The Trump administration's National Telecommunications and Information Administration (NTIA) required states receiving money from the $42 billion Broadband Equity, Access, and Deployment (BEAD) program to agree not to enforce rate regulation or net neutrality rules on funded internet providers.
In a letter to NTIA Administrator Arielle Roth, California Public Utilities Commission President John Reynolds said the commission cannot be bound by unconstitutional or unauthorized conditions and does not waive any legal challenge.
He also said the commission cannot stop other state agencies, such as the attorney general, from enforcing state law.
California plans to use the $1.42 billion to bring broadband to 270,571 locations, and it could ultimately receive up to $1.86 billion.
Reynolds said the state will not pay any money to internet providers until it and NTIA resolve their disagreement, which could delay projects.
NTIA says the award terms are the entire agreement and that the commission's letter is not part of it.
If the dispute is not settled, California could sue on constitutional grounds.
Providers could also argue they need not follow state law, or violate it and defend against enforcement actions.
Under the BEAD rules, providers could be exempt from such laws for up to 14 years.
Wildfire-preparedness groups warned that the condition could affect a California law barring mobile carriers from throttling first responders during emergencies, which followed Verizon's throttling of Santa Clara County firefighters' data plan in 2018, as well as battery-backup requirements for cell towers.
Public Knowledge called the demand "brazen and meritless." Stanford Law professor Barbara van Schewick said the letter does not remove the condition from California's award and that only a court or NTIA's written agreement can do that. She said it does put the state's position on record and preserves its legal arguments, and that the real test will come when a funded provider breaks state rules and California decides whether to enforce its laws. NTIA's dashboard now shows California was the last of 56 states and territories to return its signed agreement. Governor Gavin Newsom's office said the state's laws, including net neutrality protections, "still stand.
