Who initiates the CEQA environmental review process?

Where a project requires approvals from more than one public agency, CEQA requires one of these public agencies to serve as the "lead agency." 

The lead agency must:
Determine if the proposed activity is a "project" is subject to CEQA; if subject to CEQA, then:
Determine if the project is exempt from CEQA; if subject to CEQA and not exempt, then:
Determine, through an Initial Study if the proposed project has the potential to have a significant effect on the environment.

The Initial Study is used to decide whether to prepare an Environmental Impact Report (EIR) or a Negative Declaration (Neg Dec). The lead agency can issue a Negitive Declaration if it finds the proposed project will have no potential for significant impacts. If the Initial Study identified potentially significant effects resulting from the project, but the project is altered or the applicant agrees to conditions which will mitigate the identified significant impacts, then the lead agency may issue a Mitigated Negative Declaration.

If the Initial Study finds substantial evidence that the project will have a significant effect on the environment, then an EIR must be prepared. Intended to provide decision makers with the necessary information to make a well-informed decision, the EIR is a detailed report that identifies the potentially significant environmental effects the project is likely to have; identifies feasible alternatives to the proposed project; and indicates the ways in which significant effects on the environment can be mitigated or avoided.