California signs BEAD funding deal while disputing federal broadband rules
California accepted $1.86 billion in BEAD funding but says it may still enforce state broadband laws, setting up a dispute with NTIA.
By Hana Yoshida · Markets Reporter
3 min read
California signed an agreement for $1.86 billion in federal broadband funding while reserving its legal objections to conditions that could limit enforcement of state telecom rules. The dispute over California BEAD broadband funding could delay grants to internet providers that would build service in areas without adequate access, Ars Technica reported.
The money comes from the $42 billion Broadband Equity, Access, and Deployment, or BEAD, program. California’s Public Utilities Commission said it will not distribute the federal money to providers until it and the National Telecommunications and Information Administration resolve their disagreement, according to Ars Technica.
What rules could California BEAD funding affect?
The contested provision, known as Section 50 of the BEAD terms, requires states to commit that they will not enforce certain rules against providers receiving BEAD subgrants, or against those providers’ affiliates, during the specified life of the federal funding interest. The condition covers rules that regulate broadband rates, terms and conditions, as well as net-neutrality, open-access and other utility-style requirements, Ars Technica reported.
Net-neutrality rules are described in the terms as restrictions on blocking content, slowing service, data caps and paid prioritization. Ars Technica reported that a provider’s exemption from such state rules could last as long as 14 years.
CPUC President John Reynolds told NTIA Administrator Arielle Roth that the commission cannot be bound by conditions that are unconstitutional or not authorized by law, according to Ars Technica. He said the commission was not giving up arguments about the conditions’ legality, meaning or applicability.
Reynolds also said the CPUC cannot waive mandatory duties under state law or limit other California agencies’ authority to enforce those laws. That position leaves open the possibility that other state bodies, including the attorney general, could seek to enforce state protections, Ars Technica reported.
Why has California paused grants to internet providers?
California says its acceptance of the award does not mean it agrees to stop enforcing state law. The state has characterized Section 50 as vague and ambiguous, while maintaining that its authority and legal obligations remain intact, according to Ars Technica.
NTIA has rejected that interpretation. An agency spokesperson told Ars Technica that the award’s terms and conditions constitute the full agreement and that the CPUC’s letter of objection was not incorporated into the award.
No court has ruled on the validity of the condition. Ars Technica reported that California could challenge the federal requirement in court if the agencies cannot settle their differences, while providers that receive money could also contest whether state rules apply to them.
NTIA’s updated progress dashboard showed that California was the last state or territory to sign its final BEAD award agreement, completing signatures for all 56 states and territories, Ars Technica reported.
This story draws on original reporting from Ars Technica.