Elon Musk Versus the California Coastal Commission

The state's powerful coastal land-use regulator is arguing its awesome development-stopping powers applies to rocket launches as well as housing.

Happy Tuesday and welcome to another edition of Rent Free. This week's newsletter takes an extended look at SpaceX's legal battle with the California Coastal Commission.

On the surface, this is not a story about housing, zoning, urbanism, or other major themes of this newsletter. However, the conflict between the world's most successful space company and (arguably) its most powerful land-use regulator is a great illustration of the latter's tendency for capricious power grabs.

Today, the Coastal Commission is trying to stop rocket launches. Tomorrow, it'll likely be back to trying to stop coastal housing because it's a little too tall.

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Elon Musk Versus the California Coastal Commission

For decades, the California Coastal Commission has had near-unchecked authority to regulate development along the state's 860-mile coastline, and it's been unafraid of using it.

It's now trying to expand its terrestrial authority to outer space.

This past week, the commission voted to oppose plans by private space company SpaceX to launch more rockets from Vandenberg Space Force Base in Santa Barbara County, California.

The commission is asserting for the first time that SpaceX must get coastal development permits to shoot more rockets into space. SpaceX and the Department of the Air Force have conversely argued that SpaceX launches are federal activity that's exempt from the commission's regulatory powers.

After the commission's vote last week, SpaceX filed a lawsuit against the commission, arguing the agency is acting well outside its authority. The company asserts that the commission's true motives are not protecting the coast, but rather punishing SpaceX CEO Elon Musk for his political views.

"Rarely has a government agency made so clear that it was exceeding its authorized mandate to punish a company for the political views and statements of its largest shareholder and CEO," reads the SpaceX complaint, which was filed in the U.S. District Court for the District of Central California.

The Background

The legal controversy between SpaceX and the California Coastal Commission sits at a complex intersection of federal and state coastal protection laws, which requires a little bit of unpacking.

In 1972, as part of a wave of slow-growth environmental legislation, Congress passed the Coastal Zone Management Act to protect coastal environments.

The law encouraged states to establish their own coastal agencies to regulate private development along the coast. It also encouraged them to create coastal management plans, which—once approved by the federal government—would give state coastal regulators a limited say over federal actions along the coast.

That same year, California voters approved the creation of the California Coastal Commission.

The commission is entitled to review "federal agency actions" for consistency with its coastal management plan and can object to federal actions that are inconsistent with that plan. But that power is ultimately advisory. Federal agencies can still proceed with activities that state regulators object to, provided they try to comply with state coastal management plans to the maximum practical extent.

The Coastal Commission has much more control over the "federally permitted" activities of private parties.

Federal permit applicants must show state coastal regulators their activities are consistent with coastal management plans. If state regulators find a private party's activities aren't consistent with a coastal management plan, they can object to their federal permit application, and the federal government is generally forbidden from granting that permit.

Whose Rocket Launches Are They, Anyway?

SpaceX's dispute with the Coastal Commission boils down to whether its rocket launches are "federal agency activity" the commission can't ultimately stop or private "federally permitted activity" which they can.

SpaceX says in its lawsuit that since it started launching rockets from Vandenburg Space Force Base in 2013, the Coastal Commission has treated its launches as the former.

The commission reviewed plans for rocket launches from the base and would go back and forth with the Air Force about mitigating environmental impacts. But it didn't assert any final regulatory authority over the SpaceX launches.

This all started to change last year when the Air Force submitted plans to increase the number of SpaceX launches per year from six to 36. SpaceX now wants to do up to 50 launches from the base.

The commission started to argue that because most of these launches are part of SpaceX's private-sector commercial operations, they should be considered private, federally permitted activity the commission can regulate (and say no to) and not federal agency activity it can't.

"There is no scenario in which a federal agency contracts for a small fraction of a private business's overall business activities…and can claim that all of the private business's activities are, by extension, federal agency activities," the commission wrote to SpaceX in a September letter.

The Air Force and SpaceX counterargue that the U.S. government is dependent on commercial space companies to get to orbit and the viability of commercial space companies depends on their ability to conduct for-profit, private-sector missions. Combined with the fact that these launches are happening on federal land means SpaceX launches should be considered federal activity that the commission can't veto.

The Free Speech Angle

These arguments came to a head at the commission's October 10 hearing.

During public deliberations on whether increased SpaceX launches were consistent with the state's coastal management plan, several coastal commissioners had seemingly ungermane criticisms of Musk and his political activities.

"We're dealing with a company…the head of which has aggressively injected himself into the Presidential race and made it clear what his point of view is," said the commission's chair.

"Elon Musk…hopping about the country, spewing and tweeting political falsehoods," said another commissioner.

"We are all trying to operate in this apolitical space, we do know that the person who controls these companies has enough power to not work in the best interest, when they feel like it, of our allies," said a third commissioner.

"SpaceX has a strong argument that the commissioners are overstepping their authority by retaliating against Elon Musk based on his political views and comments on social media," says Aaron Terr, director of public advocacy for the Foundation for Individual Rights and Expression (FIRE), a free speech nonprofit. "That's an abuse of the commissioner's regulatory power and puts them on a collision course with the First Amendment."

The Power Grab

An important fact that's easy to lose in all the back-and-forth is that coastal commission staff recommended the commissioners concur with SpaceX's increased launch schedule, saying that the Air Force had imposed enough environmental protection measures to make those launches consistent with the state's coastal management plan.

If SpaceX's launches are consistent with the state's coastal management plan already, there would seem to be little environmental benefit in forcing the company to get additional permits to continue with its launches.

In that context, the commission's insistence that SpaceX must ask the commission for permits seems more like a politically motivated power grab than anything else. The commission wants the power to say no to SpaceX launches, regardless of whether they pose a threat to the coastal environment.

Anyone who's followed the commission shouldn't be surprised by this attitude. The commission often values its own authority over all else.

The commission has fined one coastal homeowner millions of dollars for putting up gates on his property. It has demanded that other coastal homeowners dismantle their two-story homes to improve views from a nearby hiking trail. It frequently shoots down housing projects for being too tall, too out-of-step with neighborhood character, and for having too little parking. The Coastal Commission consistently lobbies in favor of exempting coastal areas from state laws aimed at streamlining housing development.

For understandable reasons, the coastal commission's beef with the world's richest man and his space company has generated a lot of headlines. The First Amendment implications of that bias might end up tanking the commission's efforts to appoint itself the final regulator of SpaceX's launches.

Even if SpaceX prevails, however, everyday property owners will still be left to deal with the arbitrary whims of the commission. Typically, they'll lack the resources of a billionaire-backed space company.

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Quick Links

• New York City's famed Elizabeth Street Garden has received a last-minute stay of execution. For over a decade, the city has been trying to turn the publicly owned, privately managed sculpture garden into low-income senior housing over the intense opposition of garden supporters. In May, the city had ordered the garden evicted. This past week, a court has temporarily paused that eviction order while garden supporters' appeal plays out.
• The U.S. Supreme Court has declined to take up the case of the owners of a small New York family hardware store chain claiming that the town of Southold, New York, had unconstitutionally seized their land just to stop them building a hardware store that the town's zoning otherwise allowed. Rent Free covered the case back in June. Read Ilya Somin on why the plaintiff's cause is just, but that this case might not have been the best vehicle to get the Supreme Court to reconsider prior decisions giving the government too much power to seize private property. The case was being litigated by the Institute for Justice.
• Over at the Brookings Institution, David Wessel runs through the different estimates of the housing shortage and how researchers came up with those numbers.
• Bloomberg looks at the middle-class housing cost crunch in the swing states that will decide the upcoming presidential election.
• The Mercatus Center has a new brief on federal policies that could encourage more housing construction.
• Last week, I wrote about why disability advocates are wrong when they say that expanding rent control will make handicap-accessible housing more affordable for the disabled.
• The owners and former occupants of an empty lot in Arlington, Virginia—which was once a duplex before their neighbor blew up the entire home during a stand-off with police in December 2023—are trying to rebuild. But local zoning laws are making that more difficult than it should be. ARLnow reports that the family must ask for a zoning variance to build a single-family home on the site that's a little narrower than what the code allows.