California accepts $1.86 billion broadband grant while disputing Trump administration conditions

The CPUC voted to ratify the funding plan in September. Reynolds said in the letter that his agency's acceptance of the funds is based on the CPUC's best understanding of the effect of Section 50 of the BEAD terms and conditions. Section 50 says each state shall commit that it will not enforce any law, regulation, order, contracting requirement, or other enforceable obligation that directly or indirectly regulates the rates, terms, and conditions of broadband internet service, or imposes net neutrality rules, open access, or other utility-style rules on broadband internet service, against a subgrantee or its affiliates anywhere it provides service within the state while that subgrantee has any subgrant still within its period of performance, extended period of performance, or federal interest period.

The BEAD rules specify that a net neutrality rule is one prohibiting internet service providers from blocking content, throttling speeds, imposing data caps, or engaging in paid prioritization. Internet service providers obtaining BEAD funding could be exempt from such laws for up to 14 years.

Reynolds said the NTIA-imposed condition is vague and ambiguous as to its scope and its relationship to Section 47 U.S.C. § 1702(g)(2)(A)(i) of the BEAD statute. He wrote that the CPUC does not interpret Section 50 to require it to waive, release, or otherwise forfeit any rights, claims, arguments, or defenses concerning potential implications of Section 50 that may violate applicable laws. He also wrote that the CPUC's acceptance of funds should not be understood as agreement either to refrain from compliance with mandatory legal duties or obligations, or to constrain other State of California entities in the exercise of their authorities to enforce state law, which is outside the scope of the CPUC's authority. He noted that California's net neutrality law expressly provides that any waiver of the provisions of this title is contrary to public policy and shall be unenforceable and void, and that many of the CPUC's own programs that touch on broadband internet access service are mandated by the California Public Utilities Code and are neither discretionary nor waivable.

The NTIA updated its BEAD progress dashboard to reflect that California has signed its final agreement with the federal agency. California was the last state or territory to turn in its final agreement. The dashboard page said all 56 states and territories have signed and returned their award agreement, finalizing the process.

California could face legal problems if and when it distributes the money, which is to be given to internet service providers in exchange for deploying broadband in unserved and underserved areas. Internet service providers could insist that they do not have to follow state law and sue California, or simply decide to violate consumer protection laws and defend against any lawsuits the state attorney general might file against them.

Reynolds apparently hopes to avoid that outcome by holding discussions with the NTIA to resolve any disagreement over the enforceability of California state law. He wrote that to the extent NTIA and the CPUC disagree about the CPUC's obligations under Section 50 and other terms and conditions, the CPUC will execute any subgrant agreements if and when the CPUC and NTIA are able to resolve such disagreements and any other applicable conditions are met, and that staff will be directed to work diligently and cooperatively with NTIA staff to find such a solution.

Barbara van Schewick, a Stanford Law professor and a longtime proponent of net neutrality and other telecom regulations, told Ars that whether California's strategy works depends on what happens next.