Whether they do or do not have the authority isn't something that can be answered by anything but speculation until it's been tested in court, and I don't think any of the ISPs had enough to gain through packet prioritization that it was worth the risk of going to court.

Exactly. Even if their laws only technically apply within California, no car maker is going to build a car that cannot be legally sold in the single largest market in the US. It gets even more difficult with the internet as there are few internet providers who don't have at least some kind of connection to California and therefore fall under its jurisdiction, and ensuring you only apply prioritization to packets that don't involve California is extremely tough.