Most of Tuesday's hearing focused on the evidence against the 38-year-old agent.
Lam was first arrested almost a year and a half ago on charges of exchanging child pornography on the Internet.
Investigators say they found 83 images and videos on his computers at his San Francisco home. That prompted Homeland Security to launch a lengthy investigation.
"The actions of this particular defendant, given that he was a Homeland Security agent, are very deplorable and very disturbing," said Alex Bastian, spokesperson for the San Francisco District Attorney's Office.
The United States Attorney turned the case over to the District Attorney's office which decided earlier this month to prosecute Lam. He was being held on $250,000 bail.
Lam's lawyer, Lucy McAllister, asked the judge to release him on his own recognizance. She said her client was not a flight risk.
The judge lowered Lam's bail to $80,000.
McAllister also challenged the prosecutor's charges that Lam actually shared the files reportedly containing child porn.
"[The prosecuter] indicated that she does not have evidence of recipients and she doesn't have evidence of locations where the files were allegedly distributed," said McAllister.
But Bastian said they have all the proof they need.
"The defendant placed this child pornography on a file sharing program and in turn, made it available to the entire worldwide web to download. And one of the people who actually downloaded the material from his computer was an undercover officer," he said.
Lam will be back in court in April to enter a plea.
