California accepts funds while rejecting conditions
California is accepting $1.42 billion in broadband grant funding from the Trump administration while refusing to scrap state net neutrality laws or telecom regulations. The National Telecommunications and Information Administration decided last year that states must not enforce rate regulation or net neutrality rules on internet service providers receiving money from the $42 billion Broadband Equity, Access, and Deployment program. California will use its share to reach 270,571 locations and may receive up to $1.86 billion for various deployment and non-deployment projects. The CPUC voted to ratify the funding plan in September. California was the last state or territory to turn in its final agreement, which the NTIA updated on its progress dashboard to show all 56 states and territories have finalized the process.
The CPUC President John Reynolds told Assistant Secretary of Commerce and NTIA Administrator Arielle Roth that the commission cannot be bound by any terms or conditions that are unconstitutional or not authorized by law. Reynolds also argued that the NTIA-imposed condition is "vague and ambiguous" regarding its relationship to the BEAD statute. The state will not distribute any funding to internet service providers until the state and the federal agency resolve their differences. The NTIA spokesperson stated that the terms and conditions of the award constitute the entire agreement and that the department will not incorporate the CPUC’s concerns into the award.
Disputes over Section 50 authority
The NTIA condition, known as Section 50, requires states to commit that they will not enforce any law, regulation, or order that regulates the rates, terms, or conditions of broadband internet service. This includes net neutrality rules, open access, or other utility-style rules. These exemptions for internet service providers could last for 14 years. The rules prohibit rules that prevent providers from blocking content, throttling speeds, imposing data caps, or engaging in paid prioritization.
| Feature | Detail |
|---|---|
| Total BEAD Program Fund | $42 billion |
| California Grant Amount | $1.42 billion |
| Potential California Total | $1.86 billion |
| California Deployment Targets | 270,571 locations |
| Net Neutrality Exemption Duration | Up to 14 years |
Raza Panjwani, senior policy counsel at Public Knowledge, called the administration’s demand "preposterous" and "brazen and meritless." Panjwani stated the NTIA has no authority to alter California law or require state agencies to stop enforcing it. The CPUC cannot prevent other California agencies from enforcing state laws, and the attorney general maintains the right to punish misbehaving internet providers.
Risks to consumer protections
California faces legal instability if it distributes money to providers that might later claim immunity from state laws. Internet service providers could sue the state to assert their exemption or ignore consumer protection laws and face legal action from the attorney general. CPUC President John Reynolds noted that the commission cannot refrain from compliance with mandatory legal duties and that many CPUC programs are mandated by the California Public Utilities Code. California’s net neutrality law also states that any waiver of its provisions is "contrary to public policy and shall be unenforceable and void." Attorney General Rob Bonta’s office declined to comment.
A spokesperson for Governor Gavin Newsom said California is not giving up its right to enforce state laws against internet providers. The spokesperson stated that California is accepting federal broadband funding to bring high-speed Internet to hundreds of thousands of homes and businesses, many of which are in rural and underserved communities. California’s net neutrality protections still stand because the governor’s office maintains that protecting these communities is a priority.
Stanford Law professor Barbara van Schewick said the letter preserves California’s legal arguments before the state signs contracts with providers. She noted that the statute for the BEAD program directs states to ensure providers comply with all applicable federal, state, and local laws. The demand also threatens a 2019 law that prohibits mobile providers from throttling first responders during emergencies. This law followed an incident where Verizon throttled data used by Santa Clara County firefighters during a wildfire. The real test occurs when a provider blocks content, throttles speeds, ignores a price commitment, or engages in paid prioritization.
