Raimondo Presses for Chips Bill Deal, Draws Senate Pressure on BEAD Rules

Commerce Secretary Gina Raimondo and some Senate Commerce Committee members used a Wednesday hearing on the Commerce Department's FY 2023 budget goals (see 2204210059) as a platform to press Congress to quickly reach agreement marrying elements of the House-passed America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength Act (HR-4521) and Senate-passed U.S. Innovation and Competition Act (S-1260). Committee members also pressed Raimondo on NTIA’s plans for distributing $48 billion in broadband money from the Infrastructure Investment and Jobs Act and how to improve interagency spectrum coordination.

“I cannot say strongly enough the urgency with which we must act” to reach an HR-4521/S-1260 compromise due to the measure’s importance to bolstering U.S. semiconductor production, Raimondo told Senate Commerce. Both measures include $52 billion in subsidies to encourage U.S.-based semiconductor manufacturing (see 2201260062) but differ in other areas. House and Senate conference negotiations to marry the two measures were expected to formally begin this week, Senate Majority Leader Chuck Schumer, D-N.Y., said Monday.

China and “other countries aren’t waiting for us” to catch up on chipmaking, Raimondo said: “I don’t think it’s an exaggeration to say this is a national emergency. It’s threatening our national security as well as our economic security.” Germany, “Singapore, Spain, France” and China “are all right now … wooing” Intel and other U.S. companies “to set up facilities in their countries” to make chips, she said. Those companies’ CEOs have told her “they want to operate in America, but they cannot wait because demand for chips is up 20%” from “where it was a couple of years ago. They are going to build and if we don’t act quickly” on a HR-4521/S-1260 compromise “they’ll build elsewhere. If we do act quickly, they’ll build here.”

“Other people are moving faster than we are” in increasing chip production, said Senate Commerce Chair Maria Cantwell, D-Wash. “The faster they move, the more the money follows. And so I really am worried that even investments that people have announced” in U.S. chip production like Intel’s plan to spend $20 billion to build manufacturing facilities in central Ohio (see 2201210085) could be jeopardized. “The longer we don’t send that signal” via a compromise innovation bill, “the more that that initial investment may not go to Ohio,” she said. “It may go over to Germany or someplace else.”

'National Security' Issue

Senate Commerce ranking member Roger Wicker, R-Miss., agreed “the chips issue is a national security issue” and sought to assuage some colleagues “who object to the grants” because recipients could be “big companies, some of them do business in China.” It’s “important to follow the approach that’s in” S-1260 to prevent chips money from going overseas, he said. Raimondo said her “top priority will be protecting taxpayers,” noting “clawback provisions” in the measure aimed at preventing the funding from being used “by companies that are violating our export controls,” she said: “The money cannot be used to build facilities in China.”

Senate Homeland Security Committee Chairman Gary Peters, D-Mich., is “going to be fighting to ensure” an HR-4521/S-1260 deal includes language from his Investing in Domestic Semiconductor Manufacturing Act (HR-6359/S-3331) aimed at ensuring federal incentives to boost domestic semiconductor manufacturing include U.S. suppliers that produce the materials and manufacturing equipment that enable semiconductor production. He also emphasized his support for HR-4521/S-1260 compromise language that set aside $2 billion specifically for growing U.S. chipmaking for “mature semiconductor technologies,” including for the auto industry.

S-1260 lead GOP sponsor Sen. Todd Young, R-Ind., cited the measure’s language to establish regional tech hubs as “one of my top priorities” due to the impact it would have “on non-coastal, nontraditional areas” of the U.S. “We have incredible talent across this country,” he said. “It just needs to be harnessed.” The hubs are “designed to create ecosystems of innovation in areas of the country that have been overlooked” but already have pools of research and entrepreneurial resources, Raimondo said: “We need to start increasing our innovation in all emerging technologies” and “it isn’t all going to happen in Silicon Valley, Boston and Austin, Texas.”

The House voted Wednesday to pass the Transatlantic Telecommunications Security Act (HR-3344) 366-60 and the Protecting Semiconductor Supply Chain Materials from Authoritarians Act (HR-7372) 414-9. HR-3344 and Senate companion S-2876 would aid Central and Eastern European countries to build 5G networks using equipment not made by Chinese manufacturer Huawei, including by authorizing U.S. International Development Finance Corporation financing for infrastructure development. HR-7372 would create a working group for reporting on the semiconductor supply chain disruptions caused by Russia’s invasion of Ukraine.

BEAD Requirements

Senate Commerce members in both parties drilled down on NTIA’s IIJA broadband money plans, though in some cases the tenor of those questions divided sharply along party lines. Senate Communications ranking member John Thune, R-S.D., urged Raimondo to commit that NTIA will implement IIJA’s $42.5 billion broadband equity, access and deployment (BEAD) program “within the confines of the statute” and that the agency won’t “include net neutrality, wholesale access or rate regulation requirements” of funding recipients.

“Any inclusion of burdensome requirements … is only going to discourage participation” in the BEAD program, Thune said. He cited efforts at “other agencies” to include similar requirements in the rules for distributing connectivity money, an allusion to the Agriculture Department’s 2021 decision to factor a company’s commitment to net neutrality into decisions on whether to award an applicant ReConnect money (see 2111080063). Wicker and top House Commerce Committee Republicans pressed NTIA Administrator Alan Davidson Tuesday not to adopt such rules (see 2204260043).

Senate Consumer Protection Subcommittee Chairman Richard Blumenthal, D-Conn., meanwhile, sought Raimondo’s commitment that she would “impose stand-alone wholesale access requirements or incentives” in the BEAD program. “There’s a clear need to require companies building new fiber networks with federal money to allow competitors wholesale access at reasonable costs,” he said. Sen. Ed Markey, D-Mass., emphasized NTIA’s IIJA connectivity money is “an important opportunity to use that funding in order to promote affordability, promote competition and to ensure the internet is free and open.” The “faster we move” the money, “the better off our country is going to be,” he said.

Commerce plans to “comply with the statute,” including its prohibition on rate regulation, Raimondo said. “The FCC regulates net neutrality, not us.” But, President Joe Biden “has been very clear that we have to make sure at the end of implementing this program, every American … has access to affordable, high-speed internet. And so we are as focused on access as we are on affordability,” she said. Commerce “will be, consistent with the statute,” working with states to “make sure that there are affordability provisions” included in the distribution of connectivity money. “I believe there are ways to do that which do not involve rate regulation or violating the statute,” Raimondo said.

Workforce, Spectrum Issues

Senate Communications Chairman Ben Ray Lujan, D-N.M., and Sen. Jon Tester, D-Mont., sought Commerce’s assurance that most of the new NTIA jobs created to implement the IIJA broadband money will be located within the states. The majority of IIJA-funded jobs “will not be in” Washington, D.C., Raimondo said. “The intention is that … they will be around the country, in communities.” NTIA is “going to start to increase the pace that we onboard” the new hires this summer, she said. Lujan said he wants to dispel rumors that “none of them will be in the states.”

Brookings Institution Center for Technology Innovation Director Nicol Turner Lee is among those set to testify at a Tuesday Senate Health, Education, Labor and Pensions Employment Subcommittee hearing on broadband workforce issues, the HELP Committee said. Other witnesses are LightStream CEO Brent Gillum, Denver Joint Electrical Apprenticeship and Western Colorado Electrical Joint Apprenticeship Director Dan Hendricks and Tipmont REMC/Wintek CEO Ron Holcomb. The panel will meet at 10 a.m. in 430 Dirksen.

NTIA must “be more aggressive” and have an “elevated” role in interagency spectrum policy discussions, Raimondo told Wicker. She cited NTIA Administrator Alan Davidson’s February spectrum coordination agreement with FCC Chairwoman Jessica Rosenworcel and a joint task force’s formal start of work aimed at updating the 2003 memorandum of understanding between the two agencies (see 2203300043). “We’re going to start increasing our presence” in the interagency process, but there also needs to be “an administration-wide, government-wide spectrum strategy,” Raimondo said.

“A lot of agencies like to get their fingers in” spectrum policy coordination, but NTIA must be “the voice, rather than other agencies, for representing the executive branch on spectrum management,” Wicker said. Sen. Marsha Blackburn, R-Tenn., pressed Raimondo on whether NTIA will be able to meet a 2018 Making Opportunities for Broadband Investment and Limiting Excessive and Needless Obstacles to Wireless Act mandate that federal agencies identify at least 255 MHz of spectrum for broadband use by Sept. 30.