The California Environmental Quality Act (CEQA) is a 1970s law that requires a public agency proposing to undertake a project or approve a discretionary action to consider the potential environmental impacts of that action. The state's procedures for forming a new city are embodied in the Cortese-Knox-Hertzberg Act (CKH, Sections 56000 and following of the CA Government Code). Local Agency Formation Commisisons (LAFCOs) exist in each California County and have authority to control a municipal incorporation procedure.  Nothing in the CKH Act requires a LAFCO to invoke CEQA for an incorporation process, but it has become standard practice for LAFCOs to do so. And that has been a key reason why the formation of a new city is so costly and why the process is so cumbersome and time-consuming.

In January 2000, the state Commission on Local Governance for the 21st Century issued a report, "Growth Within Bounds", that suggested changes for the CKH Act. The Act was subsequently amended, but not every recommendation of the Commission was included. A recommendation that was ignored was the Commission's finding that a statutory CEQA exemption should be provided for a new incorporation. The Commission wrote that an act of incorporation constitutes only a political reorganization that did not commit an area to any changes in land use. Further, a Superior Court ruled in 2008 that Monterey County LAFCO abused its discretion by regarding the proposal to form a City of Carmel Valley as a "project" under CEQA and forcing the process to include a time-consuming and expensive Environmental Impact Report. Unfortunately, that case is not officially citable because the court's decision was not appealed. See COURT RULINGS on our Library page for more information.

Applying CEQA to a political reorganization process is pointless. The environment is not affected in any way merely because of a change in governance. Under state law a County's existing General Plan and implementing ordinances (that guide day-to-day land use and development) remain in effect when a new city is formed until the new city creates its own General Plan and implementing ordinances (roughly a three-year process), the creation of which requires application of CEQA. The Legislature should clarify that a municipal incorporation process is exempt from CEQA, as was recommended by the Commission on Local Governance for the 21st Century and as was validated by the 2008 court decision.