In the 1986 case California Coastal Commission et al. v. Granite Rock Co., the U.S. Supreme Court ruled that federal law did not preempt California's permit requirement for coastal development, and thus, a state could impose its own environmental standards on federally owned land if they didn't conflict with federal laws or policies. The dispute began when Granite Rock Company sought to mine limestone from a national forest in Monterey County without obtaining a permit from the California Coastal Commission (CCC). The CCC claimed it had jurisdiction over all developments along the coast, including those on federal lands. In contrast, Granite Rock argued that since it was operating on federally-owned property and had obtained necessary permits under Federal law, state regulation was pre-empted by Federal statute. The court held that while states cannot directly regulate activities on federal lands unless authorized by Congress; they can enforce regulations aimed at off-site impacts caused by such activities as long as these do not interfere with fulfilling any specific congressional objectives regarding those lands.

In the dissenting opinion for California Coastal Commission v. Granite Rock Co., Justice Blackmun, joined by Justices Brennan and Marshall, argued that federal law did not preempt state regulation in this case. They contended that the U.S. Forest Service's approval of Granite Rock's mining plan did not constitute a federal permit which would override any need for state permits under the Coastal Zone Management Act (CZMA). The CZMA was designed to encourage states to exercise their full authority over coastal resources, including requiring permits for activities such as mining. Furthermore, they disagreed with the majority’s interpretation of preemption doctrine; rather than focusing on whether there is an outright conflict between federal and state law or if Congress intended to occupy a field completely, they suggested considering whether upholding state regulations would pose significant obstacles to achieving Congressional objectives.