we were first developing these plans. So I appreciate you for taking that into account, looking at our terrain. It's a difficult terrain to build. There's lots of rock and I know that was one of the things that we went back and forth on with NTIA to try to figure out the best way to do it. So I appreciate the broader look at the circumstances of a state that has a terrain such as and geography such as mine. But anyway, thank you very much for being here and I see the chair's back. So we'll go to Senator Coons.

Thank you. Thank you, Chair Moran, Ranking Member Van Hollen. Secretary, we're here today to talk about the BEAD program. Delaware is the lowest mean elevation state in America and one of the flattest states in the whole country, so delivery of broadband hasn't faced any of the challenges or complications in more rural and mountainous states. And my comments on BEAD are simple. The plan for Delaware has been approved, it's moving forward quickly, and I think this is overall for my state a success that came out of the bipartisan infrastructure bill. So since I've got the Secretary of Commerce in front of me, I'm going to touch on IP, AI chips, and tariffs if I might in the few minutes we have. I am impressed with Director Squires' leadership of the Patent and Trademark Office. I voted for him and his efforts to restore the PTAB process to what Congress intended in the America Invents Act, a faster, cheaper alternative to going to district court. I support, I led a bicameral bipartisan letter in support of his regulatory efforts and I'd urge you in the administration to support my PREVAIL Act with Senator Tillis so we can codify legislatively what Director Squires is trying to do with regulation but could be reversed by the next director. I am very concerned though with reports that you're considering a value-based patent tax that would charge inventors different fees based on the PTO's valuation as a holder yourself of hundreds of patents. I found this puzzling. It is very complex and difficult to value a patent. I was in-house counsel to a global company that had a very large patent estate and figuring out how we would administer our patent system and potentially impose a crushing tax on American innovation, something no other major country does, struck me as puzzling. The IP community never agrees. I mean literally from small inventors to big tech, they agree on this, that this proposal would be a real negative. So could you just 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?

We will avoid harming innovation by not doing a value valuation or any valuation fee or tax on patents. That is not a plan, that is not going anywhere. We are totally on side. That is not a thing the patent office is going to do is try to say this patent is worth X. How in the world could we do that? How in the world could anyone reasonably do that?

It struck me as a completely unworkable proposal. I'm glad to hear that. And we are on the same side with that. Let's move ahead with the defining technology of this century, which is artificial intelligence. The Nvidia CEO Jensen Huang said on CNBC recently, if U.S. AI companies could have twice as much compute, their revenues would go up four times. These guys are so compute-constrained, the demand is so incredibly great, he went on. I couldn't agree more with Jensen on this. Nvidia's own CEO admitting that while they're 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. And in that context, I was glad to see your department issue regulations January 13 that said Commerce would not grant licenses for chip sales, particularly these advanced AI chip sales, to China if that export would delay Nvidia's ability to meet U.S. demand. Just to be clear, you're committed to not exporting AI chips to China until our own world-class American firms agree they have all the chips they need per the terms of that regulation. Is that what you're intending?

I think you should be a little just do a little detail. So Nvidia does not make chips, it designs chips. I know. And they are primarily made in Taiwan. Correct. Right. So we agree that demand by American firms is vast for these chips and we don't want to do anything that stands in their way.

Good, because I think selling AI chips to Chinese companies, allowing the licensure of the sale of AI chips to Chinese companies like DeepSeek or Tencent, which DOD's classified as a Chinese military company, would dramatically harm our national security interests. Last, the cost of housing is one of the things I hear about the most from Delawareans. President Trump ran on lowering folks' costs and the cost of housing is not going down. We need to build millions more homes and the homebuilding boom we need is in part not happening because of tariffs on lumber, drywall, kitchen cabinets, bathroom vanities. I think the homebuilders estimate they're raising the cost of a new home by more than $17,000. Would you support legislation to temporarily halt or provide for a tariff exemption process for specific tariffs on homebuilding supplies?

It's a broad 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'm glad to sit with you and your office to talk about it. What do 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.

Well, thank you. I look forward to the conversation. My concern is that overwhelmingly the supply of things like softwood lumber from Canada and wallboard or gypsum board from Mexico are being constrained by tariffs. These are close allies that work with us through the USMCA framework. They've pushed back hard on the tariffs that are being imposed on their products that are exported into our market. Canada's the largest export market for most American states. I think at a time when there's very little we can actually do in the short term to reduce the cost of housing, this is something we might work together on. Last, a closing comment if I might, 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 reached that conclusion upon meeting him. But it troubles me that you took your family to lunch on his island, that you had appointments with him. Please disclose everything, put this to rest because this is an issue of grave concern to my constituents. President Trump ran on releasing the Epstein files. You said casually, well, I looked at my name and how it appeared in them as does everyone. No, everyone isn't worried about their names being in the Epstein files. I know he was your neighbor, that was a coincidence, but please disclose everything that's relevant here so that we have a chance to work together and move on.

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 and none thereafter. And in the presence of my wife and as Senator Van Hollen said, under no circumstances is there a single word that I've done anything remotely wrong in any possible regard. I did not have a anything you could call a relationship, anything you could call an acquaintance. I literally met him three times over 14 years with widespread in between. That's all I can remember, that's all there is in the documents. I didn't look through the documents with any fear whatsoever because I know and my wife knows that I have done absolutely nothing wrong in any possible regard.

Well, thank you for answering our questions today.

Senator Merkley.

Thank you, Mr. Secretary. We are finding in Oregon that at places where we were trying to get microwave relays that it is now workable to use satellite for broadband and in my rural town halls, people are starting to give reports and strategies are adjusting. But still, a variety of strategies are appropriate in different places as you've pointed out. Federal poverty level. My colleague suggested that the 11 percent is an overstatement of people living in poverty. I would suggest exact opposite. That federal poverty level calculation, are you familiar with how that's put together?

Not exactly as I sit here.

Okay, well, when it was put together, food was approximately one-third of the cost of basic living. So it's based on food times three. That's the calculation. So over that time, the other components that are necessary for life, like housing and healthcare and daycare, have gone up enormously. When you take those into account, the 11 percent really understates dramatically the number of families in America that are struggling with the fundamentals. I'd like to encourage you to take a look at that formula. I think it should be rewritten to reflect what the kind of the basket of goods are necessary to have a basic life in America so we could have a much more accurate picture. This formula explains why folks cite, well, not very many people are struggling, isn't that great? When the reality on the ground, I live in a blue-collar community, I travel every part of my state, the reality is a tremendous number of families are struggling. And if we don't adjust our policies to understand that and we don't even have an accurate way of calculating it, we're really failing to understand the basic economics and challenges in a families in America.

I'm happy to sit with you and go through the details of that. I think more knowledge, more specificity is always helpful and I'd appreciate going through that with you.

Great, I look forward to that and I just encourage you to have your team look at that formula and then look at what a much better formula would be to reflect what's going on in our country. Last time we talked, we talked about the manufacture extension program and you agreed to get together for a meeting. But before that meeting was planned, the Oregon MEPs were funded, which was great because small business striving to do manufacturing is essential to a vibrant economy. But only part of that money has been dispersed in Oregon and I understand some of the grants in other states have not been dispersed at all. We're now in the situation where in fiscal year 25, we had 175 million allocated to the manufacturing extension program. Do you know how much of that's been dispersed now?

I do not know offhand.

Can you try to get the rest out the door? Whatever hasn't been dispersed.

I'll be glad to look at it and get together with your office and discuss it. Sure.

Yeah, thank you. And I really would like to see for what we're now doing for FY 26. I think I'm not sure where the disconnect is because the President talks about wanting to have manufacturing. I've done a Made in Oregon manufacturing tour of my state, done 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 they sometimes they become big businesses over time. Why is it that the MEP program hasn't been like a shining star of like the first thing that you wanted to get out the door?

I think the problem has been that the Inspector General's office in many of these locations have had problems with the offices that executed that. There's been more than a than you would expect issues of waste, fraud, and abuse from these offices. And I think the objectives of the program are sound. I think the execution needed better oversight and I think that's one of the things we are deeply focused on is trying to clean that up and that has been an issue that we've had to address.

Great. So I appreciate you taking a close look at that and look forward to this. Well, last time we were planning to meet, you took action before we met. That was great. I hope that can happen again. I want to just summarize the reason and I can hear the angst in your voice over the Epstein files. The reason people are bothered is because last year you said you'd cut off all contact. But there are eight instances of interaction in the files after 2005. In 2009, you wanted to speak with Epstein, you asked for his phone number. In 2011, there was the appointment for drinks. In 2012, you were planning a trip to the private island with your family. That sounds like somebody you know well enough to call up and say let's get our families together or let's visit each other. In 2013, the exchange of information about an article relating to intellectual property and gambling, topics that you have an interest in. You both signed up for an investment. It's not clear if you had conversations about that same investment, but you were neighbors, you made the same investment, maybe, maybe not. And then in 15, Mr. John Paulson in 2017, Mr. John Paulson wrote to Epstein saying, hey, why don't you contribute to this event? You're a close friend of the Lutnicks and it's honoring Lutnick. Again, that may not have been you personally involved in that, but I know from many events when people are raising money, they say who all do you know that might be contributing if I'm honored and one supplies a list. And so I guess collectively it suggests that when you said you cut off all contact in 2005, that was probably not a full and complete accounting. And again, no suggestion of wrongdoing on your part in propriety if you will, but I do think kind of restating that and clarifying to people that you understand that statement you made last year might not have accurately portrayed. And then there was also the communication regarding the museum across the street being put up and that action needed to be taken and what should we do? So that's eight different instances. Just encourage you to be completely frank and open with everyone, correct the record as needed, and again, no wrongdoing on your part. Thank you.

[Inaudible.]

Thank you, Mr. Chairman. Welcome, Mr. Secretary. It is nice to see you here today. Look forward to being able to visit with you about some of the programs in the Commerce Department. So thank you for being here. In December, I wrote to NTIA with over a dozen of my Senate colleagues, including Chairman Moran. And this letter urged the agency to ensure that states would be allowed to retain and to maximize their BEAD funding allocation in compliance with the bipartisan infrastructure law, which I supported. I know Chairman Moran has also touched on this in his questions with you this morning. But first and foremost, do you agree that states should be able to retain those broadband infrastructure dollars as is consistent with the law?

We will hue to the law for sure. I think the best use of those funds, I think we need to talk about and try to come up with the best idea. But we have saved the American taxpayers 21 billion and I think it behooves us to work hard to make sure the next use of those funds are the best they can be for the American taxpayer.

As it and I agree that you need to follow the law. But with the bipartisan infrastructure law, I personally think it was laid out pretty clearly on how those funds need to be maximized and I happen to think that states are the places that we experiment. I'm 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 states. So I look forward to being able to visit with you more about that and make a good case to you about it, sir. So thank you. 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 BEAD non-deployment dollars. Optimizing last-mile deployments with last-acre connections is critical for agricultural states like Nebraska. This eligibility would leverage the deployment plans that NTIA has already approved, enhancing networks and dri... ...driving economic development throughout rural America. These are goals that the infrastructure law explicitly outlined. So will you work with me to ensure that precision agriculture considerations are addressed within eligible uses for the remaining BEAD funds?

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.

Wonderful. I'd love to have you 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's going to not just benefit ag producers and states, ag states like mine, but how it's going to be able to manage our resources, whether it's water or land, and feed the world. So let me host you in Nebraska.

Sounds like fun. Yay. Okay.

And Mr. Secretary, after the benefit of the bargain rounds, there's estimated to be over $20 billion in uncommitted BEAD funding funds that are remaining. And as you imagine for senators like me who strongly supported the infrastructure law, we believe that funding needs to be put to best use again by staying in states to close that divide. I know you've talked about how NTIA has a public listening session tomorrow to inform its 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?

Sure. The department has received ideas, for example, to invest in poles in locations that don't have sufficient poles to get access directly to communities. That would be an example. Another example is to invest in public safety so that the police, the firemen, the local community can do a much better job communicating with each other in times of crisis. So that would be another example of how you could do better investment in the communication infrastructure. So those are two examples that just come to mind quickly, but tomorrow we will get a broad group of examples and I think we'll be much better served just talking to you and yourselves and your staff if they'd like to talk to us, we'd be glad to learn their ideas.

Great. You know, I think telehealth is a wonderful investment to be able to help communities across the board. Cybersecurity, obviously you're very well aware of the issues that businesses, communities, government faces with regard to being hacked, interfered with on our systems. So cybersecurity I think is another great area to be able to look at as well. So I look forward to having conversations with you and I appreciate your work. Thank you.

Thank you, Mr. Chairman. Hello, Secretary Lutnick. I have a couple questions related to the BEAD program, but I have another question or a couple that I would like to ask you about what I think is probably one of your principal responsibilities as Secretary of Commerce, and that's the conducting of the U.S. Census. I'm ranking member of Homeland Security and Government Affairs. We oversee that and as you know, it's a monumental undertaking that requires an awful lot of upfront effort. And last week, some information came to my attention that I'm concerned about is that the Census Bureau announced that it's going to cancel four of the six sites for the 2026 census test, which was supposed to start next month. Canceling these tests and firing the people in your department who were already hired, they're already there, hired to complete it, with no advance notice, I think first off is wasteful at best and worse, it seems as if there could be an effort to sabotage this effort, which I hope is not the case. I believe that we can't have an accurate 2030 census. It's one of the largest, most complicated tasks in our federal government without proper preparation. We've seen that over many, many years. This is a template that we've had to follow. We need an accurate count of everyone who lives in America to ensure that communities and families receive the funding that they need for schools, for healthcare, for first responders, infrastructure, and so much more. And fully carrying out these tests is a necessary part of making sure that we're able to actually pull that off. So given these facts, I just need a yes or no answer. Will you commit to undoing the cancellation 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?

I appreciate the question and I agree with you, the test is vital and important. But I'd like you to understand, we are for the first time ever going to use the post office. The United States Post Office is going to execute the 2026 test and the survey we're going to use is the American Community Survey. So we are going to go out with a more sophisticated census and we're going to use the, we've made a deal with the post office, so we're going to pay the post office to execute that. But 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 already pay for the gas, and they already know where everybody lives. So this is one of my big moves for efficiency. We are testing 2026 to see can the post office do it because our objective is, I think the post office can do the census in 2030, do a better job because they go to 169 million homes every day. They should be able to do the census brilliantly and for far more efficiently. And the test, as you've correctly pointed out, is coming very, very shortly in 2026. So I think, you know, I'm happy to talk to you about it and go through it with you together so you can best understand what our plan is.

Well, I appreciate that because obviously this is a big change and if it doesn't go well, that has catastrophic impact. So I would hope you would also commit as you're doing this and moving forward is that you will make all the planning results of the 26 census test available to the public and to Congress so we can fully evaluate this together and that we can perform our oversight function. Would that be something you'd be willing to agree to today? Fully transparent with us.

I'll certainly 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. Let's see how it goes, but I'd be happy to meet with you and your staff and go through it because that makes sense.

Yeah, I'd appreciate it. And if it's not going well, it's hard to, time is a-wasting, so it's important for us to really have a good sense of what's going to be going on.

Well, that's why it's vital, sorry, but that's why it's vital to do the test in 2026 for the 2030 census, right? That's why this test is vital.

And it's also vital that we assess it fully to understand it's actually working so we can make a course correction if necessary. Also on the topic of the census, it's 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 past efforts to include a citizenship question on the census and it's because the Constitution, it's a great document, the U.S. Constitution requires the Census Bureau count, quote, "the whole number of persons in each state," end of quote, regardless of citizenship status. The Census Bureau's own research, your own Census Bureau's own research has shown that asking immigrant questions on the census will make it less accurate by making people, including citizens, less likely to participate. And that'll be especially true now given the racial profiling, abuse of power, the violence that Americans are witnessing on the streets of America right now. And so 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, do you, will you commit to leaving a citizenship question off of the questionnaire? Will you take that off?

It's a, Senator, it's a longer answer. I don't know how you'd like me to play it. It's not a yes or no. Sorry.

Without objection, Mr. Chairman, he could answer the question. It is an important one.

Yes, go ahead.

You correctly point out that citizenship is not in the Constitution for the apportionment, right? The most important thing, which is the 435 seats and the 435 electoral votes are not predicated on citizenship. That is not a, it's not a necessary factor to determine apportionment. Whether what the questionnaire is, I don't know and we've not decided. But I agree with you, citizenship is not in the Constitution for apportionment.

But just to the question, the other part is that your own department has evidence to show that it has a chilling effect on people even participating in the census, including, including citizens. And if they're not participating, then that is going to have an impact on their local community's ability to access public health benefits, education benefits, and the long list, which I know you're very well of. It is very troubling and it's based on objective studies done by the Census Bureau. Having that on that test is going to undercount citizens based on research that has been done. Doesn't that trouble you?

I'm not familiar with that being true, but I will look into it.

Appreciate it. Thank you, Mr. Chairman.

Senator Reed.

Well, thank you very much, Mr. Chairman. Welcome, Mr. Secretary. Mr. Secretary, you've referred and referenced that dozens of states have submitted complete plans for deployment dollars under BEAD and signed final agreements. Rhode Island, my state, has done that. They've signed their final agreement nearly two months ago, but they have not got any funding and they have no indications of what lies ahead. Can you clarify the situation? What's the hold up?

If your state has signed the agreement, they should be able to draw funds. There is nothing, once we send you the document, if you sign it, you can draw funds from the grant, grant process. There should be nothing in the way and I'm happy as I leave here to go find out how I can help you fix that because if you've signed that, there should be nothing in your way to receive the grant proceeds.

Thank you. And you, if you want a person to deliver it, Newport's a nice place to deliver it.

Yes, it is.

Yes, it is. Until you became secretary, you led the investment bank Cantor Fitzgerald. And Cantor Fitzgerald is still maintaining significant business ties with Tether, a stablecoin issuer domiciled in El Salvador. And under the Genius Act, which was enacted last year, Tether is permitted to freely offer and sell its stablecoin token in the United States 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. And I think this is a huge risk because Tether has been identified as helping to fund Hamas, North Korean WMD proliferation, ransomware attacks, Russian arms deals, etc. Now, you said in your confirmation hearing, quote, "I believe U.S. dollar-backed stablecoins should be fully audited," close quote. Does this include Tether? And if so, why has Tether not been audited?

Two things for you. I am, I am of course completely divested from all things business. I am just worried about the United States of America. My understanding is that Tether has launched a U.S. fully approved under the Genius Act stablecoin. So I think the only Tether stablecoin in America will be the fully approved under the Genius Act stablecoin. And generally speaking, I absolutely agree with you, Tether should be audited. I don't have anything to do with it, but I agree with you that Tether should be audited.

Well, I, we both agree and so I think it's an indication perhaps that 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's a topic probably for another hearing. Let me move on to the value of the dollar, Mr. Secretary. It's hit a four-year low. In fact, it's fallen 10 percent since the administration took office. And general question, how do we maintain our economic prominence in the world with a weakening dollar? I know some people will point out and say, well, that's good in some respects because it, it brings investment to the United States jobs, but in addition to a weakening dollar, we've seen that manufacturing jobs are falling too. So what is, what is your response to these issues about the falling dollar?

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, right? That's, that's the idea. It's more expensive for everyone else in the world to buy our products and it's cheaper for us to buy theirs. When the Trump administration and the president called out this fact that we were running $1.2 trillion trade deficits, I mean the rest of the world was selling us stuff and using our dollars to buy our country from beneath us, right? They, remember in 1985, we owned more of the rest of the world than they owned of us. And now the rest of the world owns 26 trillion more of us than we own of them. So the idea is a, the dollar where it is now is just more natural. We are exporting more and that's why our GDP has grown so much, right? We had 4.4 percent GDP growth in the third quarter. I think, I think personally, my opinion is I think the fourth quarter will be over 5 percent and I think we reasonably could get over 6 percent in the first quarter because our exports are growing, the weaker dollar, our imports have shrunk because of tariffs, and that's GDP growth.

Well, you say that our economy has been sort of stepping back from our investment, purchasing, etc., but the president touts every time he meets with a foreign leader how much money they're going to invest, i.e., buy American property, buy American facilities, etc. Is there a contradiction?

Building in America rather than us buying their products that they build overseas. When you build a product overseas, you're employing your, these foreign countries' people. When you build in American, in America, you have to employ Americans to build the product. You build in America and you employ Americans to build your product is something that the president is pushing for. Stop importing, let's build manufacturing in America. You're going to see enormous manufacturing job growth coming over the course of 2026 in my opinion.

We haven't seen it yet, but I hope you're right. May I ask one more question, Mr. Chairman? Thank you. The Trump administration has approved sale of Nvidia H200 chips to China. I can tell you, I've just come from the Armed Services Committee. I've served on that committee for 30-plus years. Talking to uniformed military officers, they are quite concerned. In fact, they believe this is a very dangerous situation of giving China literally a leg up in technology. And Commerce is requiring Nvidia to self-certify that the H200 chips sold to China are not for military or intelligence end use. Well, how will you at the Department of Commerce track the final end use of these chips to ensure that they're not used for military intelligence uses and and how will you enforce these conditions?

The license terms are very detailed. They've been worked out together with the State Department and those terms Nvidia must live with and must hue to.

Do you believe the Chinese will live with them? Do you trust the Chinese to to follow up and to be the contract that they've executed with Nvidia?

I'll leave that opinion to the President of the United States.

Well, I think it's a tragic, difficult, and wrong decision because again, not only will the Chinese exploit as they've demonstrated for the last several decades any type of intellectual property they get their hands on, but I think also this might apply to the proposed sales to the United Arab Emirates because it's quite easy for them to include it in a device, sell the device to China, have the Chinese take apart the device and get the chip, and they could say, oh, we didn't sell the chips to China. I think you've got a serious problem here and without oversight by the Department of Commerce, real oversight, these chips will be misused to the detriment of our military forces. Thank you, Mr. Chairman.

Thank you, Senator Reed. Mr. Secretary, just I'm going to ask a question or two and so is Senator Van Hollen and then we'll be done. You have used the phrase "allowed by law" sufficiently a number of times that it caused me to look to see what the law says when talking about how the unspent money will be spent. And there is a long list of items under use of funds. The last one is number six: 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 law? Is that discretion?

I think the idea is to meet with the constituencies yourselves and try to come up with the smartest use of the funds. Make sure it stays within the statute of course, but what is the smartest use? We have proven I think to this committee that we are good stewards of the American taxpayer's dollar and we will continue to do that. So we will work together to come up with the best ideas. I suggested a few that had just come to us, but I think we will work it out in a way that is is smart.

Do you have any doubt but what there will still be significant portions of the country and consumers that when BEAD is fully implemented, absent the quote "unspent funds," there'll still be plenty of opportunities to provide broadband to the American consumer? Or will you do you think that BEAD with the money that's been made available will meet the needs of the country for broadband services?

My understanding is each state gave us the complete list, 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 date we did it. That that is the objective and that is what I think we are going to achieve. We are going to give broadband internet connectivity to every single person that every state said was in need. We will deliver.

And that does not necessitate the use of the unspent funds to reach that goal.

It does not and each of the broadband states, the broadband offices of the states agree.

So in my opening statement, I talked about the amount of money allocated to Kansas originally and then with the change in the the direction, the policy, that it was much less was demanded. So that less money presumably meets the goal of providing everything that Kansas needs. It just took less money to do it.

Correct, because we used competition rather, Biden administration had selected one way to do it and there was very little competition and a huge amount of red tape. If you bring competition in 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. This is universal coverage at a much better deal.

My I think my final question and then I'll turn to Senator Van Hollen. The BEAD program or any federal broadband deployment program, those resources, those grant dollars are taxable to the provider that receives the funds. And under current law, when a broadband deployment, a provider is initiating the plan to rely upon federal funds, that provider has to account for 21 percent of that award being paid back in federal taxes. And 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. I think you've testified or indicated before you support that legislation. I'm back at the at the making the effort to see we get it passed and I want to get your reaction and see if my understanding is that you're supportive of eliminating the tax on the proceeds of grants to those providers. You still support that position if you previously did.

I think that kind of opinion is best served with yourselves, right? Whether you choose on an appropriation that you've given, we've executed it, whether you think we should tax it or not, I'll leave to your committee. I think it is best served by your committee.

Well, unfortunately, we'll have to leave it to another committee than this one, at least initially, 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 this profitable for the provider.

If you let us give it out tax-free, I promise you I could do it for less than 21 billion.

It's another option. Senator Van Hollen.

Thank you, Mr. Chairman. I just want to start by sharing the concerns and statement made by the chairman. I think you've 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've heard you refer on a number of occasions to new ideas. Having worked with the states, including my state of Maryland, for a long time on this, Mr. Secretary, I think the important thing is to make sure that they get the benefit of the bargain and I think you're hearing on a bipartisan basis this committee is going to scrutinize that very closely. There's just 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 you went on his yacht, is that right? Or boat? No.

No. I didn't say that.

At that time, I think you mentioned that you were accompanied by your wife and kids and and nannies. My question is, do you know whether the nanny that you had on that trip was the same nanny that Jeffrey Epstein expressed interest in meeting?

No, I have no idea about that whole thing. I don't recall it having anything to do with me and I don't know that. No.

It's just, you know, this this guy was a convicted sex offender and obviously not a great place for kids and nannies. Was Ghislaine Maxwell at the house on the island at that time?

No.

So turning now to the issues of the high-speed internet and broadband, let me just say I appreciated your very emphatic response to Senator Shaheen about Starlink, SpaceX, or any other entity not being able to change the terms of the deal after the fact. I thought that was a really clear and defined statement. So I do want to ask you about another rider, you described that as a rider, that seems to have been referenced at least in the president's executive order with respect to AI. The order directs you, the Secretary of Commerce, to study whether the department can withhold federal rural broadband funding from states with unfavorable AI laws. Mr. Secretary, that would be a rider. Is there any place in the law that you've seen that that could be a condition of providing the funds that we're talking about here today?

I'm not sufficiently familiar to answer, unfortunately.

Well, I appreciate if you can get back to us because you properly described what Starlink's trying to do as a rider after the fact. This would be a clear rider after the fact and there's just no justification or legal grounds for applying this conditions when the condition did not exist in the underlying law. Let me ask you about the GAO. The GAO has informed the committee that Department of Commerce is declining to answer questions regarding certain investigations and audits. As you know, GAO is sort of empowered by the Congress as a congressional watchdog to look into broad waste and abuse. They have very broad jurisdiction. I'm just asking, Mr. Secretary, can you commit that your department will comply and work with GAO and cooperate with GAO in their work?

My understanding is driven by our general counsel who's instructed us how to respond and we will respond according to whatever the rules are as as informed by my general counsel.

Okay, well I think I hope, Mr. Chairman, that we have a shared interest in making sure that GAO can conduct the proper oversight of the department. It comes with every administration and so it seems to me that's something that the department should 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. technologies, high-end chips, which of course are important to power AI. And I was very I was happy to see early in the administration the adoption of the affiliates rule, right? So when you say we are not going to allow the export of a high-end technology to one entity, that we also make sure that we don't export those same high-end technologies to their subsidiaries or other related entities because it made sense that if you're going to close the front door, you shouldn't open the back door. For the life of me, Mr. Secretary, I can't understand why that was repealed. Could you take a moment and let me know why and whether you plan to reinstate the affiliates rule?

The complex relationship between the United States and China is in the hands of the President of the United States and... ...Secretary of State and they help us and instruct us and we follow their lead.

So it's interesting, Mr. Secretary, we had the our trade ambassador here and I asked him questions about this and he said to ask you. Now you're telling me I should ask Secretary Rubio or the president. You are in charge ultimately of well, the president of course is ultimately in charge, but the export controls policies of this administration frankly have been very confusing when it comes to chips. I mean, we all know about the episode that the president went to the UAE after his son's travel there and the deal that went down. But I am focused now on China. So you're asking me to go ask the Secretary of State about why the affiliates rule was dropped.

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 all are familiar with the weaponization of critical minerals and rare earths and magnets. And so the resolution of those topics is really with the president of the United States and the Secretary of State as they work through the nuance of the broad relationship between China and the United States. And that's what I'm saying. It's not a particular topic. It's a broad, very nuanced topic that rests in the hands of the president of the United States and I think he has done it, he has handled that situation I think brilliantly.

Well, we'll have to disagree on that. I see the chairman has his finger on the button. I'm going to submit some questions regarding the issue of the Trump administration's decision to take a stake in the rare earth sector. I think it was US Rare Earth and I will be following up for the record on that, Mr. Secretary. Thank you, Mr. Chairman.

Senator Murkowski.

Thank you, Mr. Chairman, and welcome to the committee, Mr. Secretary. Good to see you. I want to talk about the pending BEAD final proposal. Alaska is one of the states that has not yet been approved by NTIA for the final BEAD decision. I'm told that we've got until February 11, so this week, to get three undecided projects under the BSL threshold. So just a couple questions in this vein this morning. As I have shared with you in the communications, in the conversations we've had in my office, Alaska kind of has looked at the BEAD program as this one-time opportunity for us to really 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, I'll just say, for the Alaska Broadband Office. This is what they're telling me in terms of just what they feel are some of the changing goalposts. And so they're 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 a year. 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.

I'm happy to make such a commitment.

Great, I appreciate that. The non-statutory cost threshold per BSL in Alaska, it's shifted multiple times in my communications with NTIA. Can you tell me what per BSL cost threshold is being used in Alaska with regard to the final BEAD proposal? What we need to know is what's the threshold and can we count on the fact that it's not going to be changing on us yet again?

My understanding is that actually Alaska's on the one-yard line. I mean, we're just about there. I think the only issue was that island.

There's three islands: St. Paul, St. Lawrence, and McGrath. McGrath is not an island. It may as well be an island because it's...

But my understanding was the conversations were with respect to the island and that we were very, very close to a solution between us. So my expectation was in fact it may be resolved today or tomorrow.

Okay, that would be great and 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's my understanding that the final provisional awards approved by NTIA are going to award the states much less than their original BEAD allocations. I don't know how much is actually left on the table. The question that I have is what happens to it? Is it returned to the Treasury? How much is intended to return to the Treasury? What are the plans for the funds? We're looking at it from the perspective of look, everything in Alaska, and you know this, everything is just so high cost. Every dollar matters, we get it. We were operating under the assumption that Congress intended all these funds to be dispersed in a smart and 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 to do exactly what we intended with this program, which is to strengthen all aspects of communication, particularly when it comes to our emergency, our public safety communication in these rural areas where you just have these incredible gaps, but also within the critical mile infrastructure. So we know we want to be smart with our money, but these were funds that were directed for a very specific reason. The need is huge and in many cases it's just a little more expensive than maybe in the lower 48.

We have no plans for rescission.

Okay. There's a difference though between rescission and unspent funds.

So we have $21 billion. So we have executed universal broadband, gotten every state covering each and every person that every state asked to cover, yours included. We will have $21 billion remaining. So we are starting tomorrow a listening tour. We have 900 people signed up for tomorrow. We will meet with your office and your staff if you would like. What are your best ideas? You've said it I think very, very well. Let's do it smart, 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 standards that you set for $21 billion less. We have now 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. I think that is our objective and we start that tomorrow.

Okay, well I will look forward to those follow-on conversations both with regards to the Alaska specific projects and then on the going forward. Again, I recognize that we are the way I say it is we've never been the benefit of the bargain in many cases because we're just so high cost. And it's not because it's waste, fraud, or abusive, it is just far out there. So this is an opportunity that we have to really do right by all Alaskans even in the most remote of remote places and we look forward to working with you to address their needs as well. Thank you, Mr. Chairman.

Mr. Secretary, anything you'd like to add?

I just appreciate you having me here and thank you.

Thank you. Thank you for being here. Thanks for accepting our invitation. Thanks for your attention to issues that are really important to our constituents in the country. There are no further questions. Senators may submit additional questions for the subcommittee's official hearing record. We request that NTIA's the secretary's responses occur within 30 days. The subcommittee stands in recess subject to the call of the chair. [Gavel sounds.]

[Recess.]

The broadcast has concluded.