The municipal incorporation procedures of the LAFCO Law (Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, California Government Code Title 5, Division 3, Section 56000 et seq) require environment analysis pursuant to the California Environment Quality Act (CEQA, California Public Resources Code, Division 13, Section 21000 et seq). In 2008 a Superior Court Judge in Monterey County found there was no evidence that the proposal to establish the unincorporated community of Carmel Valley as an incorporated municipality would have a potential effect on the physical environment and that the proposal to reorganize the municipal governance structure did not trigger environmental review. The ruling was not appealed, so the case cannot be cited as precedential. But that does not mean it should be ignored.

The Monterey County Local Agency Formation Commission (LAFCO) obeyed the ruling and issued a CEQA Notice of Exemption for the incorporation proposal. Since that time, several cities were evaluated through the LAFCO processes in other counties. 

• Menifee, incorporated in October 2008 - Riverside County LAFCO, noting that incorporation itself has no direct impact on land use and finding no substantial evidence that the incorporation proposal would have a significant effect on the environment, issued a CEQA Negative Declaration
• Eastvale, incorporated in October 2010 - Riverside County LAFCO found the proposal would have no significant impacts on the environment, resulting in a CEQA Negative Declaration. 
• Jurupa Valley, incorporated in July 2011 - Riverside County LAFCO found the proposal would have no significant impacts on the environment, resulting in a CEQA Negative Declaration.
• Olympic Valley ended its quest for incorporation in December 2015 - Placer County had subjected the proposal to a CEQA focused Environmental Impact Report (essentially claiming that climate change for the state would hang in the balance if the town incorporated), but the incorporation process eventually ended due to controversy over the fiscal analysis.
• Mountain House, incorporated in June 2024 - The San Joaquin County LAFCO performed a CEQA Initial Study, found the proposal met the “common sense rule” for a CEQA exemption in that it could be seen with certainty that there was no possibility that the activity in question may have a significant effect on the environment. Nevertheless, the San Joaquin County LAFCO issued a CEQA Negative Declaration.

As can be seen, CEQA has been applied unevenly across California. There are uncertainties (go to court or not) and delays (CEQA has timelines for each type of environmental document) for the communities that seek incorporation. Most importantly, none of the decisions to form or not form a city in recent years have involved CEQA; they have all depended on different points of view about the financial feasibility of a proposal to incorporate. Changing the municipal governing body from a county Board of Supervisors to a City Council clearly is not an environmental decision. And while a new City Council could conceivably vote to harm the physical environment, assuming they will do so has two key problems:

1. Such an assumption is, by nature, purely speculative. The CEQA process depends on evidence.
2. Land use decisions for the new city must follow the county's existing General Plan for the area until the new city issues its own General Plan. The existing county General Plan will have already undergone its own CEQA process and the new city's General Plan cannot be approved without undergoing a new CEQA process. CEQA impacts do not change until the new city adopts a different General Plan.

Imposing the CEQA process on a municipal incorporation proposal is pointless and expensive. Among the state's 58 LAFCOs, CEQA expertise is usually non-existent or extremely rare. So LAFCOs typically have to hire outside consultants to implement CEQA analyses for new municipal incorporations and bill proponents for the consulting costs. The obvious disconnect between a proposal to change the governmental structure and a project with potential to harm the physical environment can force consultants to struggle to find valid issues of concern - for example the proposal to incorporate Arden Arcade in 2010 included a full CEQA Environmental Impact Report that found a handful of vacant lots within the otherwise fully built-out community, mitigation for which essentially involved discussion of specific ways the new city could provide municipal services.  The public outreach requirements of the CEQA process can add to the costs that are ultimately passed on to the proponents, who must sustain themselves with  fundraising to pay for studies, hearings and the timelines associated with different levels of CEQA analysis. Merely shifting governmental decisions from the Board of Supervisors to a new City Council does not cause a shovel to strike the ground, a tailpipe or chimney to pollute the air, a tree to be felled or a drop of a toxic substance to enter a waterway.

Why, then, is CEQA even involved in the LAFCO incorporation process? Indeed, the state's own fact-finding body, the Commission on Local Governance for the 21st Century, recommended more more than half a century ago that municipal incorporations should not involve CEQA analysis. California (un)Incorporated's position is that the CEQA process just serves as a tool available to a county LAFCO to delay and complicate the incorporation process while saddling applicants with unnecessary costs. Besides, in 2025 the Legislature made drastic revisions to CEQA that effectively render CEQA irrelevant for development of housing tracts, apartments and even computer chip manufacturing plants. In light of those revisions, the retention of CEQA as a litmus for the change of a community's governance remains highly questionable.

California (un)Incorporated wants the Legislature to finally take action to clarify that a municipal incorporation under the LAFCO Law is exempt from the requirements of CEQA. Legislative staff have told us that CEQA is a third rail that cannot be touched. Never mind that CEQA has routinely been amended many times over the years, it is holy ground that can only be altered with the permission of the "Head Environmentalist" (an imaginary being whose name they won't say). Yet everyone knows you can get a law passed if you have enough money and chutzpah. 2025's massive changes to CEQA demonstrated that. California (un)Incorporated does not have the resources that housing developers and computer chip manufacturers do, but we have common sense, a court decision, the findings of a state commission, and the weight of 5 to 6 million Californians who live in unincorporated communities behind us. CEQA and the LAFCO Law are certainly valid laws. They have been re-evaluated and revised over time, as would be appropriate for any law. There is no reason why those statues cannot continue to be updated. It is time for the Legislature to remove the unnecessary CEQA analysis from the LAFCO Law's municipal incorporation process.