Granite Rock Company, a Corporation v. California Coastal Commission, an Administrative Agency of the State of California

Citations: 768 F.2d 1077; 15 Envtl. L. Rep. (Envtl. Law Inst.) 20919; 23 ERC (BNA) 1075; 1985 U.S. App. LEXIS 21746; 23 ERC 1075Docket: 84-2146

Court: Court of Appeals for the Ninth Circuit; August 14, 1985; Federal Appellate Court

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Granite Rock Company appeals a district court ruling that denied its request to prevent the California Coastal Commission from enforcing a state permit requirement for its mining operations on federally owned land in the Los Padres National Forest. Granite Rock, which has been mining chemical grade white limestone since 1981 under a claim it acquired in 1959, argued that the Coastal Commission lacked the authority to impose the permit requirement. The district court dismissed Granite Rock's motion for summary judgment, reasoning that the land was not excluded from the state's coastal zone under the Coastal Zone Management Act (CZMA) and that states possess concurrent authority with Congress to regulate federal lands in coastal zones. The court concluded that no federal statute or regulation preempted the state’s permit requirement. Granite Rock's appeal follows this dismissal.

The property clause of the Constitution grants Congress the authority to regulate federal lands, which Granite Rock interprets as exclusive legislative power, meaning states can only regulate federally owned property if Congress explicitly allows it. Granite Rock contends that California lacks the inherent authority to regulate mining on federal land because the federal government holds the title. In contrast, the Coastal Commission argues that states have concurrent power to regulate federal lands until Congress specifically preempts such regulation.

The document shifts focus to federal preemption, defined by the Supreme Court as occurring in two scenarios: when Congress occupies a field entirely or when state law conflicts with federal law. Granite Rock claims that the Coastal Zone Management Act (CZMA) and the Mining Act, along with Forest Service regulations, preempt California's state permit requirement, asserting that the CZMA reserves regulatory power to Congress for lands outside the coastal zone and that the Mining Act's purpose is to promote mining, which state requirements obstruct.

Conversely, the Coastal Commission argues that the CZMA does not exclude the land in question and thus authorizes the state permit requirement, countering Granite Rock's claims. It also maintains that the Mining Act does not preempt state environmental regulations unless they completely prohibit mining, contending that the issue of whether the Coastal Commission will deny Granite Rock’s permit application is not yet ripe for resolution.

The excerpt addresses the congressional intent behind the Coastal Zone Management Act (CZMA) concerning federal and state regulatory powers over coastal lands. It clarifies that the CZMA does not negate or alter existing federal laws that may preempt state authority, as evidenced by the Conference Committee's statement indicating that the legislation aims to maintain existing jurisdictions. Specifically, Section 307(e)(2) of the CZMA explicitly states that it shall not supersede or modify existing laws applicable to federal agencies. The Senate Report reinforces this by highlighting that the CZMA's purpose is to promote state management of coastal resources through federal grants, without restoring any lost state authority due to federal preemption. The legislative history consistently reflects Congress’s intention to preserve the existing balance of power between federal and state authorities regarding coastal zone management. Consequently, even assuming the land in question is within the coastal zone, the CZMA is intended to maintain the status quo in the allocation of regulatory powers. The document concludes by shifting focus to the preemptive effects of the Mining Act and Forest Service regulations.

The Mining Act aims to promote mining on federal lands while also addressing the need to reduce environmental impacts associated with such activities. In 1970, Congress reaffirmed its commitment to this dual objective, leading to regulations established by the Secretary of Agriculture in 1974 that aim to minimize environmental harm from mining on National Forest System lands, without infringing on mining rights. These regulations mandate that miners inform the Forest Service of operations that could disturb surface resources, with such activities requiring Forest Service approval.

Despite a general federal intent to encourage mining, state environmental regulations that inadvertently hinder mining operations do not automatically face preemption. However, a state regulation that requires miners to obtain a state permit before proceeding with mining activities could be preempted if it effectively grants state authorities veto power over federally authorized projects. The Supreme Court's ruling in First Iowa Hydro-Electric Cooperative v. Federal Power Commission supports this view, illustrating that state requirements cannot obstruct federal permit systems, as seen in similar cases regarding federal patent regulations. The Court consistently held that additional state permit systems are preempted if they undermine federal authority, without distinguishing between prohibitions and regulations based on their reasonableness.

The court's analysis in Ventura County v. Gulf Oil Corp. established that the Mineral Lands Leasing Act of 1920 preempts local zoning ordinances that restrict oil exploration on federal land, citing an actual conflict between local regulations and federal authority granted by Congress. The Departments of Interior and Agriculture had already issued federal permits, preventing Ventura from imposing additional requirements. 

The First Iowa doctrine, as clarified in Pacific Gas, applies only when state permit mechanisms intrude upon federal permit authority. The Supreme Court upheld that the Atomic Energy Act allows California to impose permit requirements related to economic concerns, as these do not conflict with federal safety regulations governed by the Nuclear Regulatory Commission. The Court rejected the notion that states could halt construction until federal safety standards were met, emphasizing the separation between federal safety oversight and state economic regulation.

To determine the applicability of the First Iowa doctrine in this case, it is essential to assess whether federal law grants a federal agency the authority to manage mining activities in national forests based on environmental standards. The Forest Service regulations explicitly assign the authority to prohibit mining activities for non-compliance with environmental requirements, indicating that state permit authority, if it imposes additional conditions, would conflict with federal authority. Although states may implement supplementary environmental regulations, an independent state permit system enforcing state standards would undermine federal permit authority and therefore is considered preempted.

The Forest Service's regulatory authority over mining in national forests is constrained by federal policy that favors mining on federal lands. Allowing states to implement a second tier of permit authority would weaken the Forest Service's ability to maintain reasonable environmental standards. While federal law permits states to set environmental standards for the Forest Service's permit decisions, the final authority remains with the Forest Service, ensuring adherence to federal regulatory goals. Additionally, a staff statement indicating that Granite Rock must obtain necessary permits from the California Coastal Commission does not alter the impact of the established regulations. The ruling is reversed by Judge Albert Lee Stephens, Jr. of the United States District Court for the Central District of California.