The California Coastal Commission recently had one of those weeks that subtly shifts the long-standing balance between conflicting institutional powers in the state of California. Within seven days of one another, two court rulings—one from the California Supreme Court and the other from a federal courthouse settlement—arrived, and together they accomplished what fifty years of political pressure had not been able to.
At last, the Coastal Commission’s broad interpretation of its own jurisdiction has run into boundaries that it can no longer ignore. The question that will likely define the agency’s next ten years is whether this is a short-term setback or a structural recalibration of California’s approach to housing and coastal protection.
Of the two loses, the Shear Development case has greater legal significance. In a majority ruling authored by Chief Justice Patricia Guerrero, the California Supreme Court determined that the Coastal Commission’s attempt to obstruct a single-family dwelling development in Los Osos, San Luis Obispo County, had greatly beyond its jurisdictional power. The underlying dispute’s facts were essentially unremarkable.
The development had already received approval from the local county. The disputed property was not inside the legally designated coastal zone. The Coastal Commission, claiming that its statewide mandate gave it the power to supersede municipal zoning choices on inland properties when coastal environmental concerns may be cited, moved to appeal the permit notwithstanding local sensitive resource considerations.
The Supreme Court did not just decide against the Commission. With justifications that effectively dismissed the agency’s broad jurisdictional premise as legally unworkable, it did so unanimously. According to Chief Justice Guerrero’s ruling, local governments have the last say over inland developments that have acquired state-approved housing designs, and the Commission’s jurisdiction is limited to the actual coastline zone. Practically speaking, this means that the Commission is no longer able to serve as a statewide, retroactive zoning override that exercises veto power over any development project that may have an environmental relationship to the shore. This type of veto authority has been one of the main tools used to limit California’s housing supply for many years.
Of the two setbacks, the SpaceX settlement is more politically fraught and, in some respects, more illuminating of the current cultural change taking place within California’s regulatory institutions. SpaceX’s plan to expand the frequency of Falcon 9 rocket launches from Vandenberg Space Force Base, which is situated on the coast of central California, was turned down by the Coastal Commission.
The rejection’s legal merits had already been disputed. The way the commissioners behaved throughout the hearings was what led to a settlement that included a formal apology from the Commission. Commissioners publicly disparaged Elon Musk’s labor practices and political views, which have no place in an environmental impact examination. The federal settlement committed to procedures that would stop such behavior in subsequent hearings and explicitly admitted that the Commission had wrongly taken into account irrelevant factors.
The precedent it sets on the appropriate breadth of regulatory analysis is what makes the SpaceX settlement so intriguing. Environmental review organizations are free to take environmental considerations into account. According to a long-standing legal principle, they are not permitted to use their environmental mandate as a means of social engineering, ideological opposition, or political retaliation against executives or businesses whose politics the commissioners happen to disagree with. In hindsight, the Coastal Commission made an unwarranted mistake by agreeing to take such factors into account in the SpaceX case. Although the settlement resolves the current conflict, it does so in a way that establishes a formal restriction on the agency’s future actions.
In both circumstances, the political context is important. For many years, California has struggled with a severe housing scarcity that has resulted in the highest sustained house prices in the country and a homelessness crisis that has emerged as the state’s most prominent political issue. Under the leadership of Governor Gavin Newsom and a number of legislative initiatives spearheaded by the Yes In My Backyard organization, Sacramento has been attempting to reduce bureaucratic obstacles in order to expedite the construction of housing.
One of the most potent institutional barriers to that legislative drive has been the Coastal Commission, both by reputation and by the actual record of its rulings. The agency’s supporters contend that it performs an essential role in preventing excessive development along the California coast. Its real use of power, according to its detractors, has often gone much beyond justifiable coastline protection into more extensive land-use micromanagement, which has made the housing issue worse.
In contrast to earlier administrative and parliamentary pressure, the Supreme Court’s decision, in particular, endorses the critics’ framing. The court’s majority decision made it difficult for the Commission to contend that judges could reasonably disagree with its broad interpretation of its own authority. The ruling views the Commission’s overreach as legally unambiguous rather than merely debatable. Such a unanimous appellate signal is the kind that transforms an agency’s future day-to-day operations. In all future cases, commissioners and staff of the Commission will have to presume that aggressive jurisdictional claims that go beyond the actual coastal zone would be successfully contested in court.
The practical ramifications are significant for California’s housing future. Local governments around the state will now have far greater assurance that their permits choices won’t be retroactively overturned by Coastal Commission appeals, especially those that have already created state-approved housing plans. That self-assurance is important.
For a while now, developers who have spent years navigating California’s licensing climate have viewed Coastal Commission intervention as one of the most costly and unclear hazards associated with building anyplace within fifty miles of the coast. The decrease in that risk premium significantly lowers one of the structural expenses that has been impeding development throughout the state, but it won’t result in an immediate increase in the housing supply.
