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tv   Politics and Public Policy Today  CSPAN  August 5, 2015 9:00am-11:01am EDT

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we will do our best to harmonize so that there is a common common set of con accepts that govern privacy. >> unfortunately, the fcc's reclassification of the service of common carriers had a two-fold hit on consumers. it deprived the ftc. they've explicitly been given information for. secondly, because the fcc irrigated that issue for itself, our authority under the statute is relatively circumscribed. as you pointed out a pretty arcane piece of the puzzle, if you will. we don't have any rules in place. the guidance that given out has
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been completely unhelpful. in may of this year the enforcement bureau says they intend that the broadband providers should enemploy privacy protections. what does that mean? >> i have no idea. i sp prks isps have no idea. >> i have no idea. >> i would rather have let the experts who have protected consumers handle this issue based on law that you have given them. >> they have the expertise to handle these issues, correct? >> expertise and legal authority, yes. >> the chairman talked another issue about privacy and edge providers. chairman wheeler the consumer interest group filed a petition to ask you to oppose a consumer privacy protections. when are we going to see your
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response? do you believe providers should have a different standard of protection than isp's? >> thank you very much. the commission has for decades been enforcing privacy on the telecommunications carriers. it's not as though we fell into this patch. there's a long history of privacy protection regarding telecommunications carriers. in so far as extending our jurisdiction to the edge providers, i have said repeatedly that that is not our intention. i don't know when the specific response to that specific petition will be coming out. i'll be happy to fete you -- get you a date. i don't know what the planning process is -- >> i think this is part of the problem, when the fcc crossed this rubicon in february. if you believe, as the majority did at the time, that the internet is a virtuous cycle
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it would seem to follow logically then that if an edge provider is acting in an anti-consumer way, why shouldn't the the fcc have the jurisdiction to extend those same rules. and moreover, if you look at the internet contact standard, it's not clear to me why the fcc should limit its focus on internet service providers. you can see them engaging in any competitive conduct. that's part of the uncertainly that unfortunately the fcc opened up. i hope we don't follow that to its logical conclusion. >> thank you, both. i yield back the balance of my time. >> the chair recognizes the gentleman from illinois, mr. rush, for five minutes. >> i want to thank you, mr. chairman and thank you and the ranking member for today's hearing. mr. chairman, commissioner pi, i welcome both of you to today's hearing. so good to see you once again. mr. chairman i want to lift up one of the most troubling and
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egregious matters that is under the consideration of the fcc. and i am referring to the prison phone call rates. i understand the fcc is poised to make a ruling on in-state phone rates for prison phone calls. that said, mr. chairman, we must stop this immoral practice of exploitation of the poor. the very ones least able to afford this phone rate robbery. additionally, mr. chairman once and for all we must do away with the practice of site commission kickbacks and we must
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cap in-state phone rates. as you know, mr. chairman, the prison call industry is a multibillion dollar business. and if there's any doubt, i want to call your attention to a recent huffington post article entitled "prisoners pay millions to call loved ones every year." now this company wants even more. this article referenced how companies in the prison phone call industry, about its $404.6
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million future profits on the very same form. mr. chairman, as you know i've been fighting this issue for a decade and it's now time for the fcc to take action and reign in these predatory practices by capping the rate at 5 cents per minute and eliminating the ancillary fees. more importantly, mr. chairman, the fcc must also get ahead of these predatory companies. they're right now trying to circumvent the laws by offering video phone calls at the same predatory rates that they offer for phone call, telephone calls. mr. chairman, my question is, when will the fcc rule on this
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legalized telephonic terrorism? >> thank you very much mr. rush. i agree with you, this is a very serious issue. and you and i can -- and people across america owe a huge debt of gratitude to commissioner clyburn who took the issue that had been sitting on the desk of fcc for ten years, since martha wright filed her first petition and brought it forward so there was a decision about interstate. but you know what happens, is that whack-a-mole starts getting played here. we can't do it here, so we'll move it over here. next month we have a decision on that, on intrastate that we're doing next month. the point that you make about video phones is another legitimate point. the reality here is that what we're talking about is a monopoly that is granted to
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prisons to determine how people communicate. and like any monopoly, it ends up being exploitive. and the people who are hurt by that exploitation are the very people who rely on it. i can assure you, sir, that commissioner clyburn keeps our feet to the fire on this and i'm fully supportive of her efforts. >> i want to -- that's good news, mr. chairman. i'm just apathetic about this situation. and i don't know -- well, let me move on. if i have -- no, my time is up. >> time has expired. >> i should tell you, we're going to do a second round of questions. so if you're here for that there will be more time. we'll now go to a gentlemen from
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florida for five minutes. >> thank you, mr. chairman, thanks to both of you for showing up today. thank you for your system. >> in march we discussed public safety interference complaint responses and it resulted in a quarterly report, which you thought was a good idea. i know you pari yaed some information, have you posted on the website so the public can see what's going on and how what you're doing? >> sure. >> you have? >> no, i'm saying, would we? should have. >> i can't answer that question specifically. >> if you haven't, can you post that online as soon as possible? >> i think that's a good point, sir. >> commissioner py, there's been a lot of attention and concern regarding the designated entity
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auction rules. do you believe they're now correctly balanced and if not what should be done to fix them? >> i don't think they are, the agency has moved in the opposite direction the agency having loosened some of the restrictions that were imposed on a bipartisan basis several years ago, has now opened the door for large corporations to abuse the program and ironically enough, squeeze out a lot of the small businesses who need access to capital in order to provide facilities based service. we saw that, where small carriers tried to compete, but they weren't able to. the deep pocketed fortune 500 corporation used shell companies to prevent them from bidding. that's part of the reason why i proposed what i thought worked. if you're making in the upper eight figures you don't need a tax funded discount to participate in the auction. if you're a small business with less than $15 million of
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revenue, you don't need bidding credits in order to get spectrum at an auction. if you' a genuine business you should be able to provide facilities based service, not simply flip your spectrum the minute the corporation is over. it fell one vote short. and all of those proposals would have restored faith in the small business program. >> thank you. >> chairman wheeler, in the open internet order you submitted to take steps. what steps have you taken to prevent such increases and what additional steps are expected? >> there is a proceeding underway that we started in the last 6, 8 weeks, something like that, and it's to -- it's designed to make sure that there is parody between telecommunications services and
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cable service attachment fees. >> again, can you continue to update us on this? >> yes, sir. >> appreciate it very much. >> all right, mr. chairman, i yield back. >> okay. so now we'll go to, let's see, mr. johnson is next for five minutes. >> thank you, mr. chairman. chairman wheeler, in a recent response to questions for the record as to whether you think stakeholders who cannot afford to have regulatory lawyers or lobbyists in washington, d.c., should also have the same access that other stakeholders have, you made a point that the commission does not have funding for routine field hearings and similar activities. yet you're emissary has been routinely traveling to various
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events. in fact it seems you both have been wheels up quite frequently in your travels. so let me pose the question this way. given that you apparently have a robust travel budget, isn't the real issue how you elect to spend the money? >> thank you, congressman. >> i think the people who i keep turning down saying i'm not going to cut talk would probably disagree. my travel is significantly list than other members of the commission, but your point is a well-taken point, decisions get made. there is a travel budget that each commissioner has, and that is for his or her discretion. there is not -- >> you've answered my question. it really is up to your discretion on how you spend the money.
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could you let us know, for the record, how much the fcc has spent on travel in fy 2013, '14 and '15 so far. can you get that back? >> by commissioner? >> yeah. >> sure. >> okay. great. i'd like to see that. commissioner pai, i was listening closely to your discussion with my colleague regarding the designated entity program. and i'm really struggling a bit with commissioner -- or chairman wheeler's decision to eliminate the rules and facilities requirement in the competitive bidding rules for a couple of
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reasons. and you pointed those out. you made a compelling case this sets the stage for arbitrage. how are we going to prevent that from happening? what actions does the commission need to take to make sure that these rural small carriers are able to get the credits that the designated entity program was designed to give them so that they can serve those underserved, unserved areas. >> thanks for the question congressman. to be honest, we first need to return to the status quo before the most recent decision and adopt common sense reforms to make sure that large corporations don't game the system again. and make sure, the order did take some of these measures. prohibiting a single corporation from using multiple bidders in the same market. that's low hanging fruit already prohibited by the criminal antitrust laws. i'm talking about genuine reforms of the program to make sure the people who need the help, the people who want to serve folks in ohio and kansas can be able to do that. some of those reforms, limiting
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the amount of bidding credits, making sure large companies can't own a majority of the de and preserve that amr so that people don't flip all of the spectrum to the entrenched incumbents. those are the kinds of comments' reforms that don't have a partisan affiliation to them and i wish the majority would have agreed with me. >> i can tell you that it's a real concern for me, and i'm sure other colleagues that represent rural areas of the country. i've got high school students that don't have access to broadband internet service. and as a result, they have to either go to a public library nearby or some other location, maybe to where they can get a wireless signal or something like that to do their homework, to do research, to do that kind of thing. this is 2015, for crying out loud. >> if i could just add, one of the reasons that the facilities based requirement is so important is in a lot of cases business providers don't see the
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case in building out to that school or that area. whereas a smaller rural provider who does want to connect those folks to the internet wirelessly, they have a strong incentive to make sure those folks are connected. when those rules providers are squeezed out and speculators can come in and take the spectrum and flip it to the big incumbents, that really does impact those consumers. >> all right. well thank you. mr. chairman i yield back. >> now to the gentleman from missouri, mr. long, for five minutes. >> thank you, mr. chairman and to you all for being here today. mr. chairman, or chairman wheeler, on july 24th, four days ago, your agency announced that granted with conditions, approval of the transfer of control licenses and authorizations from directv to at&t. we hear much about your agency's 180-day shop clock for reviewing such transfers, yet your
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agency's provisional grant of approval took over twice the amount of time, as you're well aware, over 400 days. i've got some questions that i'd like to have answers to. number one, what's the point of the shot clock? >> the shot clock is aspirational to begin with, but it's something we try to manage here. the difficulty in this situation was that we were hung up by a court proceeding and a court decision that itself took as long as the shot clock. and so we -- that specifically dealt with the kind of information that we could have on the public record. and we had to get through that before we could get to the decision. >> well, on the 170th day of the 180-day shot clock, your agency stopped it for three months. >> because of the court decision. >> is that the same thing you're talking about? the court decision. >> the reality here is -- and there is right now pending before commissioner pai and --
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that's not a set-up question. i don't know the answer. >> i'm sorry? >> on the protective order. >> i just saw it yesterday. >> so we have put out an order to outline how you protect confidential information so that we can be in compliance with the court, so that this will not happen again. and the absence of that was what held up this proceeding. >> commissioner pai, do you have the same opinion on why the shot clock was stopped at the 170th day or what the benefit of the shot clock is? >> congressman, i do have a different view. the agency inflicted a wound on itself which is why the court had to intervene. the court didn't simply add a cold clock to participate in the proceeding. what happened in the context of that transaction is the agency decided to try to get all kinds of confidential information from programmers and without any kind of due process. so the programmers naturally sued. i urged the agency to try to
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reach a settlement because this information wasn't really necessary to resolution and unanimous d.c. circuit of appeals agreed with me, calling the fcc's decision an unexplained and substantial departure from policy. even though they remanded it and said this is the road map to follow if you want this information, despite having said the information was critical, ultimately the agency didn't seek it or rely on it in making the decision. the shot clock needs to be more than aspirational. it needs to be a rule. just as there's 24 seconds in the nba, there should be 180 days, period, for the fcc, with extensions for extenuating circumstances. but we need to give the public parties a lot of certainty as to how the fcc is going to do it. >> let me move on. i have got another question here for chairman wheeler. three days prior to your conditional grant of approval of the transfer control and license and authorization from directv to at&t, the department of justice announced that after an
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extensive investigation it concluded the combination of at&t's land-based internet video business with directv's satellite based video business does not pose a significant risk to competition. although the justice department closed its investigation without imposing any conditions, your agency announced they were imposing a number of conditions to address potential harms presented by the combination of at&t and directv despite the justice department's views that the combination of the two video businesses did not pose a significant risk to competition. what significant risks to competition did your agency identify that the justice department apparently missed? >> thank you, congressman. we worked closely with the justice department on this. i don't think there was a sliver of light between us. >> how can you say that? >> because we have a different test. >> you have a what? >> we have a different trust.
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they have an antitrust test that they face. we have a public interest test that we are supposed to measure by. so we have two different standards we measure to. and what was happening here was that in about 25% of the area, of at&t service area, directv was a competitor to at&t for video service. and so eliminating that competition, the question became, does that create an incentive then to eliminate broadband competition as well? so what we required was that at&t expand its broadband coverage which increased competition for broadband by a significant amount and created an opportunity for those video providers not to have to go
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through an increasingly decreasing -- a decreasing choke point. >> you just wanted to see if i was paying attention. we have a read light on our backboard. my five-minute shot clock has expired so i'll be back for round two. >> good. >> the chair recognizes the gentleman from new york, mr. collins. >> thank you, mr. chairman. mr. wheeler, the big issue that i've been involved in as pirate radio, which you may know. and back in early june, pretty much every new york member of congress as well as jersey sent you a letter. and while the issue may not be a terrible issue in some parts of the country, it truly is in new york city as evidenced by not often you can get 27 members of new york to agree. upstate and downstate, we're
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like two different worlds. to sum it up, we're extraordinarily disappointed the fcc has clearly said it's not a priority. we've got the letter just from you yesterday. and it -- and i understand budget concerns. i guess what i'm trying to -- the point i want to emphasize is, this is an issue, even though it's not to you, and you are the chairman. we really don't appreciate you saying that, as you put in here, the time and expense of pursuing these cases present particular difficulties in the current flat budget environment where the commission staffing is at its lowest point in 30 years. overtime is less available so, accordingly, we must prioritize based on existing resources and harm to the public. thus matters posing an imminent threat to public safety are directly harming large numbers of consumers must take precedence over other matters such as pirate radio.
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so i mean, i understand what you are saying. but what is the size of your budget? >> congressman, i -- that letter, and those particular words, which i wrote, were not designed to say that this is a low priority, but designed to say that first issue is public safety. pirate radio has to exist inside that. and i believe that we have been very aggressive. so during my chairmanship we've had 200 private radio enforcements. in the last year we've had 100 alone. >> how many in new york? >> i don't know the exact number, but i would say 90% -- maybe not 90. 80% of those. and so what we've done -- and commissioner o'reilly, when he was meeting with the new york broadcasters focused on that. he helped us focus on that. we formed an inner agency working group, task force, to
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work with the nab and the new york broadcasters on this issue to make sure -- >> so you had that meeting. and the fourth point that came out was basically that you need more folks in your local enforcement officer. point number four of that hearing was additional fcc enforcement options. >> right. that was one of the things. >> but in another hearing we talked about how you've been reducing the local field offices and pulling those folks back to headquarters. and some of us would presume that's to be ready to enforce title two which we can disagree on as well. but it seems disingenuous. and our big concern is words are words, actions are actions, and the actions have not convinced me and, i think, other members that it is at all a priority. your letter, while it said maybe
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some day if we've got nothing else to, do we'll see what we might want to find in pirate radio. it's a low priority for the fcc. >> if that's how you interpret it, i apologize, because that's not what was meant. so the new york office, the boston office and miami office which is where pirate radio tends to exist, those three areas, this is a whack-a-mole -- i keep using the whac-a-mole reference. >> that's what pirate radio is. >> so one of the things that i encouraged in that letter is that congress can be helpful because we can't go -- we can go and shut somebody down and he or she moves to this spot, boom, and we are just constantly chasing. if congress could also enact -- make it illegal to aid and abet the carrying out of this -- and i think that's also what the nab group has recommended. if we can get at those who are
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aiding and abetting -- because there's a -- that pulls this off. you move to my apartment here. move to this base here. we didn't know anything about this, you know. so there is a totality of the package here. 200 enforcements. we have a task force working on it. we could use some additional authority so we can have some teeth -- >> i'm about out of time. two things. one is, maybe this is a rhetorical question. i'll ask it. there's been suggestions that the fcc has actually directed field offices to step down and back away from enforcement. any truth in that? >> i have heard that suggestion. i have not -- >> i'm going to put it right out here. >> i have heard that suggestion. i have not seen that command. >> it did not come from you? >> it did not come from me. >> could you provide me the language that you might suggest? because i can appreciate, don't bring a problem without a solution. can you bring me the language we might have in for some other legislation that would assist you on the pirate radio issue?
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>> thank you, sir. >> it is an important issue for us in new york, and we just don't want to be the last thing on friday afternoon at 4:59 somebody said i have one minute until i get home. let me see what i can do on pirate radio. >> yes, sir. >> thank you. >> i yield back. >> the gentlemen yields back. the chair recognizes the gentleman from south dakota. >> thank the chairman and the ranking member for suffering along with me as you wait for the last questioner. thanks to both of you as well. and thank you, commissioner pai, for referencing the letter that 114 of my closest friends and i sent to the chairman and to the fcc regarding stand alone and to both of you for addressing it so thoroughly today. i might just hone in a little bit on some of the finer points regarding the timeline. in the letter i received from you, mr. chairman, yesterday, you often referred to a lack of consensus. there seems to be some consensus. you pledged that by the end of
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the year we'll solve this, but we need more consensus from stakeholders. as you both know, the community presented a plan in 2013 modified somewhat over the last couple of years to meet moving targets. i might ask you, commissioner pai, you've offered up, i think, your quote from your plan was simple amendments to existing rules as an outcome. one thing i've noticed around here and i'm certainly noticed in regulatoriryy ryiryy ryiry bodies, having served on one, we can tend to ry bodies, having served on one, we can tend to complicate simple things. my goal is usually the opposite of that. are there issues in the arlec plan that prevent this from going forward or prevent us from utilizing that as the model? or are there other issues that could cause this to take so long that you know of? >> thanks for the question and also for your kind words about
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my proposal which is modeled on your letter. i think stepping back 60,000 feet, the problem is basically this. there are a number of problems with a high cost fund. a, b, c, d. problem "a" is stand alone broadband service. my position has been consistent with your letter and a companion letter, let's adopt targeted changes to the rules to make sure rate of return carriers aren't penalized for offering broadband as a stand alone service. that's not to say problems b, c, d, e aren't important. but for the purposes of this issue, standalone broadband, let's get this piece done and turn to the other issues. the rate of return carriers, i appreciate the efforts to find that consensus. number one, it's not necessary to resolve those issues to adopt a standalone broadband issue. if we wait until a consensus, i fear we'll not meet the deadline we set for ourselves publicly getting this done by the end of the year.
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>> chairman, can we meet the end of year deadline? is there a reason we can't meet that, and are we attaching too many things to the simple solution? >> those are the two right questions. i am trying to do that. it is my goal to do it. i expect to do it. a couple of points here. in order to do that, you cannot be wedded to consensus. as you know from your previous term, at some time you've got to pull up and shoot. >> indeed. >> boy, am i trying to get consensus. if you can't get everybody to agree at some point in time, you have to put -- and we will put forward a proposal on that in a timely basis in order to do things by the end of the year because at the root of this is we've got to do better for rural consumers, period. and it's not just one simple fix. it is a broader set of fixes. i'm in violent agreement on the narrow broadband issue. but it's not enough. and then we also have a
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responsibility to those people who are paying for this every month in their phone bills to make sure the money is spent responsibly. and i hope we have consensus. i'm working for consensus. but if we can't have consensus, we need to have progress. >> there are other issues the fcc has taken up that i wish there had been more consensus on. i don't want consensus to mean 100%, as you might imagine. shifting then with my remaining time. we spent time talking about, of course, the auction. i was about to call it the voluntary auction. that's what it used to be called. the word voluntary is how it's often referred to because it is voluntary, both opting in and opting out. the $1.75 billion that congress has put in for the repacking fund is probably not going to be enough considering that we're
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looking at 1100, maybe, tv stations that will have to involuntarily move. is there a plan to deal with that shortfall that i can assure my rural north dakota broadcasters that they won't have to bear all the cost? maybe commissioner pai first and then the chairman with the remaining time. >> i have long suggested we should treat the $1.75 billion relocation fund as a budget and structure the auction in a way to minimize the possibility that we'd exceed it and ultimately end up putting the onus on broadcasters to pay up. the other issue that i've heard most recently in nebraska is that 36 months is not necessarily as long as it might seem. there's a shortage of people able to do the work. a shortage of the equipment necessary for the repacking to be done, and that the commission should be mindful of that as well, as it progresses. so i share your concern and want to make sure broadcasters, to the extent possible, are held harmless in terms of necessary
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expenditures. >> chairman, i -- >> i think he's identified the key issue. we have to live within a budget and we want to manage things within a budget. you gave us that number. we can't change that number and we have to come up with a program that will make it work. >> thank you both. thank you, mr. chairman. >> if you hang around, mr. cramer, we're going to do a second round. you could be quick on the shot clock. we're going to go to the gentleman from new mexico for five. >> mr. chairman, thank you so much for having us here today, ranking member, it's an honor to be here with you today. chairman wheeler, commissioner pai, thank you for being here. i appreciate the testimony on rural access. as commissioner pai said, he's a rural guy. i'm a rural guy. chairman walden also represents a rural district. we talk about many parts of the country that need broadband access and affordability. you've heard me say this many times, chairman wheeler.
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we can have connectivity at 30,000 feet when flying across the united states in an airplane. there's no reason we cannot have connectivity when on the ground traveling all across america, not only in rural communities, travel communities and states like mine and new mexico. with that being said, in new mexico, for example, 77% of those living in rural communities and 89% in tribal communities lack access to advanced broadband. chairman wheeler as you've said in your testimony, you've pursued an aggressive agenda that includes reforming the erate program, modernizing the life light program and establishing the connect america plan. can you discuss what this agenda means for those who lack sufficient access to broadband and communication services not just with build-out but making it more affordable so people are able to take advantage of it once there's a build-out program? >> thank you, congressman. i hope we can do significantly better than the speed delivering to the air. that's what we're doing.
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i have been in new mexico multiple times, in tribal areas and very remote areas in new mexico to personally talk to the individuals involved. i remember a situation that there was a fiber going down this side of the road. reservation. and over here about 100 yards away was a high school, and up here was the library. and they couldn't get a connection from the fiber to the high school because it was cost prohibitive and the erate program wasn't paying for that. now we pay for that. and that's in large part because of these kinds of specific examples that we've seen. we need to make sure this is the case. we also need to make sure that low-income individuals who are
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unfortunately disproportionately un unrepresented in tribal areas have access to broadband support to connect them. and that is why we are not only overhauling but changing the orientation of the lifeline program to go to broadband. >> chairman wheeler, in all these areas i'm going to submit some other questions into the record to flush these areas out. as we do this, i really appreciate the conversation we've had today and the focus in how we can grow the rural family and add attention there. the other place i want to compliment you both and get your perspective is on modernizing the fcc. you've embarked on expanding electronic filing and distribution, decreasing backlogs and improving responsiveness to consumers.
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can you tell me what you are doing to provide greater information to consumers, including improving transparency and accountability, standardizing forms, digitizing the process including submit l of documents? >> boy, am i glad you asked that question. >> do you both support that effort? yes? commissioner pai? >> yes. >> my first trip to our consumer operation in gettysburg i saw in the corner a humongous machine that the staff proudly announced to me could take 17 different forms and put them into one envelope. and i said, well, why are we sending out 17 different forms? and they said because that's the way we do it. so you contact the fcc on a robocall issue and we will send you the form for robocall as well as the form for loudness on commercials, as well as the form for every other kind of complaint. i said wait a minute.
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we can do better than this. >> those forms are required to be sent back. >> and i would talk to consumers, you know, who would say, what am i supposed to do with this? which form am i supposed to use? we now have updated it, put it on the web. we just won a prize for being one of the best government sites, consumer interface sites on the web. and most of all, we're then taking that information and putting it back into what should we be doing to help us focus on our priorities. >> that's great, mr. chairman. if there's other areas we can work on in this space, i look forward to having those conversations. if i'm able to because of the length of the line, i look forward to the second round of questions. >> indeed. which we're going to start now. so thank you. i want to go back to this issue of lptv and translators and maybe commissioner pai, chairman wheeler. there's all this talk now about setting aside an entire channel for unlicensed and i support unlicensed.
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we've made a lot of unlicensed available. there's more to be done. won't setting aside a whole channel for unlicensed contribute to the problem that we're hearing from translators and lptv community? >> mr. chairman it will by definition to the extent that a particular channel is allocated solely for unlicensed. that means an lptv's station can't occupy it, post auction. >> in reality, probably not. because what we're talking about here are using tv white spaces and creating these kinds of additional applications for unlicensed. in those areas where the duplex gap is not sufficient. and that's going to be a handful of areas that i doubt will be any areas that are the typical lptv rural kind of area. >> so will you commit to lptv and translators having priority
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then over unlicensed? >> no, we're -- so it was really clear. >> in the tv band. >> the mandate from this committee is clear. the mandate from this committee is there's no priorities given to lptv. and the committee also said, however, we need to be encouraging unlicensed. i don't think that it comes down to that kind of a solution though, mr. chairman, with all due respect. i think that it is possible in what we are just breaking our tails on, is to be able to accomplish both of these and i think we'll be successful. >> i would say, my recollection of the statute which we helped write here -- >> you wrote it. >> -- was the unlicensed was never set aside. as a priority to create a nationwide bad width. we had a lot of discussion about that very fact that you don't go
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clear all this and then give it away to some pretty major operators. commissioner pai? >> this is part of the reason i suggested we adopt a technically sound solution as to where we put broadcasters. if we put them in the up link we avoid this entire issue. if we put them in the duplex -- we not only impair unlicensed -- >> you want to -- >> this is a really good point commissioner pai has raised. there is serious concern. first of all, let's remember what we're talking about here. how do we minimize the aggregate impact across the country? and that means that in a handful of markets, it's a percentage that can be -- is in single digits that there's an issue. he is proposing that you put it in the -- in the uplink. put the interference in the uplink. what that does is knock out an entire base station. >> right. >> the impact is much broader. >> i think you have disagreement with commissioner pai. i have to move along here. my concern is, there are a lot of -- i hear from my colleagues all over the west.
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there are concerns these translators are going to go dark because they're going to get squished out. if they get squished out because you created a whole band of unlicensed, that only adds to the problem. there is a public interest obligation underpinning all of this at the commission to provide for them. i realize they don't have all the rights and all that. i was a licensee of translators myself. i knew i could be pushed out. but through this, you've got some flexibility here to manage. that's, i guess, what we're calling it. i want to switch gears and go to the tcpa issue very quickly because this issue of auto dialer has come up. in your order you adopted a pretty broad definition of an auto dialer. although you acknowledge, there are outer limits in the capacity to be an auto dialer and there must be more than a theoretical potential the equipment could be modified. is my iphone an auto dialer? >> no, sir. >> then let me ask you this. there are at least three apps
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that we found, dial my calls, callbat automated calling, and voxling, that would turn my iphone into an auto dialer. >> so the issue that we were trying to deal with in this order was not the hardware, but the impact. because the -- since congress acted in 1991, the technology has changed. and what congress' instructions to us were is no contact from auto dialers without permission. >> but my question is, if i push somebody's name -- chairman wheeler, i don't ever dial your number. i just push "chairman wheeler" and it dials. is that an auto dialer? >> no, sir. >> if i have a database of names i want to reach out to, let's say voters, and i want to turn them out to vote and i have a device that calls until somebody answers and then i can take the call, is that an auto dialer?
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>> yes, sir. >> so i no longer can do that. if i have a teletown hall in my office, which i do, and there's some company that calls all those thousands in my district, are they now limited in doing this? >> unless the consumer has asked to get this. the statute is very explicit. >> so teletown halls by members of congress and most members do that are now -- >> all i'm doing is -- >> i'm asking you a question. >> no, sir. >> so those are prohibited and your contention is always have been? >> yes, sir. >> wow. that's interesting. that will be news to a lot of people. commissioner pai? >> mr. chairman, part of the reason it is indisputable a smartphone is an auto dialer under the fcc's new interpretation, is that if you look at the statute, is says capacity to randomly or sequentially dial a number.
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the smartphone has intrinsically the ability to do that. the majority rejected my argument saying you can download an app and effectively make the smartphone an auto dialer even if it isn't intrinsically. that's part of the reason why every communications device, other than a rotary phone, nonetheless is now subject to tcpa liability as an auto dialer. that's not good for anybody other than trial lawyers. >> we're hearing from others out there who -- there's this issue with the health care exchanges and whether or not insurance companies can follow up and notify you it's time to come in and have some tests done. i've been told that may be prohibited now. are you aware of that? are you hearing those issues? >> that's the first i've heard of it. it doesn't surprise me. we've seen from a number of different industries they are uncertain what the rules of the road are. >> understand what we were doing, mr. chairman, was
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responding to a series of petitions. we did not issue a rule. people petitioned us and said -- what is the rule? >> you interpreted it. >> and so -- and if somebody wants to petition us on the kinds of things you talk about, we can deal with that. on the health care issue one we specifically had an exemption for being able to bank fraud, health care, things like this, and for government agencies. >> with changing technology, 40% of americans no longer have a land line. you spoke out and said pollsters could go the way of blacksmiths, i guess. >> they have been, right. >> my point is, so that industry in effect, in terms of trying to do a random sample, is now put out of business in effect, right? how do you do a random sample on a poll if you can't randomly sample and dial? >> i once sat down with peter hart to write a piece exactly on
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that in so far as wireless because you can't have random -- you can't get to the wireless numbers. you don't know what they are. that went by the board.'-hñ the issue here is, if you come to us and you say the statute says, which is does, is the only folks who are allowed to be called are those who want to be called -- >> got it. >> and i'm supposed to be a strict constructionalist of the statute. >> we've seen some examples by the court where they would disagree with your interpretation of statue on other issues. >> and you are constantly encouraging me to be a strict constructionalist. >> we're just trying to figure out the impact of your ruling. i've gone way beyond my time. i'll defer to my colleague from california. >> thank you, mr. chairman. well, it's an important discussion. and i think that we need to -- we need to talk about this some more because it's -- what went
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into the statute was like holding a mirror up to the country at that time. >> in '91, right. >> in '91. that's a long time ago. generations of how many generations of technology changes have taken place. so whether someone wants to be a strict constructionist or whatever i think we have to have the elasticity to stay up with the times. i mean each one of us represents 750,000 people. now, maybe we've got to reach out to every single one of them if we possibly can, but in my view meeting with people relative to a telephone town hall meeting has been overwhelmingly embraced. not just accepted but embraced by my constituents. plus, it saves tons of money and they get to just ask whatever they want.
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so these are, you know -- i don't think they'd be satisfied, well, this is what the statute says. i think they'd say change whatever you have to change, but keep up with the changes that are taking place. so it's important. since we're going into a second round, and maybe it's just the chairman and myself -- no, two others? oh, good. billy and ben. i want to talk about your budget. the house appropriators have lael screwed the fcc, in plain english, in my view. i don't think it's funny. i think it's serious. i mean, we had members asking questions today about travel budgets. i think that whatever you do and however you do it, it would be interesting to see if it tracks along with how members of congress are allowed to handle
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their mra. i don't know but it may be something for us to discuss. now, the fy appropriations bill has $315 million in it. that reflects a cut of $25 million below the fy-'15 enacted level and 73 million below the request. now, they also have placed in riders that relative to net neutrality and all of that. now, what i'd like to ask you, mr. chairman is have you had conversations with the appropriators? is there anyone from the majority here that's been asked to lean in with the appropriators? we're constantly putting on the fcc and in oversight all of these issues come up. i don't know who's going to do this work and follow up with every member's request about
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what they want. you wanted a closed offices. members said don't close them, we need them open. but there are so many things that are reliant on dollars, and i'm not talking about having a load of extra dough. i'm talking about the agency being able to carry out its responsibilities. so what i'd like to know from you is have you had conversations with the appropriators on the majority side? have you had conversations with the majority side here to see what can be worked out with the budget? i don't know -- you know these riders -- the president is not going to sign something like that. and at the end of the day, i think that the appropriations process is so messed up around here because we don't have regular order, speaking of transparency and process and all of that, that we're going to end up with an omnibus bill.
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and i think that's what's going to happen. so compare and contrast what your present budget is because an omnibus really doesn't allow for that much more and address for us any conversations or how you're following up with what the appropriators did to the budget of your agency. >> thank you congresswoman. we've had conversations with everybody who will listen and some who won't. and i mean that only in a flippant remark. i'm not saying people aren't listening. we've talked to this committee. we've talked to their committee. i was honored that the chairman came to the appropriations committee, which i think the first time that i've ever known a chairman has actually come -- >> second time. i was there last year. >> oh, i missed you then. >> i was right behind you.
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>> the -- so he's got a record now for -- >> but that's not the point. i want to know about the money. >> yes, we have to live with the number the congress gives us. it's that simple. >> have you, in response to what the appropriators have done -- and i don't know, mr. chairman, were you there to support the appropriators in cutting the budget or against it? >> i was there to listen to the appropriators. >> i see. oh, you didn't testify? >> no. no, i was there to hear what they had to say. >> i see. have you come up with -- you know what i'd like to ask you to do? two things. what you will be able to do with a budget that is reduced by 25 million. >> yes, ma'am. >> and also -- and the top-line things that you have to do. i mean we've got to move forward with the auction, with
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the voluntary auction. all the top-line items. also, if we have an omnibus bill, what that does. i look forward to reviewing that. i think it should be sent to everyone on the committee. i would really like to see that because we're walking into something that i think the members of this subcommittee that have oversight responsibility are going to have to understand that we either have to curb our appetite for giving the fcc assignments that if they don't have the dollars to carry them out, then they don't have the dollars to carry them out. something is going to go. something is going to go. >> i will tell you one interesting thing. we are currently at the lowest number of full-time employees in modern history for the agency. >> thank you. >> thank the gentlelady. now the gentleman from missouri mr. long. >> i was very impressed i got to follow the chairman for the
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first time. you hang around long enough. kind of like sally field. i thought, they really do like me. then i looked around and no one else was here. commissioner, i have a question for you. it's been reported that the chief of the enforcement bureau has acknowledged that many of his cases fall into the legal gray area where companies might not even realize they're doing anything wrong. i know you've raised concerns about this. can you kind of explain your concerns and what could be done to address them? >> thanks for the question, congressman. i think fortunately, many of the fcc's more high-profile enforcement initiatives have betrayed that basic principle of due process. that's not an fcc law. that's going back to king john signing the magna carta 800 years ago this summer. i think part of the reason why i've been so outspoken about it is that if private actors from companies all the way to individuals don't know what the rules of conduct are, then they have no reason to know that their conduct is violating what
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the fcc thinks should be the rule. with respect to certain notices of apparent liability the agency has issued, it's almost more a quest for headlines first and we'll figure out the law later, if at all. but that is backwards. to me we should look at facts look at what the law is. if there's a gap in the law, let's change it to make sure people are abiding by what we think is proper conduct. we can't sanction somebody for violating a rule that they have no reason to know or don't know exists. >> okay. thank you. and chairman wheeler and commissioner, to the two of you, i'm curious about the broadcasters relocation fund and how those moneys are going to be spent. the fund's currently $1.75 billion, as you know. obviously that fund was set up to pay for all of the relocation costs of the broadcasters who are required by the fcc to move to a new channel as part of the auction. after examining these issues for the last few years, the fcc
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determined how many stations is able -- it is able to repack with that $1.75 billion fund? >> it is. thank you congressman. it is a moving target depending upon the characteristics of who participates in the auction. do you have to move an antenna? do you have to build a bigger antenna? >> can you give me a ballpark on number? >> i can get back to you with one, sir. i don't have one in the top of my head. what we have tried to do is develop a set of rules that can live inside of that. so let me get you the number we use for a denominator in that. because i don't know off the top of my head. >> appreciate it. commissioner, same question to you. >> i have heard estimates that it will cost somewhere north of $3 billion to relocate all broadcasters. if that figure is correct and we only have $1.75 billion in the relocation fund, then it necessarily follows that broadcasters will be out of pocket for that extra 1.25
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billion. that's something i hope to avoid and certainly am willing to work with you and the chairman and my colleagues to make sure that doesn't happen. >> well do you have any estimate on the number that the 1.75 billion -- that's the number i'm trying to get to how many that would cover. >> oh, no unfortunately i don't. >> we're leaving this recorded program now to take you live to capitol hill where wendy sherman, under secretary of state for political affairs, is testifying before the senate banking committee on the iran nuclear agreement and sanctions relief. this comes as senators have been voicing their intentions on how they'll be voting on the iran nuclear deal. according to the hill's whip list, ten democrats have said they'll vote for the deal while 24 republicans have said they will vote no. you can find that list on the hill's website. also this morning, president obama will be making remarks on the agreement at a speech at american university in washington, d.c. that will be live at 11:20 on our companion network c-span.
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committee will come to order. we have a very important hearing today, and we have a lot of attendants. i'll start the hearing off by recognizing my colleague and friend senator corker because he has -- he's tied up on similar stuff himself. senator corker? >> i just want to ask the first question. >> oh, you want to go ahead and ask it now? >> it can wait. >> you want to wait? >> yeah. >> okay. if that satisfies you, that satisfies me. much has changed since the committee held its hearing on iran and marked up an economic sanctions bill drafted by senators kirk and menendez. since then, there's been a nuclear agreement with iran
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after numerous delays. many serious concerns have been raised regarding this deal including first and foremost whether it would actually prevent iran from continuing on its dangerous path to a nuclear weapon. although a new deal has been reached, fundamental problems remain with iran, the country upon whose assurances the deal rests. iran remains the world's leading state sponsor of terrorism. it remains a serious risk to the national security interests of the united states. it remains a constant threat to the survival of israel. and despite these grave concerns, it will remain a country with the capability to enrich uranium. under these circumstances, i believe it's critical that congress conduct a thorough review of the agreement as required by the iran nuclear agreement review act. as part of this review the banking committee will focus specifically on analyzing the sanctions relief provided in the
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nuclear agreement and the implications of taking such actions. there's general agreement that the pressure of sanctions brought iran to the negotiating table. congress must consider carefully now the repercussions of lifting those sanctions on our national security and our economic interests. in recent week, many of my colleagues on both sides of ooit have expressed skepticism over several aspects of the agreement. for example, the relief provided to iran under this deal would allow us to rejoin the international -- allow it to rejoin the international economic system. over time this would give iran the financial means to increase its support of terrorism and regional destabilization. in addition, the mechanism for reimposing the harshest sanctions should iran not comply with parts of the deal may prove ineffective except in the most extreme cases of violation. many view it as iran's license
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to cheat. as long as such cheating falls just short of a significant violation of the agreement. financial sanctions have become a critical tool of u.s. foreign policy, and they're an important part of this committee's jurisdiction. in fact over initial administration objections, this committee was instrumental in imposing the sanctions that brought iran to negotiations in the first place. i believe it's essential for u.s. sanctions law and policy to continue to evolve to meet any new security challenges presented by iran. today the committee will hear from two panels. on our first panel, we'll hear from the administration's lead negotiator of the agreement and its lead sanctions expert. following this, the committee will receive testimony from a panel of experts who have studied the agreement extensively, including officials from the previous administration. senator brown? >> thank you mr. chairman. thank you for being here and for
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your very important public service. we will hear from the second panel four witnesses who worked in the bush administration and terrorist finance and middle east policy. in fact this whole process began in the bush administration with a republican president who was in the wake of the iraq war willing to engage iran diplomatically. as secretary kerry observed and senator corker and senator menendez's committee the other day, the bush administration laid the foundation for what became the iran agreement. sanctions relief in return for strict limits on iran's nuclear program. in june 2008, president bush's national security adviser condoleezza rice signed a memorandum with the p5+1 which said in return for iran doing key things to limit its nuclear program, the united states was ready to do a number of things. one, to recognize iran's right to nuclear energy for peaceful purposes. two, treat iran's nuclear
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program like any other non-nuclear weapons state to the npt and the peaceful nature of its program could be restored. three, provide technical and financial aid for peaceful nuclear energy. and fourth, to work with iran on confidence building measures to begin to normalize trade and economic relations that allow for civil aviation cooperation. that was condoleezza rice's agreement at the time. this should sound familiar because it was the early outline of the iran agreement just completed. that's partly why i've been so disappointed, so disappointed in the politicized nature of the debate on this agreement so far including from colleagues coming out in opposition to the agreement within hours of its release, even though it's over 100 pages long and very dense and complicated to read. this is one of the most significant national security issues congress will face in a
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generation. i say that the most important -- this will be the second or first most important vote i've ever cast in foreign policy. second perhaps only or even more important than my vote against the iraq war a decade plus ago. this should not be subject to partisan attacks and political ad wars, even though it has been. congress should give this agreement the serious debate it deserves. we know iran is a sponsor of terrorism. we know it destabilizes the region. we know it violates the human rights of its people. that's why western policymakers agreed to separate out and try to secure agreement on this one specific issue. they knew an iran with a nuclear weapon would be especially dangerous to us to israel, and to the region. that was the singular goal of p5+1 negotiations to keep iran from getting a nuclear weapon. since iran has deceived the west verification is a key. it's not a question of trust. of course we must understand how verification will work. there's a number of questions
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why iaea has sufficient resources to conduct inspections, not just at declared sites, but at suspicious covert sites. will our intelligence capabilities be able to detect cheating? will iran's breakout time extended from two to three months to a year for the next ten years, will we have time to respond politically, economically, and if necessarily militarily if iran makes a break for a weapon? and finally, what actually happens if congress rejects the deal? how would we maintain effective enforcement of our sanctions without the support of our p5+1 allies whose ambassadors made clear to a large group of us yesterday that we would be ice isolate isolated. what happens if a country like china walks away and starts buying iranian oil again? what would a rejection in congress do to the credibility
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of the united states in the eyes of the rest of the world? we need answers to these questions and other questions. some we'll hear today. others we've been receiving in classified sessions. over the years, i've joined many of my colleagues in supporting round after round of tough unilateral and international sanctions which clearly brought iran to the table and helped secure this agreement. some predicted the jpoa would unravel the sanctions regime. it has not. others worried iran would not comply or would benefit unduly from sarngss relief. that has not happened. we have an unusually grave and historic responsibility to assess the consequences without partisan rank or without any partisan attacks to assess the consequences of this agreement. then to weigh the risks, weigh the benefits of allowing the president and our allies to test iran's ability to comply with it. while some of us might differ on tactics, it's clear we share the same goals to ensure that iran does not achieve a nuclear
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weapon. to do that diplomatically, if possible, and to recognize that other alternatives remain on the table and are not precluded by this agreement. thank you, mr. chairman. >> thank you, senator brown. on our first panel we will hear first from the honorable wendy sherman. she's the undersecretary for political affairs at the u.s. department of state. next we will hear from mr. adam zubin. he's currently the acting undersecretary of the treasury for terrorism and financial crimes. both written testimonies will be made part of the hearing record today. ambassador sherman, you proceed as you wish. >> good morning. chairman shelby, ranking member brown, and members of the committee, thank you very much for this opportunity to discuss the joint comprehensive plan of action that the united states and our international partners recently concluded with iran. to reserve as much time as possible for questions i'll only highlight a few key points. by blocking each of iran's potential pathways to the
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fissile material required for a bomb, the deal approved in vee yen ensures iran's nuclear program will be peaceful over the long term. under the deal's provisions, iran must remove two-thirds of its installed century fujs for ten years reduce its stockpile of enriched uranium by 98% for 15 years, and cap uranium enrichment at 3.67%, far below the danger point for 15 years. the core of iran's heavy water reactor at iraq will be removed and rendered unusable, and the facility rebuilt so that it cannot produce weapons grade plutonium. meanwhile, spent fuel from the reactor will be shipped out of the country. i emphasize as both the chairman and the rarnging member did, this deal is based on verification, not trust. before obtaining any relief from economic sanctions, iran must meet its major nuclear related commitments. international inspectors will
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have unprecedented access to iran's declared nuclear facilities and its entire nuclear supply chain. from uranium production to centrifuge manufacturing and operation, and if there are suspicious undeclared sites, no sites, no sites will be off limits. if iran fails to meet its responsibilities, we can ensure that sanctions snap back into place, and no country can stop that from happening. if iran tries to break out of the deal altogether, the world will have more time, a year, compared to the two months prior to the negotiation to respond before iran could possibly have enough fissile material for a bomb. at that point all the potential options that we have today would remain on the table. but we would also have the moral authority and international support that comes from having exhausted all peaceful alternatives. this is also a long-term deal. some provisions will be in effect for ten years, some for
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15, some for 25, and some indefinitely. under the nuclear nonproliferation treaty, iran is permanently prohibited from pursuing a nuclear weapon. the access and verification provisions associated with the npt will remain in place forever. enhanced by the additional protocol as a result of the joint comprehensive plan of action. the bottom line is that this deal does exactly what it was intended to do when we began formal negotiations nearly two years ago. at that point we faced an iran that was enriching uranium up to 20% at a facility built in secret and buried in a mountain and was rapidly stockpiling enriched uranium, had installed over 19,000 centrifuges, and was building a heavy water reactor that could produce weapons grade plutonium at a rate of one to two bombs her year. the plan agreed to will shrink those numbers dramatically, ensure facilities can only be used for peaceful purposes, and
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put the entire program under a microscope. some have expressed concerns about what might happen 15 years from now, but without this agreement, as secretary kerry has said, year 15 would begin today. and if the united states walks away from the jcpoa which has been negotiated every step of the way with our international partners, we will be left alone. that would be the worst of all worlds. iran could push ahead with its nuclear program in whatever direction it chooses. everything we have tried to prevent could occur. we would not have enhanced transparency required under the jcpoa to scrutinize every element of iran's nuclear program, and the multilateral sanctions regime which the president and congress worked so hard to put in place led by this committee, would begin rapidly to unravel along with the senate foreign relations committee, of course. as for iran's behavior, the
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united states is under no illusions. this agreement was never based on the expectation that it would transform the iranian regime or cause tehran to cease contributing to sectarian violence and terrorism in the middle east. that's why we've made clear that we will continue our unprecedented levels of security cooperation with israel. as secretary kerry confirmed earlier this week in qatar, we will work closely with the gulf states to build their capacity to defend themselves and to push back against iranian influence that destabilizes the region. we'll continue to take actions to prevent terrorist groups, including hamas and hezbollah, from acquiring weapons. we'll keep in place all of our own sanctions related to human rights, terrorism, wmd, and ballistic missiles and we'll continue to insist on the release of u.s. citizens unjustly detained in iran and for information about the whereabouts of robert levin sonson so everyone comes home. i'm almost done, mr. chairman.
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we all know the middle east today is undergoing severe stress due to violent extremism and sectarian and political rivalries, but every one of those problems would be even worse if iran were allowed to have a nuclear weapon. that's why the agreement reached in vienna is so important. none of us can accept a nuclear armed iran. some have said if we double down on sanctions we could force iran to dismantle its nuclear program, but quite frankly ladies and gentlemen, members, that is a fantasy. the whole purpose of sanctions was to get iran to the bargaining table and to create incentives for precisely the kind of good agreement we were able to achieve in vienna. over 90 countries have issued statements in support of the deal. that list includes all of the countries that were involved in these negotiations. every one of these countries has made tough choices to keep the international sanctions regime in place. we need their support for implementation.
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it's important to remember that we tried for many years to get here, as was pointed out. we worked on this on a bipartisan basis. president obama and this committee pushed for stronger multilateral sanctions to keep the door open to negotiations. those sanctions forced iran to pay a high price but were not enough to make them change course. that required this diplomatic initiative. congress played a critical role in getting us to this point. sanctions achieved their goal by bringing about serious productive negotiations. now congress has a chance to affirm a deal that will make our country and our allies safer, a deal that will keep iran's nuclear program under intense scrutiny, a deal that will ensure the international community remains united in demanding that iran's nuclear activities must be wholly peaceful. it is a good deal for america, a good deal for israel, a good deal for the world and i say to you all respectively, it
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deserves your support. thank you. >> mr. zubin? >> thank you chairman pj$>shelby ranking member brown, and distinguished members of the committee. thank you for inviting me this morning to appear before you to discuss the nuclear deal with iran. it's a pleasure to appear alongside ambassador sherman. the global sanctions coalition built and led by the united states across administrations and with broad bipartisan support in congress, including from this committee, gave us the leverage to secure unprecedented nuclear concessions from iran. from the start our purpose in imposing these sanctions was to build the leverage that could be used to obtain concessions on the nuclear file. our secondary sanctions were meant to be the kwid for the nuclear quo. our three goals were to close off iran's path to a nuclear weapon, ensure we had the access to know if they were cheating and preserve the leverage to hold them to their commitments and to punish them if there was a breach.
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the jcpoa obtains these purposes. on the sanctions side of the deal, i would like to touch briefly on four points that have been much debated. the scope of relief, the snapback provisions, the campaign that is ongoing to combat iran's support to terrorism, and finally our remaining leverage in the event that the united states walks away from this deal. first, we should be clear in describing what sanctions relief will and will not mean to iran. if iran completes the nuclear steps in this deal, which will take it at least six to nine months the united states will lift our nuclear-related secondary sanctions. the primary u.s. sanctions, our embargo, will still be in place with respect to iran and still be enforced aggressively. iran will be denied access to the world's most important market and unable to deal in the world's most important currency. our sanctions list, with respect to iran, will remain very
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extensive. we are not relieving sanctions against iran's revolutionary guard corps, the irgc, or the quds force or any of their subsidiaries or senior officials. in fact, under this deal, more than 225 individuals and companies linked to iran will remain designated, including major iranian companies and their financial, engineering, and transportation sectors. there's been much discussion of the iranian foreign reserves that are to be released from foreign restricted accounts under the deal. if iran fulfills its nuclear commitments, iran will receive about $50 billion, not two or three times that much. the rest of what's been inaccessible will remain inaccessible. and with that about $50 billion iran will need to try to address an economic hole that is half a trillion dollars deep. this was president rouhani's central promise to the iranian people when he ran for office,
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and he now needs to meet that promise. on snapback, if iran does not uphold its end of the bargain, we can promptly snap back sanctions. for u.s. sanctions, this can be done rapidly in a matter of days. and we have the discretion to impose everything from smaller penalties to the powerful oil and financial restrictions. a binary on or off snackpback would not serve us well. if the sanctions snap back, there's no grandfather clause. no provision in the deal gives signed contract special status. once snapback occurs, any new prospective transactions are sanctionable. third, as we neutralize the most acute threat posed by iran, its nuclear program we need to be aggressive in countering the array of iran's other maligned activities. this deal in no way limits our ability to do so. we've made that clear both to iran and to our partners.
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this means we will sustain and intensify our use of sanctions against iran's backing for terror groups like hezbollah. we'll be using our authorities to counter iran's interventions in yemen and syria. iran's efforts to oppress those who are standing up for human rights in iran. and we'll be using our sanctions to block iran's attempts to develop their missile program. under the interim deal, while negotiations were ongoing, we took action against more than a hundred iranian-linked targets. we'll be accelerateing that work in the days and months ahead alongside israel and our regional allies to combat iran's proxies, to interdict funds moving through its illicit networks. i'll personally be focused intensively on these efforts. fourth and finally, let me provide my perspective as a sanctions official on the implications of walking away from this deal. the sanctions regime generated much of its force because the
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world's major powers including iran's closest trading partners and oil customers, agreed on the goal of ending iran's nuclear threat through diplomacy. it would be a mistake for the united states to back away from this international consensus on the notion that we could feasibly unilaterally escalate the pressure and obtain a broaderbroad er capitulation from iran. u.s. sanctions are extremely powerful. i've seen that first hand in my ten years at the treasury department but they're not all powerful. if the u.s. were to walk away and ask our partners to continue locking up iran's reserves, limiting their oil purchases, the coalition we assembled would fray. with unpredictable and risky results. it is difficult to see house a broken international consensus and less leverage would help us to obtain a, quote much better deal. instead, enforcing this deal securing the far-reaching nuclear concessions iran has made will capitalize on our
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carefully built economic pressure and deny iran access to a terrifying weapons capability for the foreseeable future. and as we move forward you have my commitment that the dedicated team at treasury will continue to pursue smart and aggressive sanctions to address iran's remaining malign activities. thank you very much. i look forward to answering your questions. >> i'll yield to senator corker. >> thank you, chairman. we have miss romano coming in. actually, we have four briefings and/or hearings today, counting this one. so thank you very much. i want to start by addressing the ranking member's comments. i couldn't agree more that this should not be a partisan effort. could not agree more. i met with senator reid on monday just to talk a little bit about how this debate will take place in september. i can say to every one of my colleagues on both sides of the aisle regardless of how people vote on this you're not going to hear me making comments
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either way. i think this is a very important vote. what we've tried to do in the foreign relations committee is to make sure that people fully understand the ramifications. so i could not agree more. i do want to say that one of the details you left out in your letter regarding the bush agreement was they were not going to agree to enrichment. that's a detail that's kind of been left out. and i think that's the rubicon that has been passed here that we in essence are -- we have three state sponsors of terror that we list. sudan, syria, and iran. what this is agreement in essence does is codifies with our approval the industrialization of their nuclear program. that's a fact. that's not been debated. i want to say that i think senator donnelly senator heitkamp, senate schumer, senator menendez all know that i
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have been very open to supporting an agreement. i had one of the few conversations i've ever had with secretary kerry. i think we all know him well. i actually thought he was listening to what i was saying on a saturday. it was interesting. i was standing in my driveway, and i emphasized the importance of these last pieces. i'm talking about the inspections. i'm talking about the previous military dimensions. i know it's possible military dimensions. we all know they're involved militarily. and how important that was not just from the standpoint of what it said but the indication to us that we were really going to apply these things, that we were really going to be tough and make this agreement stand. when i got the documents -- and i've been through all of them extensively -- i have to say my temperature rose very heavily. then when i saw that we were lifting the conventional ban in five years the missile ban in
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eight years, and on the front end, lifting the missile test ban. on top of what these agreements said, i was very troubled. i want to get the sanctions relief, first of all, in perspective perspective. i know you said, adam, 50. most people have been saying 56. overall it's about 100. some of that money is tied up in deposits for activities that are going to be taking place. but in fairness, it's about 100 billion, just to put that in perspective, their economy is 406 billion. so 100 billion would be like us getting in the next nine months $4 trillion. just relative to our economy. over the next -- they've all said over the next ten years they're going to get 400 to 600 billion. that would be like us getting $17.5 trillion in our coffers over the next ten years on a relative basis. but here's the question i have.
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i was very discouraged with the final round and i think maybe i showed a little temperature when i went through it and understand it. i apologize for that. i worked with senator cardin i began with senator menendez over an excruciating period of time to make sure that the way this agreement worked we got the documents. we got them in a way that was acceptable. he spent all weekend with you the white house and others on this iran review act. if we were to get all agreements, including the side agreements, now the very entity that we're counting on to do the inspection, we can't even get a copy of the side agreement that lays how how we're going to deal with -- and i would say to everyone, if you haven't been to the intel area, you ought to see what iran is doing today while we're sitting here. you should go look at it or get them to bring it to you. we can't even see the agreement
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that relates to how we're going to deal with pmd. by the way, all sanctions relief occurs regardless of what they do with pmd. the iaea has to bring a report but if they d-minus it or a-plus it, sanctions relief still occurs. so i would just ask miss sherman, after this painstaking effort we went through to make sure we didn't ask you to give us documents you couldn't give us, you knew what the iaea protocols were. why not will you not give us the documents that exist that are so important to all of us relative to the integrity of this? why not? >> thank you very much. and thank you, mr. chairman, for all of your hard work along with first senator menendez, then senator cardin on this deal and all your attention to it. let me answer your question, but then i want to come back to one other point you made.
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you're about to have the director general come and meet n informally with the senate foreign relations committee. he made this decision on his own because the iaea is an independent agency. you made a bipartisan invitation to him, and he agreed to come and i found out about it about the same time you found out about it. he did this on his own. i think it will be very useful. >> but why can't we -- >> i'm going to explain. we don't have the documents in the first instance. we don't have them. so we don't have them to give to you. the reason we don't have them is because they are safeguards confidential. the director general will explain this to you and what that means. the iaea does safeguards confidential protocols with the united states, and they don't share them with anyone else. so they don't want to share iran's with anyone else. you, i'm sure, will say to me but ambassador sherman they did tell you about them.
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indeed, they did. and the reason they did is it was in the middle of the negotiation, and they wanted to go over with some of our experts the technical details. so i did see the provisional documents. i didn't see the final documents. i saw the provisional documents, as did my experts. as you know, there will be a classified all-senate briefing this afternoon. i will go over in detail, in a classified setting everything i know about these arrangements. >> so again i want to say we spent four days going over every detail with the administration to make sure that the dock you wants we were asking for were ones that could be delivered. >> and you got every single document we have. every single one. >> the entity that we are depending upon for the integrity of this deal, we don't even have the agreement. let me ask you this. do you have any understanding as to whether there are
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limitations, whether the iaea actually is going to have physical access inside to take samples themselves? would you give that -- >> i will be glad to discuss all of this in a classified session this afternoon. and i will say this also, senator. on two other points you made, what iran must do is give to the iaea all of the actions and all of the access they believe is required for them to write their final report on the possible military dimensions of iran's program. the united states has already made its own judgment about that. we made is in a national intelligence estimate that was made public some years ago, and that estimate said publicly that we believe they did have military dimensions of their program up until 2003. so the united states has already made its jumdgment, and we stand by that judgment. what this deal is most focused
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on is where the program is and where it's headed, and i quite agree getting access is important because it says something about access in the future. establishing the credibility of the iaea is also important to this. so i'm very glad that the director general is coming to see you. i would add one other point, mr. chairman. that is that sanctions are absolutely crucial to having brought iran to the table, but sanctions never stopped iran's program. when the obama administration began, there were about 5,000 centrifuges. sanctions were the most extensive ever during the obama administration, and yet iran went to 19,200 centrifuges. so sanctions will not stop their program ever. it is negotiations or other options that will do that. >> i would just say in closing, and i didn't want to take this
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much time, i would just say to every senator here this is a big decision. but wendy and secretary kerry, every other country, including iran, knew that because we drafted this iran review act regardless of what is being said, we were going to have the opportunity to weigh in. we were going to have the opportunity to weigh in. so when people say it's this versus that, especially on these issues that we have been so concerned about, and when we saw they were just punted on negotiated away issues that we with great sincerity talked with the administration about and yet they were just punted on. i think each of us has to make our own decision based on
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whether we think this is going to keep iran from getting a nuclear weapon regard. i hope at some point on this grandfathering issue, and i'll stop. we sent out a document to help everybody. it was nine pages long. we asked the administration for red lines. i've got resources with staff and others to go through this agreement. it's a huge privilege to do that. so i sent out a cliff notes to everybody. there was one question about whether the gold rush that we're all concerned about is going to occur. that is people going into iran immediately to sign contracts. we use the word grandfathered contracts. you used some interesting words. i guess the question i have and it's still unanswered -- and by the way, our friends in britain and germany and france and the eu have all told me that contracts are grandfathered.
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now, they backed off a little bit. there's some confusion around that. by the way, i want to say there is confusion. i think iran views it the way we had it in this document. but if someone spent a billion dollars when these sanctions are left -- let's say bp -- on an oil facility and sanctions snapped back -- by the way, y'all realize in nine months iran has the nuclear snapback meaning it shifts to them. all of the sudden if we put any sanctions in place, the agreement clearly states they can walk away. they have all their sanctions relieved, but they can walk away. so they have what's called a nuclear snapback. we have sanctions snapback. i guess the question is if somebody enters into a contract over the next year when these sanctions are relieved, everyone expects them to be relieved in nine months regardless of what the pmd report says can that contract continue on? in other words, it was put in
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place during the free time. can it continue on if sanctions are put in place afterwards? that's a gray area. i think it's a detail, but i think it does -- and i realize it's not the biggest issue, but it does create concerns about people rushing in now to establish contracts which we see happening right now with europe. >> senator, i don't think that's an unimportant issue. i wouldn't describe that as a detail at all. i think that's pretty central. if you're talking about snapback and the leverage that we have, if companies could enter into contracts and then have them be somehow protected against snapback, then we would have a very weak snapback indeed. we were intent that we were not going to let that happen. so what we have, and it's not gray, it's very clear. iran might want to put some grayness into the issue, but they understand this issue as well. obviously when sanctions are lifted, the business that's allowed by that lifting can occur.
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if sanctions are snapped back any perspective transactions on a pre-existing contract or on a new contract are sanctionable. it's that clear. our friends in the u.k. understand that. france and germany understand that. if there's any doubt, i want to remove it here today. >> could you get a letter from the other parties that agree to that? that would be helpful to us. if you could get the other parties, even including china and russia, to agree that that's the case because we're getting very mixed -- i think it would just help us to some degree. at least some people who may still be on the bubble about the issue. >> if i may just add i think senator corker i spoke with sir peter westmicott the ambassador to the united states this morning. i know he's talked to many of you. he shared with me an e-mail that i believe he sent to your office about this. he said, i want to clarify the e-3 position on our ability to apply sanctions to iran for
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other activities and for snapback, and said that, in fact he is committed and europe is committed to snapback and if the eu retains the freedom and ability to apply sanctions for other forms of unacceptable activity. he also said to me on the phone this morning that he absolutely understands, all europeans understand, and held ga schmitt, the deputy just had a meeting with the european union to affirm this very fact you questioned, which is indeed that companies have no grandfather clause whatsoever. >> senator corker thank you. senator brown? >> thanks, chairman. i appreciate his seriousness and gravitas about this issue and thoroughness that we have sanctions snapback, the iranians have, as he said nuclear snapback. the military option, obviously, is always on the table. it's a political agreement that
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any party can obviously pull out of, just to make that clear. i want to -- and again, i appreciate senator corker's comments. i don't know that the analogy of what these -- first of all, the discussion on 50 versus 100 plus, and i want to get to that in a moment. i don't know that analogizing that to the size of our economy is a very compelling -- really gets us anywhere. that aside, i want to talk about sanctions relief since this is the jurisdiction of this committee, the primary area of jurisdiction. i know you imposed, secretary sherman, a pay for performance model on iran in the agreement. i'd like you to discuss generally the steps that iran will have to go through before receiving any new sanctions relief under the agreement on implementation day. if you would walk thererough that with us. >> sure. iran has to uninstall two-thirds of its centrifuge.
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it has to get its stockpile down 98% from 12000 tons to -- 12,000 kilograms to 300. it must take the core of the iraq reactor out and fill it with concrete so that it is rendered unusable. it must set up with the iaea all of the verification processes. the iaea will have access to the declared facilities on a 24/7 basis. there will also be realtime data transmission. there will also be electronic seals so, in fact, if something is tampered with the iaea will know about it in real time. they'll put in place what's called a surveillance of centrifuge production, which means that rotors and bellows, which are the active parts of a centrifuge, the iaea will have eyes on that production.
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that will be for 20 years. for 25 years the iaea will have eyes on uranium from the time it comes out of the ground until it's milled -- from its mining until its milling conversion, fed into gas, so they will not be able to divert one ounce of uranium, one portion of uranium. we'll always know where it goes. so iran in essence would have to create an entire new supply chain covertly in order to get to a nuclear weapon. in addition to all of these measures, which have to be put in place iran has to have taken all of the steps the iaea requires on pmd. that's supposed to happen, actually, by october 15th which is around adoption day as opposed to implementation day. so even sooner. all of these things have to take place, and all of these are detailed in annex five of the agreement, before there is any sanctions relief whatsoever. at that point all sanctions relief is a lifting.
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it is not a termination. termination comes many years later or when the iaea reaches what's called the broader conclusions. the broader conclusions means that they have no undeclared facilities and indeed they can certify their program is completely peaceful. >> mr. szubin, if you would describe what sanctions remain in place that will help us manage -- eliminate as much as possible nefarious iranian activities and terrorism in the region. within that answer if you would talk about the $50 billion figure, why it's 50 and not 100 in terms of obligations. and second if you would speak to the 500 billion -- you said half a trillion $500 billion -- i think you used the word whole in the iranian economy, what
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that means in terms of pressure on their government. i assume you're implying to meet some domestic needs as some of this money is available to the iranians. >> the sanctions regime that remains in place to combat iran's malign activities -- and i take your question to mean not just referring to terrorist groups like hezbollah, but the houthis, their support to the shia militants in iraq, the assad regime in syria. that sanctions regime fully remains in place, and it's a very extensive one. it's not just the companies the front companies and actors and the generals that we've listed so far. it's an ongoing authority that we have, that the europeans maintain, and that many of our allies maintain to go after these actors. >> if i could interrupt, you're confident that our allies stay with us on those sanctions, unlike the suggestions we hear from ambassadors and others that particularly china and russia
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won't be there with the broader, deeper sanctions that are in place now overall. >> one does need to distinguish when it comes to iran's regional activities, there's a coalition of countries that are highly concerned that are working alongside us. increasingly, we're seeing a lot of cooperation from the gulf countries, who for understandable reasons are increasingly troubled by iran's activities. i would note, and i think it deserves highlighting you saw sau ya saudi arabia sanction a number of hezbollah leaders just a few months back and in doing so call out hezbollah as a terrorist organization. the concern is very high. but our concerns about hezbollah, i don't want to mislead the committee, are not shared worldwide. we've not been able to obtain u.n. security council resolutions with respect to iran's proxies in lebanon. and i don't think we'll see china and russia stepping up in the way that we've seen our allies in europe, in israel, and the gulf with respect to a lot of these regional interventions.
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>> secretary sherman the singular goal, as we've discussed, of the p5+1 negotiations was to make sure that iran did not obtain a nuclear weapon. many of the opponents to this agreement have talked about the dollars that have been available -- that will be available because of the lifting of sanctions. and what discord and terror iran can sew in the region. speak to the broader strategy outside of nuclear issues in the middle east and sort of where this money goes and what the administration's doing to combat that. >> thank you very much senator. indeed, we share the concerns that this committee has and the senate has and our country has about iran's activities in the region. not only will we have all the sanctions tools that acting undersecretary szubin laid out,
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but as you now president obama has provided more security assistance to israel than any other president. to be fair, every president democrat or republican, has built on the efforts of the previous president. so each president has increased that assistance, but this president most assistance. this president has also commissioned technology that allows us to take actions if we need to in iran in a way that no president has before and to ensure that we have the options that we need commissioned and deploy those options. in addition, as you know the president had all of the gcc, the gulf cooperation council to a meeting at camp david to talk about how to develop security for the region and a regional strategy. that's been followed up with a meeting that secretary kerry just had in doha in which by the way the gcc supported the joint plan of action, believing that if it's fully implemented will
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bring more security to the region because iran will not be able to project power, will not be able to have a nuclear weapon that acts as a deterrent but we are focused very much on helping the gcc to better improve its capabilities, whether that's special forces training, intelligence sharing, and really work in coalition. so i think we are all in common cause. this is quite critical, and we will be following up on a daily basis to make sure that these new strategies, these new efforts go forward. and finally, as you know secretary of defense carter was recently in israel. we are ready whenever the prime minister of israel is ready to discuss further enhancements to security assistance. >> my last question -- >> i'm sorry senator. i had neglected to answer on the $50 billion. the answer is and we have a high degree of confidence in our figures on this, that it's about
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$50 $50 billion. i can get into more detail on a classified session and i know we have a session with you and other members of the senate later this afternoon. >> that's important to do. thank you. >> the reason that the $100 billion figure has been out there and we've been speaking to it for several years that there's a $100 billion of the central bank of iran's foreign reserves that have been inaccessible to it. some of that has been due to the sanctions, the powerful sanctions that congress put in place. some of it because it's already been obligated for other reasons and some of it because it's gone. it's been spent. and so one can list it on the books but it's just not there. obviously those latter baskets, the funds that have been spent and aren't there the funds that are obligated and now in place as collateral can't be recovered even when sanctions are lifted. what remains is this about $50 billion that can come back to iran. with that, one needs to keep the
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perspective of the about 500 birthdays billion or more that iran needs in terms of unpaid military pensions and salaries needed infrastructure, in terms of their oil sector which is crippled. a final point that i want to add -- >> how much of that half trillion dollar hole would be required for them to get their oil sector up and producing so they can bring the wealth into the country that the iranians that we all think about and worry about that they obviously aspire to. >> their oil minister has publicly estimated that they require 160 to $200 billion just for the oil sector repairs alone. that's to get it back to baseline to undo the damage that was dan by the sanctions over the last few years. across the iranian economy at large, we see about a seven-year lag due to the sanctions meaning upon sanctions relief, let's say in the middle of next
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year the major economic sanctions abroad are believed it will be seven years before iran comes back to where they ought to be today. >> if they invested the 160 to $200 billion, it would take them that long? >> that wasn't a comment on the oil repairs. the oil repairs might happen in a shorter amount of time, two to three years. i'm not certain. i'd need to get back to you on that. if you look at their gdp curve and where it ought to have been it had this radical break, obviously due to this international sanctions effort. it only gets back in seven years to where it ought to have been today. so the hole that they're in really cannot be overstated. $50 billion coming back to them does not begin to meet the needs. what's more that $50 billion is not spending money. that's all of their freed-up foreign reserves. in other words, no country is going to exhaust its foreign
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reserves down to zero. it's risking huge instability to do so. we estimate that iran is going to use that money primarily for its domestic economy and it's going to need some in reserve in the way any country would with its foreign reserve. >> last question mr. chairman. secretary sherman many of us have raised concern about the prospects of the u.n. embargoes in iran and conventional arms being lifted in five years and on ballistic missiles in 8 years. i know all of us would have preferred to retain these embargoes much much longer. russia and china felt differently. outline if you will briefly what specific u.n. legal authorities remain in place to combat iran's conventional arms and missile efforts. >> first of all, we'll still be able to rely on other u.n. security council resolutions against areas of concern in lebanon, north korea, shia
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militants in iraq et cetera. all of those remain in place. we'll continue to work with over 100 countries around the world that have signed the proliferation security initiative to help limit iranian missile imports or exports. the missile technology control regime also remains in place and will play a critical role in that regard. in conjunction, we have a lot of unilateral, bilateral cooperative tools. we have ongoing sanctions in place as adam has pointed out. we have executive orders 12938 and 13382 which authorize u.s. sanctions on foreign persons that materially contribute to the proliferation of missiles capable of delivering weapons, and we will make use of those executive orders. the iran/north korea syria proliferation act levies u.s. sanctions connected to iranian cruise missile activities and
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the lethal military provision in the foreign assistance act, the iran sanctions act as amended in the iran/iraq arms proliferation act all impose u.s. sanctions on individuals and entities. the u.n. security council resolution that was just recently passed does not let iran's ballistic missile program off the hook. the current prohibitions on supply of ballistic missile related items, technology and assistance will remain in place. under this prohibition, states are still required to present transfers to iran of ballistic missile related items. they're still requireds to preventwáub provision tov[lñ iran of technology, technological assistance and otherãrelated services, required to prevent=ñog transfer of other$+a ballistic missile items that might pass through theird i couldqexi go on. there are about ten?áya things q
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itcí ñ still continues to require states around the world to d+ìáhp &hc% we would have liked them to go on forever, of course. but we have kept them on far longer than iran russia or china wanted them on. we have kept them on article 41 chapter 7 which means they are enforceable enforceable. more importantly, we have other u.n. security council resolutions and other tools unilaterally to make sure that where arms are concerned and where missiles are concerned, we can keep moving forward in every way we need to. >> thank you. >> senator toomey? >> thank you mr. chairman. i thank the witnesses for appearing today. i want to go back to the issue that was raised by senator corker. ambassador sherman the iran nuclear review act of 2015 is abundantly clear i think, that congress is supposed to receive all the documentation, all the agreement, all the annexes all the related materials. it says in the beginning
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referring to the transmission of agreements, the president shall transmit to the appropriate congressional committees and leadership the agreement as defined in subsection h-1 including all related materials. subsection h-1 sayspecifies that this agreement includes any additional materials related thereto, including annexes, apen dick and any other related agreements. i think it's clear that's meant to be completely all encompassing. yet we discover that there's a secret side agreement between the iaea and iran which contemplates the previous dimensions of iranian activities which strikes many of us as a very, very important information to have to evaluate whether or not future activities is in violation of this agreement or not.
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senator corker asked why you haven't given us the document and if i understood you correctly you said it's because we don't have the documents. my question is knowing this statute, the intent of this statute and the letter of this law, why didn't you insist that this essential to enforcement document be disclosed? >> senator thank you very much for your question. as you point out, we don't have the document and the united states senate has every single document that the united states government has. secondly the reason we did not insist is because we want to protect u.s. confidentiality. this is a safeguards protocol. the iaea protects our confidential understandings and our confidential arrangements between the united states and the iaea. now, i know you will say this is a different situation and i

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