California may gut state net neutrality law to comply with Trump admin demand

California could try to continue enforcing its net neutrality law even while accepting the federal funding, a strategy that would involve another long court battle over its right to regulate broadband providers. This would be difficult, as the Trump administration is requiring states that accept grant funding to commit that they won’t enforce net neutrality rules. A CPUC spokesperson told Ars that tomorrow’s vote is a “procedural requirement” to ratify the state proposal submitted to the federal government in December 2025. But nearly 30 advocacy groups that focus on access to technology are treating the vote as a significant milestone and urged state leaders to defend California’s net neutrality law in a letter yesterday. One of the letter signers is Paul Goodman, legal counsel for the Center for Accessible Technology. He told Ars in a phone interview that tomorrow’s CPUC vote is much more than a procedural step. “It’s the beginning of the end,” Goodman said. Winning a court battle would become much more difficult after the state accepts the money, he said. Goodman said the CPUC should delay the vote and that California should file a lawsuit arguing that the NTIA-imposed condition is illegal. In addition to net neutrality, Goodman said California may be giving up other regulatory authority over companies, like AT&T and Verizon, because the NTIA requirement forbids rate regulation and “utility-style rules on broadband Internet service” in general. The advocacy groups’ letter was sent to Governor Gavin Newsom, Attorney General Rob Bonta, CPUC President John Reynolds, and the other CPUC commissioners. “While our organizations recognize the significance of BEAD funding—and the role it will play in advancing critical broadband infrastructure buildout across the State—we strongly stand against allowing for the presumption of preemption of the State’s net neutrality laws in order to accept BEAD funds,” the groups said. 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 (i.e., both BEAD and non-BEAD locations), while that Subgrantee has any subgrant that is still within its period of performance, extended period of performance, or federal interest period. The NTIA said the exemption from state laws must extend statewide, because “applying net neutrality and rate regulation at non-BEAD locations could raise compliance costs and threaten the overall financial viability of the Subgrantee, increasing the risk of default for the Subgrantee at BEAD locations and jeopardizing the success of the entire BEAD program.” Goodman said the exemption from state laws would last for up to 14 years. This is because ISPs receiving grants would have four years to deploy the required broadband networks, and the extended period of performance lasts another 10 years. Goodman told Ars that upon receiving BEAD money, AT&T could tell California that it can’t regulate the price of AT&T’s copper landline phone service or require AT&T to serve everybody who wants phone service, Goodman said. AT&T is already trying to get out of state obligations related to its basic phone service in California, as we’ve reported. Goodman said the BEAD money could also jeopardize a merger condition that requires Verizon to offer $20-per-month broadband service to people with low incomes in California. Goodman said the savings for people with low incomes from those required Verizon plans would dwarf the money California is due to receive for BEAD. Of the $1.86 billion in BEAD money for the state, California is slated to spend about $1.4 billion to deploy broadband to 270,571 locations. The NTIA-mandated exemption to state laws throughout the country would also apply to any other ISP receiving BEAD funding, such as SpaceX’s Starlink satellite division. “Roughly 69 percent of California’s BEAD funding flows to five large, national providers: Comcast ($400 million), AT&T ($331 million), Verizon/Frontier ($173 million), Amazon’s Kuiper satellite service ($55 million), and SpaceX’s Starlink ($22 million),” Stanford Law professor Barbara van Schewick wrote today. According to van Schewick, another casualty of the BEAD restriction would be a 2019 California law that prohibits mobile providers from throttling first responders during emergencies. The law was passed after Verizon throttled an “unlimited” data plan used by Santa Clara County firefighters during a wildfire. “Those protections exist for a reason: left to their own devices, Internet providers have put profits over public safety before. California is now being asked to sign away those protections for fourteen years,” she wrote. California would have a good case because the federal BEAD law says funded providers must follow state and local laws, van Schewick wrote. “A federal agency can’t use fine print in a grant to override what Congress wrote into the statute,” she wrote, adding that Newsom “should refuse to sign away California’s net neutrality, affordability, and public-safety protections and go to court to get the money the way Congress intended: with every state protection intact.” Goodman said that once California accepts the money, the state attorney general would only be able to challenge the Trump administration’s requirements in the US Court of Appeals for the District of Columbia Circuit. The DC Circuit court “can really only review that decision for basically fraud or corruption, which is a really high bar to prove,” he said. Goodman said that if California takes legal action before finalizing the agreement with the Trump administration, it could sue the US in the Ninth Circuit Court of Appeals. “Right now, the California AG could sue saying, ‘Hey, these general terms… are illegal. You can’t require us to do that.’ [The state] could sue here in California and the Ninth Circuit has a sort of favorable view of that claim, so [the state would have a] pretty good view of success,” Goodman said. In the DC Circuit, “it’s a much, much harder push,” he said. “Not impossible, but enormously more difficult.” He said the CPUC has a deadline at the end of this month to sign the agreement with the NTIA, but the state “can get a 30-day extension and then challenge the case in court.” On the other side of the country, New York may have to stop enforcing an affordable broadband law that requires ISPs to offer $15- or $20-per-month service to people with low incomes. New York defended the law in court against broadband industry lobby groups and won that battle less than two years ago but has agreed to take $664.6 million of BEAD money from the Trump administration. New York Governor Kathy Hochul said in an April 2026 press release that closing the digital divide requires bringing broadband to every household in the state and ensuring “that it remains affordable when it gets there. New York is showing the rest of the nation that both are possible through its landmark Affordable Broadband Act and commitment to reaching the final 1 percent of unserved or underserved households.” But with New York having accepted the BEAD funding, it may be unable to enforce the Affordable Broadband Act on ISPs that receive grants. We contacted the offices of Hochul and New York Attorney General Letitia James yesterday and will update this article if we get a response.