California will accept up to $1.86 billion in federal broadband money but says it will keep enforcing its own internet rules, setting up a possible legal fight.
California told the federal government it will take its share of a $42 billion internet expansion fund. It also says it will not give up its own consumer protections to get it. Washington attached a condition that says otherwise, and the two sides now disagree. Until that is settled, the state will not pay any of the money to internet providers.
The fund is called BEAD, short for Broadband Equity, Access, and Deployment. A federal agency, the NTIA, set a condition on it. States that take the money must agree not to enforce rate rules or net neutrality rules on providers that receive funding.
California may get up to $1.86 billion. It plans to spend $1.42 billion to bring internet to 270,571 locations. The rest would go to a mix of building and non-building projects.
The federal text bars a state from enforcing laws that directly or indirectly regulate prices or terms of internet service. It also bars net neutrality, open access and other utility-style rules. The BEAD rules define net neutrality as a ban on blocking content, throttling speeds, imposing data caps or paid prioritization. Throttling means deliberately slowing a connection.
The exemption would apply to a provider's service across the state, not just at funded locations. Providers could be exempt for up to 14 years.
John Reynolds, president of the California Public Utilities Commission (CPUC), wrote to NTIA head Arielle Roth. He said the CPUC cannot be bound by terms that are unconstitutional or not authorized by law. He also said the CPUC cannot stop other state agencies from enforcing state law. That suggests the attorney general could still act against misbehaving providers.
Reynolds added that California's net neutrality law says any waiver of its provisions is void. If the NTIA does not change course, California could sue on the grounds that the condition is unconstitutional.
The NTIA does not appear ready to bend. A spokesperson said the award terms are the entire agreement and that the CPUC's letter is not part of it. Public Knowledge, a consumer advocacy group, backed California. Its counsel called the demand "preposterous" and said the NTIA has no authority to alter California law.
California was the last of the 56 states and territories to return its final agreement, according to the NTIA's progress dashboard. The money is not yet flowing to providers. Possible lawsuits could involve the state, the federal government and internet providers seeking funds. The material does not say how long the dispute could last or when new connections would be built.
A federal funding condition could override California's net neutrality and price rules, so watch whether the state sues and how soon new connections get built.
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