February 14, 2025 • 47 mins
The 2025 Pacific Palisades Fire has underscored the challenges of building in California’s complex regulatory landscape. In response, Governor Newsom issued an executive order suspending CEQA and Coastal Act requirements to expedite reconstruction, raising important questions about the future of development in the state.
In this podcast, experts Jeremy Talcott and Donald Kochan examine California's regulatory environment before the disaster and the broader implications of its permitting processes in the effort to rebuild. Join us for an in-depth discussion on balancing efficient recovery with long-term regulatory considerations.
In this podcast, experts Jeremy Talcott and Donald Kochan examine California's regulatory environment before the disaster and the broader implications of its permitting processes in the effort to rebuild. Join us for an in-depth discussion on balancing efficient recovery with long-term regulatory considerations.
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Episode Transcript
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Speaker 1 (00:02):
Welcome to the Regulatory Transparency Project's Fourth Branch podcast series.
All expressions of opinion are those of the speaker.
Speaker 2 (00:18):
Welcome to the Regulatory Transparency Project's Fourth Branch podcast I'm
Sarah Bankson, Deputy Director of RTP. Today we're happy to
host two experts discussing the challenges of rebuilding in California
in the wake of the Palisades Fires. Jeremy Talcott is
an attorney in the Pacific Legal Foundation's Property rights practice.
He also leads PLS Coastal Land Rights Project. We're also
(00:42):
joined by Donald Cochin, Professor of Law and Executive director
of the Law and Economic Center at George Mason University,
Scalia Law School. Thank you both for being with us today.
Our listeners can read the full bios for both of
our speakers at regproject dot org. With that, I'll hand
it over to you, Professor Cochin.
Speaker 3 (01:00):
Thanks so much, Sarah, and thanks to the Regulatory TRANSPARENCCY
Project for hosting this forum. I'm excited to sit down
with Jeremy Telcott today to talk a little bit about
the existing environment for regulations and land use and development
in California and throughout the country, with a specific emphasis
on what's happening today. It's important to regularly re examine
(01:22):
our regulatory frameworks for their effectiveness at meeting state objectives.
In other words, are they bringing the utility and benefits
that they claim, as well as to assess the negative
impacts of costs associated with the regulations, including the unintended
consequence of otherwise well meaning action in other words, to
help bring a little bit of focus and to help
(01:46):
make more transparent that which is otherwise less clear. Sometimes
critical inflection points bring heightened awareness to the effects of regulation.
When that happens, careful examination is doubly important, including because
major events can bring unlike coalitions to the table. To
reevaluate existing structures and erroneous are outdated assumptions on where
to set regulatory standards, as well as to see what's working,
(02:09):
such as the case today in California. California is always
a regulatory playground worth observing, but it presents an especially
useful case study in regulation and light of current events
including the Palisades Fire and other natural catastrophes throughout the
state that shine a light on some of the effects
of the existing regulatory environment. To better inform the debate,
(02:30):
we have with us. As Sarah mentioned on this podcast,
a leading expert with substantial experience in land used regulations,
property rights, natural resources, and related issues on the ground
in California and across the United States. As mentioned, I'm
delighted to sit down here with Jeremy Talcott, whom in
a turn over to in just a moment. Jeremy's an
attorney with the Pacific Legal Foundation property rights practice. He
(02:51):
focuses on fundamental rights of landowners to use and develop
their property. He also leads PLF's Coastal Land Rights Project.
Jeremy attained his undergraduate green Communications from the University of
Central Florida, and he graduated cumloud from Chapman University Fowler
School of Law in Orange, California, where he was President
of the Federal Society and Senior Articles editor of the
(03:11):
Chapman Law Review. Jeremy, I'm going to turn it over
to you to kind of get us started. But I
think that we're principally focused today on what's happening on
the ground and opportunities for reform. But before we get there,
we need to understand the current and pre existing regulatory
environment that has led us to the discussions we're having today.
(03:32):
So can you describe a little bit about the regulatory
environment for development in California. How SEQUA and other regulatory
structures have been working, what's the expense, How is it
affecting timing on land development projects? Is it effective? Those
sorts of things. Tell us a little bit about what
you're seeing on the ground.
Speaker 4 (03:52):
Yes, thank you, Donald. Well, you know, the very short
answer is that the regulatory framework in California is probably
one of the most burdensome in the entire country, if
not the most burdensome, and really because of that, it
is the state in the country that has had the
(04:13):
highest growth in both new home prices and rent. Individuals
in California spend far above the national average on all
of their home costs, generally two and a half times
the national average, and again that expense has risen far
(04:33):
more than the rest of the country over the same period,
and even California itself. The Legislative Analyst Office has recognized
that the single largest driver of those costs are the
regulatory framework of California, and in California, in addition to
all of the local zoning and regulations, land use regulations
(04:58):
that individuals must navigate to obtain a development permit. There's
also several extensive environmental overlay programs that have made again
California one of the most costly and time consuming places
to build. So, as you've mentioned, there's SEQUE, which is
(05:19):
the California Environmental Quality Act, as well as the California
Coastal Act. And while that really only applies to the
coastal zone of California, it's notable that the coastal zone
covers over sixty percent of the individuals living in California,
So unsurprisingly, the California coast is one of the most
(05:42):
desirable places to live. It's where we've done a lot
of development in the past, but these days it is
far and away the most expensive place to attempt to
build in California, and a huge part of that has
to do with the California Coastal Commission, who, again, ever
their initial mission might have been, which really I think
(06:03):
this was passed to try and preserve coastal resources, has
really over the subsequent decades become something much larger and
almost serves as kind of a super zoning board over
all these local governments, and they have asserted huge amounts
of appellate jurisdiction, so taking on more permit appeals than
(06:24):
they might previously have been authorized to take, and then
also have more finely scrutinized permits and attempted to meddle
in the outcomes of those permits that I think the
Coastal Act originally intended. So the reality is it is
very easy for individuals in California if you have a
(06:46):
development that they do not like, it is very easy
for them to sue under either of these regulations. And
the California courts have very zealously applied these environmental regulations
in ways that often forced individuals to go back time
and again. You know, perhaps they succeed in one lawsuit,
(07:07):
go back and fix shortcomings in an environmental impact report,
and then get sued again for another shortcoming. And you know,
as mentioned every time, you know, time is money. Just
the time cost alone can be substantial, but endless repeated
environmental reports can add hundreds of thousands of dollars to
(07:27):
any development project. And the reality is that this leaves
development in the hands only of the largest development groups,
often in California, and makes it very difficult and onerous
on individuals to make productive use of their property.
Speaker 3 (07:44):
Would be fair to say that the California Coastal Commission
is inserting itself into the process in ways that in
and of itself, just that insertion is causing additional delays,
and also that some of it is unnecessarily redundant upon
existing regulatory approvals as you mentioned. Then it cycles through
(08:06):
and in multiple levels of litigation to add more and
more delays. But it really is this intentional insertion of
the CCC into far more minutia of decision making that
makes it difficult to process.
Speaker 4 (08:20):
That's correct, and I think you know it's very notable
that when the Coastal Act was initially passed, there was
a very strong incentive contained within the Act for local
governments to pass new regulation. These are called local Coastal
Programs or lcps, and under the structure of the Coastal Act,
initially the Coastal Commission was given a tremendous amount of
(08:43):
power over development in this coastal zone. And then the
incentive for local governments was, if you pass an LCP
and submit it to the Commission, and the Commission approves
it as consistent with the Coastal Act, then we will
return your primary permitting authority to you, the local government,
and at that point the Commission retains appellet jurisdiction only,
(09:06):
and under what I would say is the original conception
of the Act, that's a fairly limited authority. In other words,
it's not there to oversee these minor development decisions. Rather,
it's there to if a local government fails to follow
the terms of its local Coastal program, the Commission can
step in and say, you're approving development that is inconsistent
(09:29):
with the rules that we certified, and if you do that,
we're going to overturn that development. And turning to the
second part of your question on delays, the delays can
be substantial. We've at PLF, we've recently done a report
on this appellate process, and again under some kind of
interesting interpretations of the deadlines contained within the Coastal Act,
(09:52):
the Coastal Act has a forty nine day deadline for
these appellate decisions from local government approved permits to the Commission,
and the courts and the Commission have interpreted that to
mean forty nine days to open the process. And once
the Commission opens the process, there is no deadline for
(10:13):
them to close that process by actually making a final decision,
so the Commission will take a permit approval that oftentimes
already represented three to five years of work between a
developer and the county, the commission finds a substantial issue
with it, which vacates that permit approval, and then the
(10:36):
commission moves into a DiNovo permit process, whereby they can
really demand almost anything of the developer, and the developer
has no mechanism by which to force that development forward
or that process forwards. So, unlike many of the streamlining
laws that otherwise exist for development in California, none of
(10:57):
those apply to the Coastal Commission itself can drag that
process out for a very long time, And in our research,
what we found is that even for a permit denial,
where the Commission simply decides they're going to take over
the permit and then remove it entirely and essentially send
the person back to start over, that takes about a
(11:17):
year on average, and permit approvals take far longer than that,
about five hundred and thirty days to get to an approval,
often with substantial modifications to the original project plan, and
oftentimes with concessions or other mitigations attached to that permit,
which again increases the cost of the finished product.
Speaker 3 (11:41):
Very interesting and so as I'm hearing it, really the
California Coastal Commission, once the local land use folks come
in on the first part of your answer, there was
meant to have more of a ratification role and then
an independent reviewer role, and they've just sort of done
a power graph that circumvents the original deal.
Speaker 4 (12:00):
Is that right? That's correct? Essentially, Again, our view of
the Coastal Act is that that appellate power was limited
to ensuring that you don't have bad actor local governments
essentially taking advantage of this certification process, re obtaining local
control and then ignoring entirely those regulations. So again, the
(12:24):
pellet power of the Commission is limited to certain categories
of development. So one area of their jurisdictional expansion has
been creative interpretations of that list that limited list. There
are some areas where that's very straightforward. For example, development
between the first public road and the sea is always
(12:46):
subject to Commission ap pellet jurisdiction. Occasionally there's some factual
disputes about whether or not a property falls within that boundary,
but those tend to be minimal. But one example I'll
put forward of the kind of creative intern pretation jurisdictional
overreach where the Commission authorizes, or excuse me, the Coastal
(13:07):
Act authorizes commission jurisdiction over development that is not the
principal permitted use within a zoning category of the LCP,
and for decades, the Commission and all local governments treated
that as any principal permitted use. In about a decade
or so ago, the Commission said, wait a minute, the
(13:27):
Coastal Act says the principal permitted use. We believe this
means that the Coastal Act intended every coastal jurisdiction to
have one single principal permitted use within each zoning area,
and if they have more than one principal permitted use,
that means we have appellate jurisdiction over every permit issued
in that area. And in practical terms, for most counties
(13:50):
within California, that has now opened up every single local
government approved permit to commission jurisdiction. I think it's unlikely
that's what the legislator intended. It may have been in
artful drafting, but nonetheless that's just one interpretation that the
Commission has pushed forward to grab jurisdiction over permits that
previously would have been considered outside of their purview.
Speaker 3 (14:12):
And we see this kind of model even on the
federal state level and federalism and sort of delegated state
programs under the Clean Water Act and other things, which
was intended to devolve authority down to those communities most
directly affected, so that the federal government, for example, can
have basic general standards for the Clean Water Act, but
then the states have delegated authority to have their authorized
(14:32):
state programs to actually do the minutia and the actual
regulatory and the permit approvals and our things. And only
when they really run astray is EPA supposed to come
in and take over that program.
Speaker 4 (14:43):
Very similar, I think to what we're seeing here.
Speaker 3 (14:47):
And so I promise all of the listeners that we
want to get to the fires and the current state
of things quickly, but just a quick I appreciate your
thoughts because you are a local you know, land use
attorney and property rights attorney.
Speaker 4 (15:03):
Part, can you tell us a little.
Speaker 3 (15:04):
Bit about why they wanted to give the authority to
the local governments to ultimately decide this. Why do we
devolve that kind of decision making down to local governments
rather than powerful.
Speaker 4 (15:16):
State apparatus. Well, you know, as I mentioned the California coastline,
we're talking about over eight hundred miles of coast These
are unique areas, you know, stretching from Oregon down to Mexico.
There's quite a bit of variation in the type of
coastal environment, in the type of community that communities that
(15:39):
exist along that coastline, in the type of development that
already exists, the type of practices and development and uses
that people would like to see going forward. And I
think the Coastal Act had a very strong recognition that
these types of unique local challenges require individualized solutions, usually
(16:01):
reached by the local government. And so while I think
it's clear that the Coastal Act was intended to be
one push of state policy, or one way to ensure
that state environmental policy was asserted and pushed down onto
these local jurisdictions, as you mentioned, I think the more
(16:24):
individualized and particularized determinations were meant to be left to
those local governments. And again, the Commission was given a
very strong oversight role in that certification process, whereby a
local government cannot enact new lcps or amendments without going
to the Commission, submitting them and allowing the Commission the
(16:47):
opportunity to certify. And it is effectively a veto power.
If they disagree with the language put forward, they can
reject entirely those amendments, or they can suggest modifications. But
what the legislature did not do is give the Commission
any legislative power directly. So really their role was meant
to be this certification process, this oversight process, and I
(17:10):
think once those laws were certified, it was intended to
provide quite a bit of power to the local governments
and again give the Commission just this oversight rule to
ensure that those laws were not ignored.
Speaker 3 (17:22):
So it sounds like there's sort of two categories of
potential reform or more obviously, one is a legislative fixed
to reassert their own authority and to restate what those
goals were or to take back, you know, some of
that power. And then second is you know, the courts,
through differential standards, have been largely complicit or enabling of
(17:46):
the CCC's power grabs in these areas. So I guess
the question is what can be done about this? What
is being done? And in particular, you know, did you
see any movement prior to the most recent fires in
California and legislatively or judicially or regulator in the regulatory agencies?
(18:09):
And what has happened since? So what you know now
we can get to what's happening right now? Is there
is there a renew momentum or opening of the eyes
on the part of those who may have been advocates
for these strong regulatory structures to re examine uh and
seeing some of the errors of the ways.
Speaker 4 (18:31):
Well, again, I think the short answer is yes, you know,
there there is some hope in California. Even in California,
there is some hope where where in recent years. So
I'll start a little bit from the beginning here. Most
pro housing, i would say, or streamlining laws that have
been passed in California over recent years, and these have
(18:53):
been passed with the recognition that California has a severe
housing crisis and shortage, that we have not been building
enough to meet demand for years. Those laws always contain
provisions exempting the coastal zone or the coastal Act or
saying that nothing within those laws was meant to diminish
the Coastal Act in any way. And really only in
(19:16):
the last couple of years we've seen some of the
more pro housing legislators within California include provisions that in
fact apply those pro housing laws even within the coastal zone.
And so I think there has been some recognition that
if we are going to build enough units, we are
going to have to build them in the area where
(19:38):
people most desire to build, and that is the coastal zone.
So we have seen some push within the legislatively within
California to at least chip away slightly from the scope
and authority of the Coastal Commission and the Coastal Act
as far as judicially, As you mentioned, for decades, most
(19:59):
of the opinion that we've seen have been extremely deferential
to Commission authority, really very minimal scrutiny of Commission interpretations
or deference to Commission interpretations. But in recent years we've
seen some inroads within the California courts, and the biggest
example of that ongoing right now. One of our cases
(20:22):
at PLF Sheer Development against California Coastal Commission was granted
review at the California Supreme Court, and we've just completed
briefing in that case, and that did involve an issue
where the local government issued a permit, said it was
agreed with all of the local land use laws, it
(20:43):
was consistent with all of the regulations, and importantly, the
local government said that it was not an appealable permit
to the Coastal Commission, and the Commission nonetheless took appeal
and they asserted multiple areas of authority, one of which
was the principal permitted use issue that I mentioned earlier,
(21:04):
and the other was a fairly creative reinterpretation of the LCP.
The required the Commission to ignore the kind of plain
language of the LCP which said the appealable zones are
contained in official maps, and instead finding a figure elsewhere
within the LCP that covered the subject property in saying
(21:25):
any reference to this property within the LCP is enough
to give us a juris dictional hook. We believe that
because we can pinpoint this property on a map that
says there may be some dune sands underlying it that
are sensitive habitat, we're going to assert that that is
sufficient to give us a jurisdictional hook, despite again contrary
(21:50):
language within the LCP which said these are informational maps.
The official maps are over here, and all of your
appellate jurisdiction is governed by the official maps. And surprisingly,
the Court of Appeal accepted that argument and essentially did
an extremely deferential review of this core legal question of
(22:14):
how is an LCP interpreted? And really that's one of
the core functions of the courts is to interpret these
laws and determine what the law says. That goes back
to some of our very earliest cases of the US
Supreme Court Marbury v. Madison, is it is the province
of the court to say what the law is, and
(22:35):
here the Court of Appeal really did not do that.
The California Supreme Court granted review. We believe this is
a sign that even the California Supreme Court is at
the very least aware that the lower courts have been
very deferential and that there has been some division within
those lower courts of exactly how deferential they should be.
(22:55):
And we're hopeful that it's an opportunity for the Court
to kind of reassert its area of authority in these
matters and be the primary interpreter of these land use laws,
which will provide I believe, more stability for local governments
and landowners if these laws are treated objectively rather than
(23:16):
of subject to the whims of commission rey interpretation.
Speaker 3 (23:20):
So there are a couple other cases out there right
now that are important developments too, right, Hattian and Kasimira.
Speaker 4 (23:27):
Can you tell us a little bit about those, Yes,
both of those again very recent cases, Haydian. Just the
last day of last year, the opinion came down from
the Superior Court, and that was again a jurisdictional issue
where we argued that the Commission had essentially no authority
to take this permit over that the language of the
(23:49):
LCP was clear, and that they lacked essentially this jurisdictional hook.
And in that case we actually had a victory at
the Superior Court, and it was really precisely the opposite
example as the Court of Appeal, where a judge did
a very in depth analysis of the multiple provisions that
(24:11):
were at issue and how they interacted, and by doing
this holistic interpretation was able to determine that the LCP
precluded the Commission from taking jurisdictions. So you're very happy
with a Win. I would love to see more judges
following this example where they again give a very critical
(24:32):
eye towards these very fundamental jurisdictional questions of when the
Commission may may take over and reject a permit approval
from the local government and the other one Kasimira. This
is a case that was also a Court of Appeal case.
This involves a separate provision of the Coastal Act and
(24:52):
another example of this commission interpretive overreach, where the Coastal
Act contains a provision that it actually requires local governments
in the Commission to issue permits for shoreline protective devices,
so things like sea walls, rip wrap other measures to
protect a collapsing bluff face where it might be in
(25:15):
danger to an existing structure. And for decades the first
forty years of the Coastal Act, everyone understood that existing
structures meant existing at the time of the application for
a sea walls. So if you had lawfully constructed a
home on this bluff face and a change in the
(25:37):
environmental circumstances a heavy al Nino year or sea level rise,
if any of these measures threatened, then your home you
were entitled to get this shoreline protective device to protect
your private property in that investment, And starting about twenty ten,
the Commission suddenly reversed course and said, we believe existing
(25:58):
structures actually meant and existing as of January first, nineteen
seventy seven, or the date that the Coastal Act went
into effect. And you know, it's surprising to me to
think that the legislator, would legislature would have done something
so significant such as banning all sea walls going forward
with virtually no debate or discussion publicly. It's even more
(26:21):
surprising to me to think that everyone involved would have
immediately interpreted, interpreted that provision incorrectly and consistently over the
next forty years. But nonetheless, the Court of Appeal accepted
that interpretation, and that case is now being petitioned to
the California Supreme Court. So I'm hopeful that that is
(26:41):
a case where we may get reviewed at the California
Supreme Court. If not, that's certainly another opportunity for legislative fix,
because I think, again, when individuals I should add. The
Coastal Act also contains a provision that says new development
should be designed to minimize any need to rely on
(27:05):
shoreline protective devices. So there are other measures within the
Coastal Act that certainly disincentivize the need for these types
of sea walls. But when someone has lawfully developed their property,
obtained all the necessary permits, done all the studies, and
everyone has done their best to avoid the need for
(27:25):
a sea wall, if in fact that is nonetheless required
to protect an investment, I think the Coastal Act recognizes
that to deny that would potentially be a taking of
private properties. So again something that I'm hopeful will either
be addressed in the courts or legislatively.
Speaker 3 (27:42):
So with the Palisades fire and other fires and other
natural catastrophies in California, there's a real understanding of a
need to redevelop and redevelop fast in the areas where
that have been most affected. People need to move back
into their homes. Economies need to be revite a lot,
so businesses need to be able to come back into
(28:03):
the spaces. This has led to some very interesting maybe
policy reversals, shifts, interesting coalitions being developed to either suspend
or create exceptions or variances to some of the regulatory
laws inside California. Can you tell us a little bit
about the political shifts and or the the political attempts
(28:27):
to suspend or create exceptions to the regulatory structure, which
seems to me to be an admission of the of
the real impediments that these structures place on redevelopment.
Speaker 4 (28:41):
Yeah, it's it's you know, it's unfortunate that it takes
a catastrophe of this magnitude to shine a light on
these issues. But you know, many people may have for
the first time heard about the Coastal Commission, certainly outside
of California, many many people for the first may have
been made aware of it by a rant by Adam
(29:04):
Carolla that took place just days after the destruction of
the fire. And the main thrust of that discussion was
people are going to find out when they try to rebuild.
When we have ten thousand homes along the coasts that
need to be rebuilding and they try to go find
a you know, try to go seek a permit for this,
they're going to discover just how onerous it is to
(29:27):
obtain a permit to develop along the coast. And I
think certainly, if everything had remained status quo, I can't
imagine that even a fraction of those homes could have
been rebuilt in the short term, and certainly, you know,
it's not to say that it won't take some time
(29:50):
for areas that are this destroyed to rebuild, but under
the regulatory framework as it existed, I think decades would
be optimistic. And so again, just days after all of
this took place, Governor Gavin Newsom issued an executive order
which suspended the operation of the Coastal Act and the
(30:14):
California Environmental Quality Act in areas impacted by the fire
with respect to any homes that needed to be rebuilt.
And so I think that is a tacit admission by
the governor that if these regulations are not suspended, we
simply will not be able to rebuild, and certainly not
in the timeline that people would expect. I think most
(30:36):
people expect that if your home is destroyed, you really
have a right to replace what's been lost, and that's
most people would have assumed that that's the status quo.
And indeed, the Coastal Act does contain a provision that
allows for a right to rebuild when homes are destroyed,
but that hasn't stopped the Commission in the past, and
(30:59):
we have we have seen individuals be delayed or denied permits,
even where it involved the rebuilding of homes, and so
I think it was a very tacit recognition of the
overreach of the Commission. The Governor Newsom stepped in and
by executive orders suspended those regulations. And perhaps even more surprisingly,
(31:26):
despite that executive order, the Commission nonetheless engaged in some
various guidance, written or oral guidance as to when and
where you actually qualified as exempt for these rebuilding projects.
And so about a week or so later we were
treated to a second executive order by Gavin Newsom which said, no, really,
(31:52):
I mean it, Commission. In fact, you're not only prohibited
from acting under the Coastal Actress or sequel, you're also
prohibited from even offering written auroral guidance as to the
scope of the exemption I am putting forward. So really
a clear act and intent by the Governor to shut
(32:12):
down entirely the operation of the Coastal Act in these
fire ravaged areas so that they can in fact rebuild.
Speaker 3 (32:19):
I think that's a very telling study too, in what
a lot of academics examine in terms of agency behavior
and the way bureaucracies operate to self perpetuate, and that
threats to their existence are faced with claims of power
that need to be doubly rebuffed, like the governor had
to in this case. One curious aspect of this all
(32:45):
is that the fires themselves may have been exacerbated, or
the impacts may have been exacerbated by the existence of
the regulatory strungructure. One way to think about this is
that they could have perhaps made the fires worse as
(33:07):
a result of the existing environment that was created by
the lack of development and the lack of land stewardship
activities that might otherwise occur that could contain or at
least limit the spread of fire. And then you know,
a second claim I think can be made that environmental
resources were more susceptible to destruction from any fires that
(33:32):
actually occurred. In other words, you know, because you are
unable to responsibly develop and maintain and be good stewards
of certain areas meant that you might be more fire susceptible.
That in fact leads to this unintended consequence of making
entire habitats, for example, subject to destruction by fires. In
(33:55):
order to put someone through the ringers of a long
term development process, so, so I I was wondering if
you could comment on those two points. First off, you know,
is is there an argument that the regulatory structure actually
made the fires impact worse?
Speaker 4 (34:10):
And then second is this.
Speaker 3 (34:12):
Uh, you know, part of that concern is have the
fires actually done significant environmental damage that could have been
avoided had we had a more you know, reasonable understanding
of how development works in conjunction with good land stewardship.
Speaker 2 (34:29):
Uh?
Speaker 4 (34:30):
Yeah, I think, uh, you know, the answer to both
is yes. I think there's certainly, at minimum, you know,
colorable arguments as to both. And I think one way uh,
in which the implementation of the Coastal Act and relevant
to some of these these new ongoing cases, uh, is
(34:50):
that the inability for individuals to develop and redevelop in
these areas has has forced many of many, any of
these areas to essentially be locked in time. And so
they're certainly anecdotal stories that can be found of individuals
(35:11):
buying a property, perhaps one with a small home, and thinking,
and we're talking about individuals with substantial means and thinking,
I'll be able to buy this Malibu property and maybe
tear down a small relatively dilapidated and wood structure built
in the nineteen fifties and replace it with a new, modern,
(35:33):
beautiful home, perhaps even a mansion, and the regulatory environment
is so difficult for that redevelopment that it's simply not
taking place. And so, in other words, a lot of
these homes are probably or these properties are probably not
being put to their highest and best use, or in
a way in which might be the most desirable and
(35:56):
probably the best able to withstand these types of disasters.
So I think certainly if the natural process of redevelopment
and upgrading of these areas as they became so desirable
was able to take place, I think we might have
seen far more of these properties redeveloped with modern techniques,
(36:18):
with modern materials, with perhaps a better planning that took
into account these types of risks, and I think certainly
that might have at least minimized the total amount of destruction,
because again, when you have an entire neighborhood of seventy
eighty year old wood homes, a lot of them were
(36:41):
virtually a tinderbox and able to go up and burn
quite quickly. And I think as to the seawall issue, again,
under this new interpretation of the Coastal Act, if you
do redevelop your house, it is treated as new development.
So in existing structure, if you wanted to pull down
(37:04):
some of the walls and expand and you redevelop it
more than fifty percent, the Commission treats that as new development. Well,
if you're a new development, you're no longer an existing
structure as of January first, nineteen seventy seven, and now
you lose a very valuable right under the Coastal Act
to protect your private property. So another disincentive to the
type of redevelopment and improvement of these properties that might
(37:28):
have again incentivized the creation of more fire resistant homes.
So I think there's certainly an argument there that it
would be preferable to allow that type of redevelopment to
take place, rather than to make it so difficult and
to discourage all of this type of creative destruction that
normally would take place. As to the management, I think
(37:49):
many individuals in the Coastal Zone have found themselves really
caught between a rock and a hard place. On the
one hand, they're required to engage in fire mitigation, brush clearing,
things of that nature that are intended to ensure that
these types of fires don't grow and tear through neighborhoods
(38:13):
in the fashion that they did. On the other hand,
sequa in the Coastal Act. These environmental protective regulations also
include penalty powers, and the Commission has been very aggressive
with their penalty power. They I should also note that
(38:35):
they consider virtually anything development. So the definition of development
under the Coastal Act has been treated so broadly that
certainly clearing of brush, anything that changes the natural landscape whatsoever,
would likely require a coastal development permit. Again, there may
be exemptions for fire mitigation techniques, but your average individual
(39:00):
can't always understand what can I clear? What can I
not clear? What methods of clearing are going to allow
me to remove some of this dry brush without accidentally
grating or disturbing habitat that might then lead to an
enforcement action. So I think the aggressive enforcement of both
(39:21):
the definition of development, which in California, in the California
courts and in the view of the Commission, a fireworks
show is development. So opening a gate or closing a
gate that can be considered development. So for all of
these relatively minor activities, you might either have to first
(39:43):
go to the commission for an expensive permit, or face
the realistic probability of being fined over eleven thousand dollars
a day for undertaking that activity without first seeking the permit.
So I think it's been a tremendous disincentive to behavior
that we really would much rather in devize these individuals
clearing their own property and ensuring that there isn't this
(40:06):
dry rush that allows these fires to really just tear
through entire areas.
Speaker 3 (40:11):
Yeah, it seems, I mean people are going to be
rational and react to the regulatory system and so you know,
develop right up to that line instead of developing in
a prudent way so that they don't get caught into
the system. And then, of course, as you mentioned individual
property ours, they can't afford to hire an attorney and
other things in advance of doing some of these activities,
(40:33):
so they're going to assume, you know, and it's and
the risk of being wrong is really high because those
penalties are are too high. So it undoubtedly leads to
over over committed resources beyond what you would even need
to simply because people fear what the consequences would be
of not going through those permit processes very interesting. I
(40:56):
want to come back to one thing that you mentioned
at the beginning, and just on housing.
Speaker 4 (41:01):
I think that there you know what.
Speaker 3 (41:03):
I thought you could just say a couple of things
briefly about the unintended consequences on the housing market. You
mentioned that before, but I want to stress one other thing.
You know, part of it is that it takes a
long time for something new to be built, and something
is built at a much higher cost, and that is
(41:24):
undoubtedly a reason why there's just simply not development or
not development at a pace we might otherwise wish. But
when there's not development, it also affects the overall shortage
issue in the market. That is that they and the shortage,
so the cost of housing goes up just by the
costs that are tied into the development itself makes the
product more expensive, but in addition to that, the costs
(41:47):
and delays mean that less product is coming into the market.
And when you have less product coming into the market,
then you have a supply shortage.
Speaker 4 (41:55):
In relation to the demand.
Speaker 3 (41:56):
And we know that that a supply shortage in relation
to demand drys up prices, so that and then the
driving up prices crowds even more people out. So it's
kind of a double effect that's happening on the housing shortage.
Speaker 4 (42:09):
As a result of a regulatory structure.
Speaker 3 (42:11):
It's not just about, oh, my home's more expensive, it's
that my home is more expensive, it doesn't come online
very quickly. But it also contributes to the to the
overall shortage of housing supply.
Speaker 4 (42:23):
Any thoughts on that additional point, Yeah, I think that's
exactly right, and I would again, virtually all prices at
the end of the day are going to come down
to supply and demand, and there's high demand for homes
in California. As you've mentioned, we already have a shortage,
and on top of that, people are moving in and
(42:46):
you know, simply to meet the growth in California, we
need to add about two hundred and ten thousand homes
each year, and California has averaged roughly half that in
good years over the last decade or so. So if
we are ever let alone reducing the existing price, if
(43:10):
it's not going to continue to rise, we need to
at least meet the growth in California. If we actually
want to start driving down prices, we have to build
more homes, and we have to build more homes of
all types, because, as you've mentioned, the increased supply at
all levels will filter down. Even if you build a
very expensive home, that opens up a less expensive home
(43:33):
for the person who's now been able to build there
the perhaps dream mansion on the California Coast, they move
out of where they were living, person in an apartment
moves up to the home that's been vacated, and so
on and so on, and things filter down to where
eventually you're adding more affordable units even if they're existing
(43:53):
simply by allowing development to take place. And that's something
that with the focus on affordable housing, there's been too
much emphasis on generating new low price units and not
on simply increasing the supply across the board. Again, the
most sure fire economics one oh one way to lower
the prices would be to do that, but in California
(44:16):
it's simply been extremely difficult to do so. And again
I think it's also just worth mentioning that it's simply
not a problem that California can spend their way out
of so in order to provide rental assistance et cetera.
(44:36):
For the number of people who are currently paying more
than fifty percent of their monthly income. It would take
about ten billion dollars a year in California to do that.
So this is not simply a problem that we can
solve with spending. We really do need to revisit the
regulatory environment and say, why is it so difficult to
build in California? Why is it so expensive? We do
(45:01):
want these increased numbers of homes available, What can we do?
What can we do to do that? And I think
this fire really offers a very good inflection point for
a reimagining or a revisiting of the utility of all
of these regulatory frameworks that exist in California. If it
(45:23):
is good to suspend these regulations temporarily for individuals who
have been seeing their homes destroyed and need to quickly rebuild,
why are all of these regulations left in place for
the thousands and thousands of landowners with empty units that
could be put to a beneficial use. In California, it's
(45:45):
not just building out, that includes building in. There are
too many units within existing neighborhoods that are right now
being left idle because the regulatory prospects of navigating the
hurdles to obtain it development permit are simply too difficult,
and I think if we take an honest look at
(46:06):
just how difficult it has been in California and continues
to be, and perhaps if we also see the outcomes
of this temporary suspension, it will force some legislative revisiting
of the utility of these laws and whether or not
some reform might be in order.
Speaker 3 (46:24):
I think that's a great way to summarize the state
of affairs and to sum up. So thank you very
much Jeremy Telcott the Pacific Legal Foundation for joining us
on this podcast to reflect on important issues on the
regulatory structure inside California and really a discussion that bleeds
over to the examination of the regulatory structures.
Speaker 4 (46:44):
Throughout the other states and at the federal level as well.
Speaker 3 (46:47):
Thank you so much for the Regulatory Transparency Project for
hosting this and I hope that the listeners have enjoyed
the program and will walk away with some useful tips.
Speaker 2 (46:58):
Thank you and thank you both for sharing your time
and expertise with us today and to our listeners, thank
you for tuning in.
Speaker 1 (47:11):
On behalf of the Federal Society's Regulatory Transparency Project. Thanks
for tuning in to the Fourth Branch podcast to catch
every new episode when it's released. You can subscribe on
Apple Podcasts, Google Play, and speaker for layus from our
TP Please visit our website at regproject dot org. That's
our egproject dot org.
Speaker 4 (47:39):
This has been a FEDSC audio production.
Welcome to the Regulatory Transparency Project's Fourth Branch podcast series.
All expressions of opinion are those of the speaker.
Speaker 2 (00:18):
Welcome to the Regulatory Transparency Project's Fourth Branch podcast I'm
Sarah Bankson, Deputy Director of RTP. Today we're happy to
host two experts discussing the challenges of rebuilding in California
in the wake of the Palisades Fires. Jeremy Talcott is
an attorney in the Pacific Legal Foundation's Property rights practice.
He also leads PLS Coastal Land Rights Project. We're also
(00:42):
joined by Donald Cochin, Professor of Law and Executive director
of the Law and Economic Center at George Mason University,
Scalia Law School. Thank you both for being with us today.
Our listeners can read the full bios for both of
our speakers at regproject dot org. With that, I'll hand
it over to you, Professor Cochin.
Speaker 3 (01:00):
Thanks so much, Sarah, and thanks to the Regulatory TRANSPARENCCY
Project for hosting this forum. I'm excited to sit down
with Jeremy Telcott today to talk a little bit about
the existing environment for regulations and land use and development
in California and throughout the country, with a specific emphasis
on what's happening today. It's important to regularly re examine
(01:22):
our regulatory frameworks for their effectiveness at meeting state objectives.
In other words, are they bringing the utility and benefits
that they claim, as well as to assess the negative
impacts of costs associated with the regulations, including the unintended
consequence of otherwise well meaning action in other words, to
help bring a little bit of focus and to help
(01:46):
make more transparent that which is otherwise less clear. Sometimes
critical inflection points bring heightened awareness to the effects of regulation.
When that happens, careful examination is doubly important, including because
major events can bring unlike coalitions to the table. To
reevaluate existing structures and erroneous are outdated assumptions on where
to set regulatory standards, as well as to see what's working,
(02:09):
such as the case today in California. California is always
a regulatory playground worth observing, but it presents an especially
useful case study in regulation and light of current events
including the Palisades Fire and other natural catastrophes throughout the
state that shine a light on some of the effects
of the existing regulatory environment. To better inform the debate,
(02:30):
we have with us. As Sarah mentioned on this podcast,
a leading expert with substantial experience in land used regulations,
property rights, natural resources, and related issues on the ground
in California and across the United States. As mentioned, I'm
delighted to sit down here with Jeremy Talcott, whom in
a turn over to in just a moment. Jeremy's an
attorney with the Pacific Legal Foundation property rights practice. He
(02:51):
focuses on fundamental rights of landowners to use and develop
their property. He also leads PLF's Coastal Land Rights Project.
Jeremy attained his undergraduate green Communications from the University of
Central Florida, and he graduated cumloud from Chapman University Fowler
School of Law in Orange, California, where he was President
of the Federal Society and Senior Articles editor of the
(03:11):
Chapman Law Review. Jeremy, I'm going to turn it over
to you to kind of get us started. But I
think that we're principally focused today on what's happening on
the ground and opportunities for reform. But before we get there,
we need to understand the current and pre existing regulatory
environment that has led us to the discussions we're having today.
(03:32):
So can you describe a little bit about the regulatory
environment for development in California. How SEQUA and other regulatory
structures have been working, what's the expense, How is it
affecting timing on land development projects? Is it effective? Those
sorts of things. Tell us a little bit about what
you're seeing on the ground.
Speaker 4 (03:52):
Yes, thank you, Donald. Well, you know, the very short
answer is that the regulatory framework in California is probably
one of the most burdensome in the entire country, if
not the most burdensome, and really because of that, it
is the state in the country that has had the
(04:13):
highest growth in both new home prices and rent. Individuals
in California spend far above the national average on all
of their home costs, generally two and a half times
the national average, and again that expense has risen far
(04:33):
more than the rest of the country over the same period,
and even California itself. The Legislative Analyst Office has recognized
that the single largest driver of those costs are the
regulatory framework of California, and in California, in addition to
all of the local zoning and regulations, land use regulations
(04:58):
that individuals must navigate to obtain a development permit. There's
also several extensive environmental overlay programs that have made again
California one of the most costly and time consuming places
to build. So, as you've mentioned, there's SEQUE, which is
(05:19):
the California Environmental Quality Act, as well as the California
Coastal Act. And while that really only applies to the
coastal zone of California, it's notable that the coastal zone
covers over sixty percent of the individuals living in California,
So unsurprisingly, the California coast is one of the most
(05:42):
desirable places to live. It's where we've done a lot
of development in the past, but these days it is
far and away the most expensive place to attempt to
build in California, and a huge part of that has
to do with the California Coastal Commission, who, again, ever
their initial mission might have been, which really I think
(06:03):
this was passed to try and preserve coastal resources, has
really over the subsequent decades become something much larger and
almost serves as kind of a super zoning board over
all these local governments, and they have asserted huge amounts
of appellate jurisdiction, so taking on more permit appeals than
(06:24):
they might previously have been authorized to take, and then
also have more finely scrutinized permits and attempted to meddle
in the outcomes of those permits that I think the
Coastal Act originally intended. So the reality is it is
very easy for individuals in California if you have a
(06:46):
development that they do not like, it is very easy
for them to sue under either of these regulations. And
the California courts have very zealously applied these environmental regulations
in ways that often forced individuals to go back time
and again. You know, perhaps they succeed in one lawsuit,
(07:07):
go back and fix shortcomings in an environmental impact report,
and then get sued again for another shortcoming. And you know,
as mentioned every time, you know, time is money. Just
the time cost alone can be substantial, but endless repeated
environmental reports can add hundreds of thousands of dollars to
(07:27):
any development project. And the reality is that this leaves
development in the hands only of the largest development groups,
often in California, and makes it very difficult and onerous
on individuals to make productive use of their property.
Speaker 3 (07:44):
Would be fair to say that the California Coastal Commission
is inserting itself into the process in ways that in
and of itself, just that insertion is causing additional delays,
and also that some of it is unnecessarily redundant upon
existing regulatory approvals as you mentioned. Then it cycles through
(08:06):
and in multiple levels of litigation to add more and
more delays. But it really is this intentional insertion of
the CCC into far more minutia of decision making that
makes it difficult to process.
Speaker 4 (08:20):
That's correct, and I think you know it's very notable
that when the Coastal Act was initially passed, there was
a very strong incentive contained within the Act for local
governments to pass new regulation. These are called local Coastal
Programs or lcps, and under the structure of the Coastal Act,
initially the Coastal Commission was given a tremendous amount of
(08:43):
power over development in this coastal zone. And then the
incentive for local governments was, if you pass an LCP
and submit it to the Commission, and the Commission approves
it as consistent with the Coastal Act, then we will
return your primary permitting authority to you, the local government,
and at that point the Commission retains appellet jurisdiction only,
(09:06):
and under what I would say is the original conception
of the Act, that's a fairly limited authority. In other words,
it's not there to oversee these minor development decisions. Rather,
it's there to if a local government fails to follow
the terms of its local Coastal program, the Commission can
step in and say, you're approving development that is inconsistent
(09:29):
with the rules that we certified, and if you do that,
we're going to overturn that development. And turning to the
second part of your question on delays, the delays can
be substantial. We've at PLF, we've recently done a report
on this appellate process, and again under some kind of
interesting interpretations of the deadlines contained within the Coastal Act,
(09:52):
the Coastal Act has a forty nine day deadline for
these appellate decisions from local government approved permits to the Commission,
and the courts and the Commission have interpreted that to
mean forty nine days to open the process. And once
the Commission opens the process, there is no deadline for
(10:13):
them to close that process by actually making a final decision,
so the Commission will take a permit approval that oftentimes
already represented three to five years of work between a
developer and the county, the commission finds a substantial issue
with it, which vacates that permit approval, and then the
(10:36):
commission moves into a DiNovo permit process, whereby they can
really demand almost anything of the developer, and the developer
has no mechanism by which to force that development forward
or that process forwards. So, unlike many of the streamlining
laws that otherwise exist for development in California, none of
(10:57):
those apply to the Coastal Commission itself can drag that
process out for a very long time, And in our research,
what we found is that even for a permit denial,
where the Commission simply decides they're going to take over
the permit and then remove it entirely and essentially send
the person back to start over, that takes about a
(11:17):
year on average, and permit approvals take far longer than that,
about five hundred and thirty days to get to an approval,
often with substantial modifications to the original project plan, and
oftentimes with concessions or other mitigations attached to that permit,
which again increases the cost of the finished product.
Speaker 3 (11:41):
Very interesting and so as I'm hearing it, really the
California Coastal Commission, once the local land use folks come
in on the first part of your answer, there was
meant to have more of a ratification role and then
an independent reviewer role, and they've just sort of done
a power graph that circumvents the original deal.
Speaker 4 (12:00):
Is that right? That's correct? Essentially, Again, our view of
the Coastal Act is that that appellate power was limited
to ensuring that you don't have bad actor local governments
essentially taking advantage of this certification process, re obtaining local
control and then ignoring entirely those regulations. So again, the
(12:24):
pellet power of the Commission is limited to certain categories
of development. So one area of their jurisdictional expansion has
been creative interpretations of that list that limited list. There
are some areas where that's very straightforward. For example, development
between the first public road and the sea is always
(12:46):
subject to Commission ap pellet jurisdiction. Occasionally there's some factual
disputes about whether or not a property falls within that boundary,
but those tend to be minimal. But one example I'll
put forward of the kind of creative intern pretation jurisdictional
overreach where the Commission authorizes, or excuse me, the Coastal
(13:07):
Act authorizes commission jurisdiction over development that is not the
principal permitted use within a zoning category of the LCP,
and for decades, the Commission and all local governments treated
that as any principal permitted use. In about a decade
or so ago, the Commission said, wait a minute, the
(13:27):
Coastal Act says the principal permitted use. We believe this
means that the Coastal Act intended every coastal jurisdiction to
have one single principal permitted use within each zoning area,
and if they have more than one principal permitted use,
that means we have appellate jurisdiction over every permit issued
in that area. And in practical terms, for most counties
(13:50):
within California, that has now opened up every single local
government approved permit to commission jurisdiction. I think it's unlikely
that's what the legislator intended. It may have been in
artful drafting, but nonetheless that's just one interpretation that the
Commission has pushed forward to grab jurisdiction over permits that
previously would have been considered outside of their purview.
Speaker 3 (14:12):
And we see this kind of model even on the
federal state level and federalism and sort of delegated state
programs under the Clean Water Act and other things, which
was intended to devolve authority down to those communities most
directly affected, so that the federal government, for example, can
have basic general standards for the Clean Water Act, but
then the states have delegated authority to have their authorized
(14:32):
state programs to actually do the minutia and the actual
regulatory and the permit approvals and our things. And only
when they really run astray is EPA supposed to come
in and take over that program.
Speaker 4 (14:43):
Very similar, I think to what we're seeing here.
Speaker 3 (14:47):
And so I promise all of the listeners that we
want to get to the fires and the current state
of things quickly, but just a quick I appreciate your
thoughts because you are a local you know, land use
attorney and property rights attorney.
Speaker 4 (15:03):
Part, can you tell us a little.
Speaker 3 (15:04):
Bit about why they wanted to give the authority to
the local governments to ultimately decide this. Why do we
devolve that kind of decision making down to local governments
rather than powerful.
Speaker 4 (15:16):
State apparatus. Well, you know, as I mentioned the California coastline,
we're talking about over eight hundred miles of coast These
are unique areas, you know, stretching from Oregon down to Mexico.
There's quite a bit of variation in the type of
coastal environment, in the type of community that communities that
(15:39):
exist along that coastline, in the type of development that
already exists, the type of practices and development and uses
that people would like to see going forward. And I
think the Coastal Act had a very strong recognition that
these types of unique local challenges require individualized solutions, usually
(16:01):
reached by the local government. And so while I think
it's clear that the Coastal Act was intended to be
one push of state policy, or one way to ensure
that state environmental policy was asserted and pushed down onto
these local jurisdictions, as you mentioned, I think the more
(16:24):
individualized and particularized determinations were meant to be left to
those local governments. And again, the Commission was given a
very strong oversight role in that certification process, whereby a
local government cannot enact new lcps or amendments without going
to the Commission, submitting them and allowing the Commission the
(16:47):
opportunity to certify. And it is effectively a veto power.
If they disagree with the language put forward, they can
reject entirely those amendments, or they can suggest modifications. But
what the legislature did not do is give the Commission
any legislative power directly. So really their role was meant
to be this certification process, this oversight process, and I
(17:10):
think once those laws were certified, it was intended to
provide quite a bit of power to the local governments
and again give the Commission just this oversight rule to
ensure that those laws were not ignored.
Speaker 3 (17:22):
So it sounds like there's sort of two categories of
potential reform or more obviously, one is a legislative fixed
to reassert their own authority and to restate what those
goals were or to take back, you know, some of
that power. And then second is you know, the courts,
through differential standards, have been largely complicit or enabling of
(17:46):
the CCC's power grabs in these areas. So I guess
the question is what can be done about this? What
is being done? And in particular, you know, did you
see any movement prior to the most recent fires in
California and legislatively or judicially or regulator in the regulatory agencies?
(18:09):
And what has happened since? So what you know now
we can get to what's happening right now? Is there
is there a renew momentum or opening of the eyes
on the part of those who may have been advocates
for these strong regulatory structures to re examine uh and
seeing some of the errors of the ways.
Speaker 4 (18:31):
Well, again, I think the short answer is yes, you know,
there there is some hope in California. Even in California,
there is some hope where where in recent years. So
I'll start a little bit from the beginning here. Most
pro housing, i would say, or streamlining laws that have
been passed in California over recent years, and these have
(18:53):
been passed with the recognition that California has a severe
housing crisis and shortage, that we have not been building
enough to meet demand for years. Those laws always contain
provisions exempting the coastal zone or the coastal Act or
saying that nothing within those laws was meant to diminish
the Coastal Act in any way. And really only in
(19:16):
the last couple of years we've seen some of the
more pro housing legislators within California include provisions that in
fact apply those pro housing laws even within the coastal zone.
And so I think there has been some recognition that
if we are going to build enough units, we are
going to have to build them in the area where
(19:38):
people most desire to build, and that is the coastal zone.
So we have seen some push within the legislatively within
California to at least chip away slightly from the scope
and authority of the Coastal Commission and the Coastal Act
as far as judicially, As you mentioned, for decades, most
(19:59):
of the opinion that we've seen have been extremely deferential
to Commission authority, really very minimal scrutiny of Commission interpretations
or deference to Commission interpretations. But in recent years we've
seen some inroads within the California courts, and the biggest
example of that ongoing right now. One of our cases
(20:22):
at PLF Sheer Development against California Coastal Commission was granted
review at the California Supreme Court, and we've just completed
briefing in that case, and that did involve an issue
where the local government issued a permit, said it was
agreed with all of the local land use laws, it
(20:43):
was consistent with all of the regulations, and importantly, the
local government said that it was not an appealable permit
to the Coastal Commission, and the Commission nonetheless took appeal
and they asserted multiple areas of authority, one of which
was the principal permitted use issue that I mentioned earlier,
(21:04):
and the other was a fairly creative reinterpretation of the LCP.
The required the Commission to ignore the kind of plain
language of the LCP which said the appealable zones are
contained in official maps, and instead finding a figure elsewhere
within the LCP that covered the subject property in saying
(21:25):
any reference to this property within the LCP is enough
to give us a juris dictional hook. We believe that
because we can pinpoint this property on a map that
says there may be some dune sands underlying it that
are sensitive habitat, we're going to assert that that is
sufficient to give us a jurisdictional hook, despite again contrary
(21:50):
language within the LCP which said these are informational maps.
The official maps are over here, and all of your
appellate jurisdiction is governed by the official maps. And surprisingly,
the Court of Appeal accepted that argument and essentially did
an extremely deferential review of this core legal question of
(22:14):
how is an LCP interpreted? And really that's one of
the core functions of the courts is to interpret these
laws and determine what the law says. That goes back
to some of our very earliest cases of the US
Supreme Court Marbury v. Madison, is it is the province
of the court to say what the law is, and
(22:35):
here the Court of Appeal really did not do that.
The California Supreme Court granted review. We believe this is
a sign that even the California Supreme Court is at
the very least aware that the lower courts have been
very deferential and that there has been some division within
those lower courts of exactly how deferential they should be.
(22:55):
And we're hopeful that it's an opportunity for the Court
to kind of reassert its area of authority in these
matters and be the primary interpreter of these land use laws,
which will provide I believe, more stability for local governments
and landowners if these laws are treated objectively rather than
(23:16):
of subject to the whims of commission rey interpretation.
Speaker 3 (23:20):
So there are a couple other cases out there right
now that are important developments too, right, Hattian and Kasimira.
Speaker 4 (23:27):
Can you tell us a little bit about those, Yes,
both of those again very recent cases, Haydian. Just the
last day of last year, the opinion came down from
the Superior Court, and that was again a jurisdictional issue
where we argued that the Commission had essentially no authority
to take this permit over that the language of the
(23:49):
LCP was clear, and that they lacked essentially this jurisdictional hook.
And in that case we actually had a victory at
the Superior Court, and it was really precisely the opposite
example as the Court of Appeal, where a judge did
a very in depth analysis of the multiple provisions that
(24:11):
were at issue and how they interacted, and by doing
this holistic interpretation was able to determine that the LCP
precluded the Commission from taking jurisdictions. So you're very happy
with a Win. I would love to see more judges
following this example where they again give a very critical
(24:32):
eye towards these very fundamental jurisdictional questions of when the
Commission may may take over and reject a permit approval
from the local government and the other one Kasimira. This
is a case that was also a Court of Appeal case.
This involves a separate provision of the Coastal Act and
(24:52):
another example of this commission interpretive overreach, where the Coastal
Act contains a provision that it actually requires local governments
in the Commission to issue permits for shoreline protective devices,
so things like sea walls, rip wrap other measures to
protect a collapsing bluff face where it might be in
(25:15):
danger to an existing structure. And for decades the first
forty years of the Coastal Act, everyone understood that existing
structures meant existing at the time of the application for
a sea walls. So if you had lawfully constructed a
home on this bluff face and a change in the
(25:37):
environmental circumstances a heavy al Nino year or sea level rise,
if any of these measures threatened, then your home you
were entitled to get this shoreline protective device to protect
your private property in that investment, And starting about twenty ten,
the Commission suddenly reversed course and said, we believe existing
(25:58):
structures actually meant and existing as of January first, nineteen
seventy seven, or the date that the Coastal Act went
into effect. And you know, it's surprising to me to
think that the legislator, would legislature would have done something
so significant such as banning all sea walls going forward
with virtually no debate or discussion publicly. It's even more
(26:21):
surprising to me to think that everyone involved would have
immediately interpreted, interpreted that provision incorrectly and consistently over the
next forty years. But nonetheless, the Court of Appeal accepted
that interpretation, and that case is now being petitioned to
the California Supreme Court. So I'm hopeful that that is
(26:41):
a case where we may get reviewed at the California
Supreme Court. If not, that's certainly another opportunity for legislative fix,
because I think, again, when individuals I should add. The
Coastal Act also contains a provision that says new development
should be designed to minimize any need to rely on
(27:05):
shoreline protective devices. So there are other measures within the
Coastal Act that certainly disincentivize the need for these types
of sea walls. But when someone has lawfully developed their property,
obtained all the necessary permits, done all the studies, and
everyone has done their best to avoid the need for
(27:25):
a sea wall, if in fact that is nonetheless required
to protect an investment, I think the Coastal Act recognizes
that to deny that would potentially be a taking of
private properties. So again something that I'm hopeful will either
be addressed in the courts or legislatively.
Speaker 3 (27:42):
So with the Palisades fire and other fires and other
natural catastrophies in California, there's a real understanding of a
need to redevelop and redevelop fast in the areas where
that have been most affected. People need to move back
into their homes. Economies need to be revite a lot,
so businesses need to be able to come back into
(28:03):
the spaces. This has led to some very interesting maybe
policy reversals, shifts, interesting coalitions being developed to either suspend
or create exceptions or variances to some of the regulatory
laws inside California. Can you tell us a little bit
about the political shifts and or the the political attempts
(28:27):
to suspend or create exceptions to the regulatory structure, which
seems to me to be an admission of the of
the real impediments that these structures place on redevelopment.
Speaker 4 (28:41):
Yeah, it's it's you know, it's unfortunate that it takes
a catastrophe of this magnitude to shine a light on
these issues. But you know, many people may have for
the first time heard about the Coastal Commission, certainly outside
of California, many many people for the first may have
been made aware of it by a rant by Adam
(29:04):
Carolla that took place just days after the destruction of
the fire. And the main thrust of that discussion was
people are going to find out when they try to rebuild.
When we have ten thousand homes along the coasts that
need to be rebuilding and they try to go find
a you know, try to go seek a permit for this,
they're going to discover just how onerous it is to
(29:27):
obtain a permit to develop along the coast. And I
think certainly, if everything had remained status quo, I can't
imagine that even a fraction of those homes could have
been rebuilt in the short term, and certainly, you know,
it's not to say that it won't take some time
(29:50):
for areas that are this destroyed to rebuild, but under
the regulatory framework as it existed, I think decades would
be optimistic. And so again, just days after all of
this took place, Governor Gavin Newsom issued an executive order
which suspended the operation of the Coastal Act and the
(30:14):
California Environmental Quality Act in areas impacted by the fire
with respect to any homes that needed to be rebuilt.
And so I think that is a tacit admission by
the governor that if these regulations are not suspended, we
simply will not be able to rebuild, and certainly not
in the timeline that people would expect. I think most
(30:36):
people expect that if your home is destroyed, you really
have a right to replace what's been lost, and that's
most people would have assumed that that's the status quo.
And indeed, the Coastal Act does contain a provision that
allows for a right to rebuild when homes are destroyed,
but that hasn't stopped the Commission in the past, and
(30:59):
we have we have seen individuals be delayed or denied permits,
even where it involved the rebuilding of homes, and so
I think it was a very tacit recognition of the
overreach of the Commission. The Governor Newsom stepped in and
by executive orders suspended those regulations. And perhaps even more surprisingly,
(31:26):
despite that executive order, the Commission nonetheless engaged in some
various guidance, written or oral guidance as to when and
where you actually qualified as exempt for these rebuilding projects.
And so about a week or so later we were
treated to a second executive order by Gavin Newsom which said, no, really,
(31:52):
I mean it, Commission. In fact, you're not only prohibited
from acting under the Coastal Actress or sequel, you're also
prohibited from even offering written auroral guidance as to the
scope of the exemption I am putting forward. So really
a clear act and intent by the Governor to shut
(32:12):
down entirely the operation of the Coastal Act in these
fire ravaged areas so that they can in fact rebuild.
Speaker 3 (32:19):
I think that's a very telling study too, in what
a lot of academics examine in terms of agency behavior
and the way bureaucracies operate to self perpetuate, and that
threats to their existence are faced with claims of power
that need to be doubly rebuffed, like the governor had
to in this case. One curious aspect of this all
(32:45):
is that the fires themselves may have been exacerbated, or
the impacts may have been exacerbated by the existence of
the regulatory strungructure. One way to think about this is
that they could have perhaps made the fires worse as
(33:07):
a result of the existing environment that was created by
the lack of development and the lack of land stewardship
activities that might otherwise occur that could contain or at
least limit the spread of fire. And then you know,
a second claim I think can be made that environmental
resources were more susceptible to destruction from any fires that
(33:32):
actually occurred. In other words, you know, because you are
unable to responsibly develop and maintain and be good stewards
of certain areas meant that you might be more fire susceptible.
That in fact leads to this unintended consequence of making
entire habitats, for example, subject to destruction by fires. In
(33:55):
order to put someone through the ringers of a long
term development process, so, so I I was wondering if
you could comment on those two points. First off, you know,
is is there an argument that the regulatory structure actually
made the fires impact worse?
Speaker 4 (34:10):
And then second is this.
Speaker 3 (34:12):
Uh, you know, part of that concern is have the
fires actually done significant environmental damage that could have been
avoided had we had a more you know, reasonable understanding
of how development works in conjunction with good land stewardship.
Speaker 2 (34:29):
Uh?
Speaker 4 (34:30):
Yeah, I think, uh, you know, the answer to both
is yes. I think there's certainly, at minimum, you know,
colorable arguments as to both. And I think one way uh,
in which the implementation of the Coastal Act and relevant
to some of these these new ongoing cases, uh, is
(34:50):
that the inability for individuals to develop and redevelop in
these areas has has forced many of many, any of
these areas to essentially be locked in time. And so
they're certainly anecdotal stories that can be found of individuals
(35:11):
buying a property, perhaps one with a small home, and thinking,
and we're talking about individuals with substantial means and thinking,
I'll be able to buy this Malibu property and maybe
tear down a small relatively dilapidated and wood structure built
in the nineteen fifties and replace it with a new, modern,
(35:33):
beautiful home, perhaps even a mansion, and the regulatory environment
is so difficult for that redevelopment that it's simply not
taking place. And so, in other words, a lot of
these homes are probably or these properties are probably not
being put to their highest and best use, or in
a way in which might be the most desirable and
(35:56):
probably the best able to withstand these types of disasters.
So I think certainly if the natural process of redevelopment
and upgrading of these areas as they became so desirable
was able to take place, I think we might have
seen far more of these properties redeveloped with modern techniques,
(36:18):
with modern materials, with perhaps a better planning that took
into account these types of risks, and I think certainly
that might have at least minimized the total amount of destruction,
because again, when you have an entire neighborhood of seventy
eighty year old wood homes, a lot of them were
(36:41):
virtually a tinderbox and able to go up and burn
quite quickly. And I think as to the seawall issue, again,
under this new interpretation of the Coastal Act, if you
do redevelop your house, it is treated as new development.
So in existing structure, if you wanted to pull down
(37:04):
some of the walls and expand and you redevelop it
more than fifty percent, the Commission treats that as new development. Well,
if you're a new development, you're no longer an existing
structure as of January first, nineteen seventy seven, and now
you lose a very valuable right under the Coastal Act
to protect your private property. So another disincentive to the
type of redevelopment and improvement of these properties that might
(37:28):
have again incentivized the creation of more fire resistant homes.
So I think there's certainly an argument there that it
would be preferable to allow that type of redevelopment to
take place, rather than to make it so difficult and
to discourage all of this type of creative destruction that
normally would take place. As to the management, I think
(37:49):
many individuals in the Coastal Zone have found themselves really
caught between a rock and a hard place. On the
one hand, they're required to engage in fire mitigation, brush clearing,
things of that nature that are intended to ensure that
these types of fires don't grow and tear through neighborhoods
(38:13):
in the fashion that they did. On the other hand,
sequa in the Coastal Act. These environmental protective regulations also
include penalty powers, and the Commission has been very aggressive
with their penalty power. They I should also note that
(38:35):
they consider virtually anything development. So the definition of development
under the Coastal Act has been treated so broadly that
certainly clearing of brush, anything that changes the natural landscape whatsoever,
would likely require a coastal development permit. Again, there may
be exemptions for fire mitigation techniques, but your average individual
(39:00):
can't always understand what can I clear? What can I
not clear? What methods of clearing are going to allow
me to remove some of this dry brush without accidentally
grating or disturbing habitat that might then lead to an
enforcement action. So I think the aggressive enforcement of both
(39:21):
the definition of development, which in California, in the California
courts and in the view of the Commission, a fireworks
show is development. So opening a gate or closing a
gate that can be considered development. So for all of
these relatively minor activities, you might either have to first
(39:43):
go to the commission for an expensive permit, or face
the realistic probability of being fined over eleven thousand dollars
a day for undertaking that activity without first seeking the permit.
So I think it's been a tremendous disincentive to behavior
that we really would much rather in devize these individuals
clearing their own property and ensuring that there isn't this
(40:06):
dry rush that allows these fires to really just tear
through entire areas.
Speaker 3 (40:11):
Yeah, it seems, I mean people are going to be
rational and react to the regulatory system and so you know,
develop right up to that line instead of developing in
a prudent way so that they don't get caught into
the system. And then, of course, as you mentioned individual
property ours, they can't afford to hire an attorney and
other things in advance of doing some of these activities,
(40:33):
so they're going to assume, you know, and it's and
the risk of being wrong is really high because those
penalties are are too high. So it undoubtedly leads to
over over committed resources beyond what you would even need
to simply because people fear what the consequences would be
of not going through those permit processes very interesting. I
(40:56):
want to come back to one thing that you mentioned
at the beginning, and just on housing.
Speaker 4 (41:01):
I think that there you know what.
Speaker 3 (41:03):
I thought you could just say a couple of things
briefly about the unintended consequences on the housing market. You
mentioned that before, but I want to stress one other thing.
You know, part of it is that it takes a
long time for something new to be built, and something
is built at a much higher cost, and that is
(41:24):
undoubtedly a reason why there's just simply not development or
not development at a pace we might otherwise wish. But
when there's not development, it also affects the overall shortage
issue in the market. That is that they and the shortage,
so the cost of housing goes up just by the
costs that are tied into the development itself makes the
product more expensive, but in addition to that, the costs
(41:47):
and delays mean that less product is coming into the market.
And when you have less product coming into the market,
then you have a supply shortage.
Speaker 4 (41:55):
In relation to the demand.
Speaker 3 (41:56):
And we know that that a supply shortage in relation
to demand drys up prices, so that and then the
driving up prices crowds even more people out. So it's
kind of a double effect that's happening on the housing shortage.
Speaker 4 (42:09):
As a result of a regulatory structure.
Speaker 3 (42:11):
It's not just about, oh, my home's more expensive, it's
that my home is more expensive, it doesn't come online
very quickly. But it also contributes to the to the
overall shortage of housing supply.
Speaker 4 (42:23):
Any thoughts on that additional point, Yeah, I think that's
exactly right, and I would again, virtually all prices at
the end of the day are going to come down
to supply and demand, and there's high demand for homes
in California. As you've mentioned, we already have a shortage,
and on top of that, people are moving in and
(42:46):
you know, simply to meet the growth in California, we
need to add about two hundred and ten thousand homes
each year, and California has averaged roughly half that in
good years over the last decade or so. So if
we are ever let alone reducing the existing price, if
(43:10):
it's not going to continue to rise, we need to
at least meet the growth in California. If we actually
want to start driving down prices, we have to build
more homes, and we have to build more homes of
all types, because, as you've mentioned, the increased supply at
all levels will filter down. Even if you build a
very expensive home, that opens up a less expensive home
(43:33):
for the person who's now been able to build there
the perhaps dream mansion on the California Coast, they move
out of where they were living, person in an apartment
moves up to the home that's been vacated, and so
on and so on, and things filter down to where
eventually you're adding more affordable units even if they're existing
(43:53):
simply by allowing development to take place. And that's something
that with the focus on affordable housing, there's been too
much emphasis on generating new low price units and not
on simply increasing the supply across the board. Again, the
most sure fire economics one oh one way to lower
the prices would be to do that, but in California
(44:16):
it's simply been extremely difficult to do so. And again
I think it's also just worth mentioning that it's simply
not a problem that California can spend their way out
of so in order to provide rental assistance et cetera.
(44:36):
For the number of people who are currently paying more
than fifty percent of their monthly income. It would take
about ten billion dollars a year in California to do that.
So this is not simply a problem that we can
solve with spending. We really do need to revisit the
regulatory environment and say, why is it so difficult to
build in California? Why is it so expensive? We do
(45:01):
want these increased numbers of homes available, What can we do?
What can we do to do that? And I think
this fire really offers a very good inflection point for
a reimagining or a revisiting of the utility of all
of these regulatory frameworks that exist in California. If it
(45:23):
is good to suspend these regulations temporarily for individuals who
have been seeing their homes destroyed and need to quickly rebuild,
why are all of these regulations left in place for
the thousands and thousands of landowners with empty units that
could be put to a beneficial use. In California, it's
(45:45):
not just building out, that includes building in. There are
too many units within existing neighborhoods that are right now
being left idle because the regulatory prospects of navigating the
hurdles to obtain it development permit are simply too difficult,
and I think if we take an honest look at
(46:06):
just how difficult it has been in California and continues
to be, and perhaps if we also see the outcomes
of this temporary suspension, it will force some legislative revisiting
of the utility of these laws and whether or not
some reform might be in order.
Speaker 3 (46:24):
I think that's a great way to summarize the state
of affairs and to sum up. So thank you very
much Jeremy Telcott the Pacific Legal Foundation for joining us
on this podcast to reflect on important issues on the
regulatory structure inside California and really a discussion that bleeds
over to the examination of the regulatory structures.
Speaker 4 (46:44):
Throughout the other states and at the federal level as well.
Speaker 3 (46:47):
Thank you so much for the Regulatory Transparency Project for
hosting this and I hope that the listeners have enjoyed
the program and will walk away with some useful tips.
Speaker 2 (46:58):
Thank you and thank you both for sharing your time
and expertise with us today and to our listeners, thank
you for tuning in.
Speaker 1 (47:11):
On behalf of the Federal Society's Regulatory Transparency Project. Thanks
for tuning in to the Fourth Branch podcast to catch
every new episode when it's released. You can subscribe on
Apple Podcasts, Google Play, and speaker for layus from our
TP Please visit our website at regproject dot org. That's
our egproject dot org.
Speaker 4 (47:39):
This has been a FEDSC audio production.
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