California has agreed to accept its $1.86 billion in federal BEAD funds, but is putting the NTIA on notice that the new conditions being imposed by the Trump administration will not amount to giving up its power to regulate Internet service in the Golden State.
In a Nov. 2 letter accepting the Notice of Award under the BEAD (Broadband Equity, Access, and Deployment) program established by the 2021 infrastructure law, California Public Utilities Commission (CPUC) President John Reynolds said the agency does not read the new federal grant conditions as requiring California to forfeit its legal rights or to stop enforcing state law, and that the CPUC will sign BEAD grant recipient agreements only if and when the state and NTIA resolve its disagreements.
At issue is Section 50 of NTIA’s updated grant terms, which would require states to commit not to enforce laws that regulate broadband rates, impose net neutrality, require open access, “or other utility-style rules on broadband internet.”
The letter comes less than four months after NTIA approved California’s BEAD Final Proposal on July 17, following a year of pressure from the Trump administration that states submit to “Benefit of the Bargain” rules to receive its BEAD dollars that were not initially a part of the law that Congress passed in 2021 — a move that experts have said was on shaky legal grounds.
During that time, the CPUC has pushed to address broadband affordability — the single biggest barrier to expanding high-speed Internet access — through a variety of state actions, including the attachment of conditions on Verizon’s acquisition of Frontier which require the company to offer a discounted plan for $20 a month or less for income-eligible households.
Reynold’s letter seems to indicate that the state does not intend to ignore state laws and regulatory requirements.
“The CPUC’s acceptance of funds under this award 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,” Reynolds letter to NTIA says.
“Moreover, 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’…Likewise, 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.”
What Happens Next?
For industry analysts, the standoff was predictable. Doug Dawson of CCG Consulting notes that when BEAD was first created, providers were required under BEAD to follow net neutrality, which was an FCC rule at the time the infrastructure law was passed. But under Brendan Carr’s leadership at the FCC, those rules were reversed, even though California’s net neutrality law had already been adopted and essentially mirrored the FCC’s previous rule.
“California is saying we’ll take the money, but we’re not giving up our authority,” Dawson said, summarizing the CPUC’s position.
Meanwhile, he expects the NTIA will say California’s response is unacceptable, which will likely lead to the state’s $1.86 billion BEAD grant award process to be put on hold until the dispute is settled, either through a legal challenge or perhaps with a Congressional remedy.
Dawson tells ILSR this outcome was “fully expected.”
The result is another test of how far NTIA can go in attaching conditions that Congress never wrote into the 2021 law.
Besides California, Illinois is the only other state that has not received its final BEAD award.
Header image of CPUC building courtesy of Wikimedia Commons, the Creative Commons Attribution-Share Alike 3.0 Unported license, CC BY-SA 3.0, Attribution-ShareAlike 3.0 Unported
Inline image of scales of justice courtesy of Pexels.com
