I'd be inclined to favor an easy licensing system for very-low-power stations, subject only to the condition that each one originates its own programming and does not simply relay something else. But I strongly suspect the "pirates" wouldn't get licenses even if licenses were available.
From the rest of the story, it sounds like being illegal, and deliberately antagonizing the FCC, is part of the game.
There's also the issue of technical standards -- staying on frequency and not having harmonics that take out something else, such as fire departments or air traffic signals.
And also the issue of paying for the music that they broadcast, if they broadcast commercially produced music. I'll bet they don't want to do that.
That, of course, requires no license at all and should be encouraged. It still requires the permission of music copyright holders.
Is Santa Cruz trying to secede from the United States, then? And even from the International Telecommunications Union?
I don't think any of these "rebels" realize is that the only reason they *have* clear channels to transmit on is that the FCC regulates radio. If there were no regulation, competitors would be free to jam each other and would do so.