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SAN LORENZO VALLEY COMMUNITY ADVOCATES FOR RESPONSIBLE EDUCATION, Plaintiff and Appellant,

v.

SAN LORENZO VALLEY UNIFIED SCHOOL DISTRICT, Defendant and Respondent.

H028147

COURT OF APPEAL OF CALIFORNIA, SIXTH APPELLATE DISTRICT

139 Cal. App. 4th 1356; 44 Cal. Rptr. 3d 128; 2006 Cal. App. LEXIS 801; 2006 Cal. Daily Op. Service 4495; 2006 Daily Journal DAR 6509

 
May 26, 2006, Filed

PRIOR HISTORY:   Santa Cruz County Superior Court No. CV147109, Irwin Joseph, Judge.

COUNSEL: Dawson, Passafuime, Bowden & Martinez, Gerald Bowden and Kathleen Morgan-Martinez for Plaintiff and Appellant.
 
Burton, Volkmann & Schmal, Timothy R. Volkmann and John P. Loringer for Defendant and Respondent.

JUDGES: McAdams, J., with Elia, Acting P. J., and Mihara, J., concurring.

OPINION BY: McAdams

OPINION: McADAMS, J.--This action arises out of a decision by the defendant school district to close two elementary schools in the San Lorenzo Valley area of Santa Cruz County. Plaintiff seeks to overturn the closure decision, alleging that it violates various state laws, including the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.), the California Public Records Act (Gov. Code, § 6250 et seq.), the Ralph M. Brown Act (Gov. Code, § 54950), provisions of the Education Code, and school bond financing laws. The trial court rejected all of the plaintiff's contentions. We shall affirm.
 
BACKGROUND

This suit was brought by plaintiff and appellant San Lorenzo Valley Community Advocates for Responsible Education, an unincorporated association (SLV CARE). SLV CARE challenges a school closure decision made by defendant and respondent San Lorenzo Valley Unified School District (the District). At issue is the District's April 2003 decision to close two of its elementary schools and to transfer students from those schools to the District's other two elementary school campuses. Plaintiff SLV CARE challenges that decision on various legal grounds.
 
Factual Summary

The District made the challenged decision in response to declining enrollment and fiscal difficulties. The initial decision to close one or more schools was approved by District's Board of Trustees in December 2002. From December 2002 to June 2003, the District entertained public comment on the issue at its regular and special board meetings.
 
January 2003-March 2003: First Advisory Committee

The District also convened a task force--called the Superintendent's School Closure Committee (SSCC)--to consider the school closure question and make a recommendation to the Board. The SSCC was composed of 17 people representing all of the affected schools; task force members included seven parents, four teachers, four classified employees, and two community members.

Between mid-January and mid-March 2003, the SSCC met formally eight times; ad hoc subcommittees also met separately. In mid-March 2003, after considering an extensive body of information about the schools, the SSCC recommended the closure of Redwood and Quail Hollow Elementary Schools. To consolidate student populations at the north end of the San Lorenzo Valley, in Boulder Creek, Redwood students would be transferred to Boulder Creek Elementary School (BCE). At the south end of the valley, in Felton, Quail Hollow students would be transferred to San Lorenzo Elementary School (SLE).
 
April 2003: Closure Decision

At a public meeting held on April 8, 2003, the District's Board considered and ultimately adopted the recommendation of the SSCC. Thus, as to the north valley elementary schools, the Board voted to close Redwood, and keep BCE open. As for the south valley, the Board voted to close Quail Hollow and keep SLE open.

In May 2003, a community group proposed private fund-raising to keep Redwood Elementary School open for the upcoming school year. The Board rejected that proposal the following month.
 
June 2003-October 2003: Requests for Public Records

Starting in June 2003, various written requests for public records relating to the closure decision were made by attorney Steven A. Greenburg, acting as counsel for plaintiff SLV CARE.

In July 2003, the District forwarded more than 400 pages of records to Greenburg. The following month, acting through its counsel, the District provided Greenburg with additional documents. After October 2003, document requests were addressed through formal discovery.

An additional request for documents was e-mailed to the District by San Lorenzo Valley resident David Churchill, with a copy to attorney Greenburg. The principal subject of Churchill's request was the District's use of money from Measure S, a multi-million dollar school facilities bond issue that had been approved by local voters in 2000.
 
June 2003-October 2003: Consideration of Environmental Impacts

In early August 2003, in response to public concerns--and notwithstanding its receipt of earlier legal advice that the school closure decision was exempt under the California Environmental Quality Act (CEQA)--the District retained consultants to evaluate possible environmental impacts, including traffic. The District retained environmental consultant Stephen Graves & Associates (Graves). The District also hired traffic consultant Keith Higgins & Associates (Higgins).

Graves, the environmental consultant, confirmed that the school consolidation decision was exempt from CEQA. On August 19, 2003, the District formally approved the filing of a notice of exemption from CEQA. Despite the exemption, the District authorized Graves to prepare an initial study of environmental effects. The initial study concluded that the school closures and transfers would not create any significant environmental impacts, and that potential traffic impacts, though insignificant, could be minimized with recommended project conditions. After public comment and response, Graves stood by the conclusions in the initial study.

As for traffic, by June 2003, the Public Works Department of Santa Cruz County had advised the Board of Supervisors of the need for an ordinance to reroute traffic in the San Lorenzo Valley following the school closure decision. The initial study by environmental consultant Graves incorporated a report by traffic consultant Higgins. That report identified anticipated traffic and parking problems resulting from the school consolidations. Nevertheless, the traffic report concluded, mitigation measures were not mandatory because those impacts would not exceed historic levels. With respect to BCE, however, the report noted that the District was "planning on implementing several strategies to improve traffic and parking operations" as described in the report. The District implemented those strategies.

By October 2003, having considered the issues, the District was prepared to approve the adoption of a negative declaration, thus confirming the absence of significant environmental impacts. No environmental impact report was prepared.
 
Fall 2003: Second Advisory Committee

In August 2003, the District's Board voted to convene a Surplus Property Advisory Committee (SPAC). At the same time, it approved an application form for membership on the committee. In October 2003, the District's Board approved the proposed roster of SPAC members. The Board meeting minutes of November 4, 2003, state: "The Board has declared the District Office and Redwood Elementary School surplus property as a result of the Board decision to close Redwood Elementary and Quail Hollow Elementary Schools and move the District Office from the Felton site to Quail Hollow." Those minutes further state that purpose of the public hearing on the SPAC was "to provide input to the committee for the purpose of determining acceptable uses of these properties." The SPAC met three times, from late October to mid-November 2003. In December 2003, the SPAC presented its recommendations for Redwood Elementary and the District Office, which included commercial, community, and educational uses.
 
Procedural History

Plaintiff SLV CARE brought this action, challenging the District's closure decision. As amended in August 2004, the complaint states five causes of action, all asserting statutory violations by the District. The first cause of action is for breach of statutory duties arising out of school bond financing laws. The second cause of action alleges CEQA violations. The third cause of action asserts breach of Education Code mandates for community input on certain decisions. The final two causes of action allege violation of the California Public Records Act, which requires disclosure of public records, and of the Ralph M. Brown Act, which compels open public meetings.

The court conducted a six-day bench trial, which started on August 30, 2004, and concluded on September 8, 2004. At the close of evidence and argument, the court took the matter under submission. It issued a statement of decision on September 13, 2004, finding for the District on all claims.

In November 2004, the court entered judgment for the District. This appeal by SLV CARE followed.
 
CONTENTIONS

On appeal, SLV CARE renews its trial court claims that the District violated CEQA, bond financing laws, the California Public Records Act, the Ralph M. Brown Act, and the Education Code. In addition, SLV CARE asserts that the trial court made certain erroneous evidentiary rulings and that it demonstrated bias. Appellant SLV CARE also seeks an award of attorney fees and costs. The District opposes all of appellant's arguments.
 
DISCUSSION

We consider each issue in turn, beginning with the claims of statutory violation.
 
I. CEQA

SLV CARE asserts that the District violated CEQA. To establish the proper framework for assessing that contention, we begin by summarizing the governing legal principles.
 
A. General Principles

CEQA is codified at division 13 of the Public Resources Code, beginning with section 21000. n1 As an aid to carrying out the statute, the state Resources Agency has issued a set of regulations, called Guidelines for the California Environmental Quality Act (Guidelines). n2

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n1 In this section of the opinion (pt. I), which discusses CEQA, further unspecified statutory references are to the Public Resources Code.


n2 The Guidelines are contained in the California Code of Regulations, title 14, division 6, chapter 3, starting at section 15000. Further unspecified guideline references are to those regulations.
 

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(1) CEQA embodies our state's policy that "the long-term protection of the environment ... shall be the guiding criterion in public decisions." (§ 21001, subd. (d); see Davidon Homes v. City of San Jose (1997) 54 Cal. App. 4th 106, 112 [62 Cal. Rptr. 2d 612].) As this court has observed, "the overriding purpose of CEQA is to ensure that agencies regulating activities that may affect the quality of the environment give primary consideration to preventing environmental damage." (Save Our Peninsula Committee v. Monterey County Bd. of Supervisors (2001) 87 Cal. App. 4th 99, 117 [104 Cal. Rptr. 2d 326].) Together, the statute and accompanying regulatory guidelines protect a variety of environmental values. Human health is among them. (See Guidelines, § 15065, subd. (a)(4).)
 
1. The Three-step CEQA Process

(2) Consistent with California's strong environmental policy, whenever the approval of a project is at issue, the statute and regulations "have established a three-tiered process to ensure that public agencies inform their decisions with environmental considerations." (Davidon Homes v. City of San Jose, supra, 54 Cal. App. 4th at p. 112; see also Gentry v. City of Murrieta (1995) 36 Cal. App. 4th 1359, 1371 [43 Cal. Rptr. 2d 170].)
 
a. Threshold Determination of CEQA's Applicability

(3) "The first tier is jurisdictional, requiring that an agency conduct a preliminary review in order to determine whether CEQA applies to a proposed activity. (Guidelines, §§ 15060, 15061.)" (Davidon Homes v. City of San Jose, supra, 54 Cal. App. 4th at p. 112.) CEQA applies if the activity is a "project" under the statutory definition, unless the project is exempt. (See §§ 21065, 21080.) "If the agency finds the project is exempt from CEQA under any of the stated exemptions, no further environmental review is necessary." (Davidon Homes, p. 113.) In such cases, the agency may file a notice of CEQA exemption, if it chooses to do so. (Guidelines, § 15062, subd. (a); see Apartment Assn. of Greater Los Angeles v. City of Los Angeles (2001) 90 Cal. App. 4th 1162, 1171 [109 Cal. Rptr. 2d 504].)

If the project is not exempt--either because it does not fall within an exempt category or because an exception makes the exemption unavailable--then the agency must proceed to the second tier and conduct an initial study. (Santa Monica Chamber of Commerce v. City of Santa Monica (2002) 101 Cal. App. 4th 786, 792 [124 Cal. Rptr. 2d 731]; see Guidelines, § 15063.)
 
b. Initial Study

(4) The second tier of the process, the initial study, serves several purposes. One purpose is to inform the choice between a negative declaration and an environmental impact report (EIR). (Guidelines, § 15063, subd. (c)(1); Lighthouse Field Beach Rescue v. City of Santa Cruz (2005) 131 Cal. App. 4th 1170, 1180 [31 Cal. Rptr. 3d 901].) Another of the initial study's purposes is to eliminate unnecessary environmental impact reports. (Guidelines, § 15063, subd. (c)(7).)

(5) "CEQA excuses the preparation of an EIR and allows the use of a negative declaration when an initial study shows that there is no substantial evidence that the project may have a significant effect on the environment." (San Bernardino Valley Audubon Society v. Metropolitan Water Dist. (1999) 71 Cal. App. 4th 382, 389-390 [83 Cal. Rptr. 2d 836], citing Guidelines, § 15070; see also §§ 21064, 21080, subd. (c).) In certain situations where a straightforward negative declaration is not appropriate, the agency may permit the use of a mitigated negative declaration. (See § 21064.5; Guidelines, § 15064, subd. (f)(2); San Bernardino Valley Audubon Society, at p. 390.)
 
c. Environmental Impact Report

(6) If the project does not qualify for a negative declaration, "the third step in the process is to prepare a full environmental impact report ... ." (Davidon Homes v. City of San Jose, supra, 54 Cal. App. 4th at p. 113, citing §§ 21100 and 21151, and Guidelines, §§ 15063, subd. (b)(1) & 15080; Gentry v. City of Murrieta, supra, 36 Cal. App. 4th at p. 1372.)

(7) The California Supreme Court has "repeatedly recognized that the EIR is the 'heart of CEQA.' " (Laurel Heights Improvement Assn. v. Regents of University of California (1993) 6 Cal. 4th 1112, 1123 [26 Cal. Rptr. 2d 231, 864 P.2d 502] (Laurel Heights II).) As the court observed more than three decades ago, "since the preparation of an EIR is the key to environmental protection under CEQA, accomplishment of the high objectives of that act requires the preparation of an EIR whenever it can be fairly argued on the basis of substantial evidence that the project may have significant environmental impact." (No Oil, Inc. v. City of Los Angeles (1974) 13 Cal. 3d 68, 75 [118 Cal. Rptr. 34, 529 P.2d 66], criticized on another point in Western States Petroleum Assn. v. Superior Court (1995) 9 Cal. 4th 559, 576 [38 Cal. Rptr. 2d 139, 888 P.2d 1268].) Other cases have since confirmed the statutory preference for resolving doubts in favor of an EIR. (See, e.g., Santa Teresa Citizen Action Group v. City of San Jose (2003) 114 Cal. App. 4th 689, 703 [7 Cal. Rptr. 3d 868]; League for Protection of Oakland's etc. Historic Resources v. City of Oakland (1997) 52 Cal. App. 4th 896, 905 [60 Cal. Rptr. 2d 821].)
 
2. Timing

(8) "Choosing the precise time for CEQA compliance involves a balancing of competing factors. EIRs and negative declarations should be prepared as early as feasible in the planning process to enable environmental considerations to influence project program and design and yet late enough to provide meaningful information for environmental assessment." (Guidelines, § 15004, subd. (b); see also, e.g., Laurel Heights Improvement Assn. v. Regents of University of California (1988) 47 Cal. 3d 376, 395 [253 Cal. Rptr. 426, 794 P.2d 278].) As a general rule, "public agencies shall not undertake actions concerning the proposed public project that would have a significant adverse effect or limit the choice of alternatives or mitigation measures, before completion of CEQA compliance." (Guidelines, § 15004, subd. (b)(2).)

When a project is exempt, however, a somewhat different timing rule applies. "When a public agency decides that a project is exempt from CEQA ... , the agency may file a notice of exemption. The notice shall be filed, if at all, after approval of the project." (Guidelines, § 15062, subd. (a), italics added.) "A notice of exemption may be filled out and may accompany the project application through the approval process" but it "shall not be filed ... until the project has been approved." (Id., subd. (b); see also Guidelines, § 15061, subd. (d).)
 
3. Judicial Review

At issue here are CEQA challenges to a quasi-legislative action taken by the District, in a procedural setting where no administrative hearing was required. (See No Oil, Inc. v. City of Los Angeles, supra, 13 Cal. 3d at p. 74, fn. 3; City of South Gate v. Los Angeles Unified School Dist. (1986) 184 Cal. App. 3d 1416, 1423-1424 [229 Cal. Rptr. 568] (South Gate); Dehne v. County of Santa Clara (1981) 115 Cal. App. 3d 827, 835-836 [171 Cal. Rptr. 753].) Judicial review of such challenges is governed by well-established rules.
 
a. Prejudicial Abuse of Discretion

Where a party seeks judicial review of a quasi-legislative decision "on the grounds of noncompliance with [CEQA], the inquiry shall extend only to whether there was a prejudicial abuse of discretion. Abuse of discretion is established if the agency has not proceeded in a manner required by law or if the determination or decision is not supported by substantial evidence." (§ 21168.5; see also, e.g., No Oil, Inc. v. City of Los Angeles, supra, 13 Cal. 3d at p. 88; Lighthouse Field Beach Rescue v. City of Santa Cruz, supra, 131 Cal. App. 4th at p. 1182.) Generally speaking, an agency's failure to comply with the procedural requirements of CEQA is prejudicial when the violation thwarts the Act's goals by precluding informed decisionmaking and public participation. (See, e.g., Lighthouse Field Beach Rescue, at pp. 1182, 1202 [deficient initial study]; Bakersfield Citizens for Local Control v. City of Bakersfield (2004) 124 Cal. App. 4th 1184, 1198 [22 Cal. Rptr. 3d 203] [deficient EIR].)

"The determinations that an agency makes during a preliminary review are subject to judicial review under the abuse of discretion standard contained in section 21168.5." (Association for a Cleaner Environment v. Yosemite Community College Dist. (2004) 116 Cal. App. 4th 629, 636 [10 Cal. Rptr. 3d 560]; City of Pasadena v. State of California (1993) 14 Cal. App. 4th 810, 821 [17 Cal. Rptr. 2d 766], disapproved on another point in Western States Petroleum Assn. v. Superior Court, supra, 9 Cal. 4th at p. 576, fn. 6.)
 
b. Independent Review

The foregoing review standard applies to case-specific issues of compliance with the law and sufficiency of the evidence. But "questions of interpretation or application of the requirements of CEQA are matters of law." (Save Our Peninsula Committee v. Monterey County Bd. of Supervisors, supra, 87 Cal. App. 4th at p. 118; accord, Bakersfield Citizens for Local Control v. City of Bakersfield, supra, 124 Cal. App. 4th at p. 1207.) Thus, for example, interpreting the scope of a CEQA exemption presents "a question of law, subject to de novo review by this court." (Fairbank v. City of Mill Valley (1999) 75 Cal. App. 4th 1243, 1251 [89 Cal. Rptr. 2d 233]; accord, Santa Monica Chamber of Commerce v. City of Santa Monica, supra, 101 Cal. App. 4th at p. 792; see also, e.g., Azusa Land Reclamation Co. v. Main San Gabriel Basin Watermaster (1997) 52 Cal. App. 4th 1165, 1192 [61 Cal. Rptr. 2d 447].)
 
B. Application

Addressing the first tier of the analysis, we consider whether CEQA applies to the school consolidation decision at issue here. That inquiry involves two threshold questions: Is this a project under CEQA? If so, is it exempt?
 
1. The District's school closure decision is a project under CEQA.

(9) At the threshold, for CEQA to apply, the activity or decision at issue must constitute a "project" under the statute. CEQA applies only to "discretionary projects proposed to be carried out or approved by public agencies ... ." (§ 21080, subd. (a), italics added.) "If there was no 'project,' there was no occasion to prepare either a negative declaration or an EIR." (Simi Valley Recreation & Park Dist. v. Local Agency Formation Com. (1975) 51 Cal. App. 3d 648, 663 [124 Cal. Rptr. 635]; accord, Prentiss v. Board of Education (1980) 111 Cal. App. 3d 847, 852 [169 Cal. Rptr. 5] (Prentiss), questioned on another point in Fullerton Joint Union High School Dist. v. State Bd. of Education (1982) 32 Cal. 3d 779, 796, fn. 16 [187 Cal. Rptr. 398, 654 P.2d 168] (Fullerton).)
 
a. Definition

(10) "A 'project' is an activity subject to CEQA." (Guidelines, § 15002, subd. (d).) As relevant here, "project" means activity by a public agency that "may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment ... ." (§ 21065, subd. (a).) n3 "The word 'may' in this context connotes a reasonable possibility." (Citizen Action to Serve All Students v. Thornley (1990) 222 Cal. App. 3d 748, 753 [272 Cal. Rptr. 83].) " 'Environment' means the physical conditions which exist within the area which will be affected by a proposed project, including land, air, water, minerals, flora, fauna, noise, objects of historic or aesthetic significance." (§ 21060.5.)

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n3 Section 21065 provides in full as follows: " 'Project' means an activity which may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and which is any of the following: [P] (a) An activity directly undertaken by any public agency. [P] (b) An activity undertaken by a person which is supported, in whole or in part, through contracts, grants, subsidies, loans, or other forms of assistance from one or more public agencies. [P] (c) An activity that involves the issuance to a person of a lease, permit, license, certificate, or other entitlement for use by one or more public agencies."
 

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The statutory definition of a CEQA project "is amplified in the Guidelines," which clarify that a project means " 'the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. ...' (Guidelines, § 15378, subd. (a), italics added.)" (Association for a Cleaner Environment v. Yosemite Community College Dist., supra, 116 Cal. App. 4th at p. 637; see also, e.g., Lighthouse Field Beach Rescue v. City of Santa Cruz, supra, 131 Cal. App. 4th at p. 1180.)

To maximize environmental protection, the concept of a "project" is broadly defined under CEQA. (Lighthouse Field Beach Rescue v. City of Santa Cruz, supra, 131 Cal. App. 4th at p. 1180.)
 
b. Judicial Determination

"Exactly what constitutes a project within the meaning of CEQA is a question which has been addressed by California courts on several occasions since the enactment of CEQA in 1970." (Kaufman & Broad-South Bay, Inc. v. Morgan Hill Unified School Dist. (1992) 9 Cal. App. 4th 464, 472 [11 Cal. Rptr. 2d 792].)

(11) As articulated in recent case authority, there is a two-pronged test for determining whether a public agency's action qualifies as a project under CEQA: The first consideration is "whether there has been an 'activity directly undertaken by any public agency.' (§ 21065, subd. (a).)" (Association for a Cleaner Environment v. Yosemite Community College Dist., supra, 116 Cal. App. 4th at p. 639.) "The second test for a 'project' is whether the activities have a 'potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment ... .' (Guidelines, § 15378, subd. (a).)" (Ibid.)

(12) Where the facts in the record are undisputed, the court decides as a matter of law whether the challenged activity falls within CEQA's definition of a project. (Fullerton, supra, 32 Cal. 3d at pp. 794-795; Association for a Cleaner Environment v. Yosemite Community College Dist., supra, 116 Cal. App. 4th at p. 637.)
 
c. School Closures and Student Transfers

Several published appellate cases have addressed the issue of CEQA's applicability to decisions involving school closures, the transfer of students between schools, or both.

In Prentiss, a case decided in 1980, the court held that a school closure decision was not a project under CEQA. (Prentiss, supra, 111 Cal. App. 3d at p. 851.) The Prentiss court reasoned that the school district's decision to close an elementary school was not "a necessary step in the development of property for a new and different use" and thus was not subject to CEQA. (Id. at p. 853.) But the California Supreme Court has since questioned that holding in a plurality opinion. (See Fullerton, supra, 32 Cal. 3d at p. 796, fn. 16; but see Board of Supervisors v. Local Agency Formation Com. (1992) 3 Cal. 4th 903, 918 [13 Cal. Rptr. 2d 245, 838 P.2d 1198] [criticizing Fullerton on another point, and further noting that as a plurality opinion, it "lacks authority as precedent"].) As the plurality said in Fullerton: "The decision in Prentiss ... , that the closure of a school is not a 'project' because the school board had not decided whether to put the land to a different use, is questionable. It may be unlikely that the closure of a single elementary school would have a significant environmental impact apart from its effect on the use of the property--the school board in Prentiss filed a negative declaration -- but the possibility cannot be rejected categorically." (Fullerton, supra, 32 Cal. 3d at p. 796, fn. 16.)

In a 1986 case, South Gate, the challenged action was the transfer of students from one campus to another, though without a school closure. (South Gate, supra, 184 Cal. App. 3d at pp. 1423-1424.) At issue in South Gate was the school district's use of a pupil attendance boundary adjustment, a mechanism used to "distribute student population over the District so as to relieve school overcrowding." (Id. at p. 1420.) In concluding that CEQA did not apply to the transfer, the South Gate court conflated the two threshold concepts--project and exemption. As the court put it: "The District's action creating the boundary adjustment is not a project requiring an EIR because it is exempt under CEQA guidelines ... ." (Id. at p. 1423.)

A 1989 case, East Peninsula, involved the decision to close a high school and transfer its students to other campuses. (East Peninsula Ed. Council, Inc. v. Palos Verdes Peninsula Unified School Dist. (1989) 210 Cal. App. 3d 155 [258 Cal. Rptr. 147] (East Peninsula ).) Again, both threshold issues were at issue: "whether the [school] closure ... and transfer of students is a project subject to CEQA" and "whether such action is statutorily exempt ... ." (Id. at p. 165, fn. 5.) And again, the court conflated the two questions. In the court's view, the two issues involved "the same analysis" under the statutory language. (Ibid.) Furthermore, the court said: "In this case, for all practical purposes, the two concepts merge." (Ibid.) The court concluded that CEQA applied, that the school board used an "incorrect legal standard" in making the exemption determination, and that its failure to comply with CEQA was prejudicial. (Id. at p. 174; cf. Citizen Action to Serve All Students v. Thornley, supra, 222 Cal. App. 3d at p. 752 [school district did not "consider the closure exempt from CEQA" but instead proceeded with a negative declaration]; Fullerton, supra, 32 Cal. 3d at pp. 797, 798 [school district's reconfiguration and secession plan was a project under CEQA; it "is an essential step leading to ultimate environmental impact" as it "necessarily entails building a new high school and other actions which may have an environmental effect"].)
 
d. Analysis

Although some courts have conflated the issues presented in the first tier of the CEQA analysis, we shall separately address the first question first: Is this a project?

To answer that question, we turn to the two-pronged test for defining a project under CEQA, described ante. (See Association for a Cleaner Environment v. Yosemite Community College Dist., supra, 116 Cal. App. 4th at p. 639.) As to the first prong, there is no dispute that the decision challenged in this case is an "activity directly undertaken by any public agency." (§ 21065, subd. (a).)

Our focus is on the second prong--"whether the activities have a 'potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment ... .' (Guidelines, § 15378, subd. (a).)" (Association for a Cleaner Environment v. Yosemite Community College Dist., supra, 116 Cal. App. 4th at p. 639 [10 Cal. Rptr.3d 560].) As noted above, "project" is defined broadly for these purposes. (Lighthouse Field Beach Rescue v. City of Santa Cruz, supra, 131 Cal. App. 4th at p. 1180.) But "the broad definition of project is tempered by the requirement that CEQA applies only to those activities which 'may have a significant effect on the environment.' " (Kaufman & Broad-South Bay, Inc. v. Morgan Hill Unified School Dist., supra, 9 Cal. App. 4th at p. 471.) Applying those principles to the case at hand, we conclude that the District's school closure decision constitutes a project for CEQA purposes.

The consequences of the decision challenged here can be broken down into two components: (1) the closure of two schools (Redwood and Quail Hollow); and (2) the transfer of students from those schools to the District's two other campuses (BCE and SLE).

Concerning the first component, as a plurality of our state's high court recognized in Fullerton, while it "may be unlikely that the closure of a single elementary school would have a significant environmental impact apart from its effect on the use of the property ... the possibility cannot be rejected categorically." (Fullerton, supra, 32 Cal. 3d at p. 796, fn. 16.) As the Fullerton opinion stated: "Implementation of the secession Plan in the present case involves the possibility of a significant impact. Secession will likely require the construction of a new high school in Yorba Linda and may result in abandonment of some facilities in the remaining portion of the Fullerton HSD." (Id. at p. 794, fn. omitted.)

As for the second component, transferring students may "change bus routes and schedules, and affect traffic patterns." (Fullerton, supra, 32 Cal. 3d at p. 794.) The transfer could increase traffic congestion and parking problems, with attendant environmental effects. (See, e.g., Citizen Action to Serve All Students v. Thornley, supra, 222 Cal. App. 3d at pp. 755, 756.) The transfer component also may pose some possibility of "increased physical harm to relocated ... students because of (1) the likelihood of a major earthquake ... and (2) altercations with students at schools receiving transferred ... pupils." (Id. at p. 757 [stating party's contention].) Under the circumstances, at least at the threshold, the "possibility that the activity in question may have a significant effect on the environment" cannot be positively ruled out. (Cf. Guidelines § 15061, subd. (b)(3); Kaufman & Broad-South Bay, Inc. v. Morgan Hill Unified School Dist., supra, 9 Cal. App. 4th at p. 471.)

In sum, both tests for defining a CEQA project are satisfied. We thus conclude that the school consolidation decision falls within the broad definition of a CEQA project. That conclusion finds further support in the very existence of a categorical exemption for school closures. As a matter of logic alone, if such closures were not CEQA projects, there would be no need for an exemption.
 
2. The project is exempt.

Our conclusion that the challenged decision is a project brings us to the second part of the preliminary review analysis: Is the project exempt from CEQA? (See § 21080, subd. (a) [CEQA "shall apply to discretionary projects ... unless the project is exempt"]; Guidelines, § 15061, subd. (a) [once the "agency has determined that an activity is a project subject to CEQA," it "shall determine whether the project is exempt from CEQA"]; Association for a Cleaner Environment v. Yosemite Community College Dist., supra, 116 Cal. App. 4th at p. 640 [10 Cal.Rptr.3d 560] [exemption is the "second issue arising in connection with the preliminary review"].)
 
a. CEQA Exemptions: General Principles

(13) CEQA does not apply to projects that are statutorily or categorically exempt. (Guidelines, § 15061, subd. (b).) The Legislature has specified a number of statutory CEQA exemptions. (See, e.g., § 21080, subd. (b)(1)-(15); § 21080.18; § 21084; see Sierra Club v. State Bd. of Forestry (1994) 7 Cal. 4th 1215, 1230-1231 [32 Cal. Rptr. 2d 19, 876 P.2d 505].) The Legislature also has authorized the State Resources Agency to identify other categories of exemptions, which are contained in the Guidelines. (See Sierra Club, at pp. 1230-1231.) As to these, CEQA does not apply where there is "a categorical exemption [in the Guidelines] and the application of that categorical exemption is not barred by one of the exceptions set forth in [Guidelines] Section 15300.2." (Guidelines, § 15061, subd. (b)(2).)

The Guidelines contain 33 classes of categorical exemptions. (Guidelines, §§ 15301-15333.) Each class embodies a "finding by the Resources Agency that the project will not have a significant environmental impact." (Davidon Homes v. City of San Jose, supra, 54 Cal. App. 4th at p. 116; see also Magan v. County of Kings (2002) 105 Cal. App. 4th 468, 475 [129 Cal. Rptr. 2d 344]; § 21084, subd. (a).) In addition to the categorical exemptions, the Guidelines also incorporate a " 'common sense exemption,' " which " 'provides a short way for agencies to deal with discretionary activities which could arguably be subject to the CEQA process but which common sense provides should not be subject to the Act.' " (Davidon Homes, at pp. 112-113, citing Guidelines, § 15061, subd. (b)(3), and quoting the accompanying discussion.)

There are exceptions to the categorical exemptions. (See Guidelines, § 15300.2.) Among other things, a "categorical exemption shall not be used for an activity where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances." (Id., subd. (c); see East Peninsula, supra, 210 Cal. App. 3d at p. 164.) This is sometimes called either the "significant effects" exception or the "unusual circumstances" exception. (See City of Pasadena v. State of California, supra, 14 Cal. App. 4th at p. 824; Santa Monica Chamber of Commerce v. City of Santa Monica, supra, 101 Cal. App. 4th at p. 795.) "The Guidelines do not define the term 'unusual circumstances.' " (City of Pasadena v. State of California, supra, 14 Cal. App. 4th at p. 826.) As explicated in case law, an unusual circumstance refers to "some feature of the project that distinguishes it" from others in the exempt class. (Fairbank v. City of Mill Valley, supra, 75 Cal. App. 4th at p. 1260.) In other words, "whether a circumstance is 'unusual' is judged relative to the typical circumstances related to an otherwise typically exempt project." (Santa Monica Chamber of Commerce, at p. 801.)
 
b. Judicial Determination

As noted above, the court reviews decisions made during an agency's preliminary review for a prejudicial abuse of discretion. (Association for a Cleaner Environment v. Yosemite Community College Dist., supra, 116 Cal. App. 4th at p. 636 [reviewing determination that there was no project].) When faced with a challenge to an agency's exemption determination, the court considers whether the agency proceeded in the manner required by law and whether its determination is supported by substantial evidence. (§ 21168.5; see, e.g., East Peninsula, supra, 210 Cal. App. 3d at p. 165 [holding that school district failed to proceed in manner required by law]; Dehne v. County of Santa Clara, supra, 115 Cal. App. 3d at p. 837 [holding that "planning commission's grant of a categorical exemption" for reconstruction of existing structures was "supported by substantial evidence"].) The scope of an exemption may be analyzed as a question of statutory interpretation and thus subject to independent review. (See, e.g., Fairbank v. City of Mill Valley, supra, 75 Cal. App. 4th at pp. 1258-1259 [interpreting the scope of a categorical exemption]; cf. Santa Monica Chamber of Commerce v. City of Santa Monica, supra, 101 Cal. App. 4th at p. 795 [same]; cf. Centinela Hospital Assn. v. City of Inglewood (1990) 225 Cal. App. 3d 1586, 1600 [275 Cal. Rptr. 901] [finding that the proposed facility was exempt as a matter of law].) But "the substantial evidence test governs our review of the [agency's] factual determination that a project falls within a categorical exemption." (Fairbank, at p. 1251.)

Because the exemptions operate as exceptions to CEQA, they are narrowly construed. (See, e.g., Santa Monica Chamber of Commerce v. City of Santa Monica, supra, 101 Cal. App. 4th at p. 793.) "Exemption categories are not to be expanded beyond the reasonable scope of their statutory language." (Mountain Lion Foundation v. Fish & Game Com. (1997) 16 Cal. 4th 105, 125 [65 Cal. Rptr. 2d 580, 939 P.2d 1280].)
 
c. School Closure Exemption

(14) At issue here is the categorical exemption applicable to public school closures. Pursuant to section 21080.18, CEQA "does not apply to the closing of any public school in which kindergarten or any of grades 1 through 12 is maintained or the transfer of students from that public school to another school if the only physical changes involved are categorically exempt under Chapter 3 (commencing with Section 15000)" of the Guidelines. Of the 33 classes of categorical exemptions set forth in the Guidelines, one applies to the situation presented here: "Class 14 consists of minor additions to existing schools within existing school grounds where the addition does not increase original student capacity by more than 25% or ten classrooms, whichever is less. The addition of portable classrooms is included in this exemption." (Guidelines, § 15314.)

So far as we are aware, this particular exemption has been the subject of only one prior judicial decision, East Peninsula. n4 In that case, the defendant school board approved a high school closure and transfer of students. (East Peninsula, supra, 210 Cal. App. 3d at pp. 161-162.) The board made an express determination that its decision was exempt from CEQA, under section 21080.18 and Guidelines section 15314. (210 Cal.App.3d at p. 162.) But it did so without undertaking any environmental review. (Id. at pp. 172, 173.) The trial court issued a peremptory writ of mandate, commanding the district to void its closure decision and to suspend all related activity "until the District has first analyzed the cumulative environmental effects of this and other school closures and transfers in compliance with CEQA." (Id. at pp. 162-163.) In the trial court's view, the "District did not properly evaluate whether its proposed action was exempt from CEQA, a step preliminary to a determination of whether an EIR is required." (Id. at p. 163.)

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n4 As to the other two school cases discussed ante, neither reached the exemption issue. The Prentiss court held that the school closure decision was not a project under CEQA. (Prentiss, supra, 111 Cal. App. 3d at p. 851.) The South Gate case involved a transfer of students without a school closure. (South Gate, supra, 184 Cal. App. 3d at pp. 1423-1424.)
 

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On appeal, the East Peninsula court addressed this question: Is the school closure categorical exemption subject to the exception for significant cumulative effects? (East Peninsula, supra, 210 Cal. App. 3d at pp. 160, 164-165.) Framing its analysis as a matter of statutory interpretation, the court answered the question in the affirmative. (Id. at p. 166.) Thus, the court held, "the plain language of section 21080.18 ... requires an agency to consider the issue of significant effects and cumulative impacts of a transfer of students from a closed school in determining whether the project is exempt from CEQA under that statute." (Id. at p. 173.) As the court recognized, its "interpretation of section 21080.18 leads to a situation where the amount of analysis and study involved at the preliminary review stage of determination of whether a project is exempt from CEQA may be similar to that involved at the 'second' stage where the agency conducts an initial study to determine whether the project has a significant effect on the environment [citation]. However, such result is mandated by the statutory language and does not appear to be repugnant to legislative policy." (Ibid.) n5

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n5 As the court that decided East Peninsula later clarified, however, "we did not hold in East Peninsula an agency always must conduct an 'initial study' before declaring a project exempt from CEQA review. Such a holding would run counter to the three-tiered structure of CEQA review under which, if a project is categorically exempt 'no further agency evaluation is required' and no 'initial study' takes place." (Apartment Assn. of Greater Los Angeles v. City of Los Angeles, supra, 90 Cal. App. 4th at p. 1172.)
 

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Turning to the specific case before it, the East Peninsula court concluded that the school board "used an incorrect legal standard" in making its exemption determination because it failed to consider the cumulative environmental impacts of its decision. (East Peninsula, supra, 210 Cal. App. 3d at p. 174.) Furthermore, the court held, the board's "failure to comply with CEQA" was "prejudicial because meaningful information and analysis of cumulative effects and significant environmental effects not occurring at the receptor schools were omitted from the environmental review process." (Id. at p. 174.)
 
d. Analysis

We analyze the District's preliminary determination that its decision is exempt from CEQA (1) for compliance with procedural requirements and (2) for evidentiary support. (§ 21168.5; Association for a Cleaner Environment v. Yosemite Community College Dist., supra, 116 Cal. App. 4th at p. 636.) They are distinct issues: "[I]f a procedural violation of CEQA is shown, the substantial evidence prong of the statutory standard of review does not come into play." (Laurel Heights II, supra, 6 Cal. 4th at p. 1133 [stating party's contention]; see No Oil, Inc. v. City of Los Angeles, supra, 13 Cal. 3d at pp. 74-75; Bakersfield Citizens for Local Control v. City of Bakersfield, supra, 124 Cal. App. 4th at p. 1208; County of Amador v. El Dorado County Water Agency (1999) 76 Cal. App. 4th 931, 945-946 [91 Cal. Rptr. 2d 66].)

SLV CARE challenges the exemption on both grounds. On the first question-- procedural compliance--the key issue is timing: The District made its closure decision in April 2003; it approved the filing of a notice of CEQA exemption more than four months later, in August 2003. SLV CARE asserts a procedural violation of CEQA because the District failed to formally invoke the exemption in advance of its closure decision. As to the second question, SLV CARE challenges the evidentiary basis for the decision. We consider each point in turn.
 
Procedural compliance

(15) "In granting an exemption, the agency must proceed in the manner prescribed by law, lest it be charged with abusing its discretion." (Dehne v. County of Santa Clara, supra, 115 Cal. App. 3d at p. 842.) "That law consists of CEQA statutes, the Guidelines, and the judicial gloss on both." (Id. at pp. 842-843; cf. Kennedy v. City of Hayward (1980) 105 Cal. App. 3d 953, 962 [165 Cal. Rptr. 132] [in quasi-adjudicatory proceeding, due process principles apply].) Generally speaking, the agency should proceed with a "considered awareness of the purposes and policy" that underlie CEQA; it should not undertake "a mechanical application of the exemption criteria" in reaching its decision. (Dehne v. County of Santa Clara, supra, 115 Cal. App. 3d at p. 843.)

Several legal principles are relevant to the issue of CEQA compliance, including requirements related to timing, documentation, and public comment. In applying these precepts, it is important to distinguish between an exemption determination such as the one made here, which is part of the agency's preliminary review, and a negative declaration or an EIR, which comes into play later in the CEQA analysis.

(16) As indicated above, the timing rules depend on which step of the CEQA process is involved. In cases involving the second and third tiers of CEQA analysis, where a negative declaration or an EIR is necessary, the law requires "that environmental issues be considered and resolved before a project is approved." (No Oil, Inc. v. City of Los Angeles, supra, 13 Cal. 3d at p. 75, italics added.) In such cases, courts condemn attempts at after-the-fact rationalizations. (Id. at p. 81.) By contrast, determinations made as part of a preliminary, first-tier CEQA review are not formalized until after the project has been approved. Under the Guidelines, a notice of CEQA exemption "shall be filed, if at all, after approval of the project." (Guidelines, § 15062, subd. (a), italics added; see County of Amador v. El Dorado County Water Agency, supra, 76 Cal. App. 4th at p. 962 [notice of exemption was not valid, where it was filed before agency approved the project]; see also, e.g., Magan v. County of Kings, supra, 105 Cal. App. 4th at pp. 470, 472 [notice of exemption filed one day after action taken]; Fairbank v. City of Mill Valley, supra, 75 Cal. App. 4th at pp. 1249, 1250 [same].) Since the District's exemption determination was made as part of a preliminary, first-tier CEQA review, it was not untimely.

(17) As with timing rules, documentation requirements are different for first tier assessments than for those undertaken later in the CEQA process. When a negative declaration or an EIR is required, it must be in writing. "CEQA impliedly requires (and the guidelines expressly require) that the agency render a written determination whether a project requires an EIR before it gives final approval to that project." (No Oil, Inc. v. City of Los Angeles, supra, 13 Cal. 3d at p. 75 [post-hoc negative declaration]; see Guidelines, § 15362 [defining "environmental documents"].) By contrast, there is no requirement that the agency put its exemption decision in writing. According to the Guidelines, "the agency may file a notice of exemption." (Guidelines, § 15062, subd. (a), italics added.) But it is not required to do so: "A notice of exemption has no significance other than to trigger the running of the limitations period." (Apartment Assn. of Greater Los Angeles v. City of Los Angeles, supra, 90 Cal. App. 4th at p. 1171.) For that reason, "it is irrelevant" whether an exemption notice contains "all that it should under the CEQA guidelines." (Id. at p. 1171, fn. 23.)

(18) There are other procedural differences between first-tier review and later CEQA evaluations, including the opportunity for public comment. "CEQA provides for public comment on a negative declaration and an EIR. ( § 21092.) By contrast, CEQA does not provide for a public comment period before an agency decides a project is exempt." (Azusa Land Reclamation Co. v. Main San Gabriel Basin Watermaster, supra, 52 Cal. App. 4th at p. 1210.) "Similarly, where an agency approves a project and simultaneously decides that the project is exempt from CEQA, there is no 'public hearing ... before the issuance of the notice of determination.' " (Ibid.; see City of Pasadena v. State of California, supra, 14 Cal. App. 4th at p. 821 [agency "not required to hold a hearing prior to filing the notice of exemption"].)

(19) Underlying these differences in procedural rules is a more fundamental concept: CEQA does not apply to exemption decisions. By definition, a "project falling within ... a categorical exemption is not subject to CEQA." (Mountain Lion Foundation v. Fish & Game Com., supra, 16 Cal. 4th at p. 124.) For that reason, compliance with the act is not required. "Where a project is categorically exempt, it is not subject to CEQA requirements and 'may be implemented without any CEQA compliance whatsoever.' " (Association for Protection etc. Values v. City of Ukiah (1991) 2 Cal. App. 4th 720, 726 [3 Cal. Rptr. 2d 488] (Ukiah); accord, Magan v. County of Kings, supra, 105 Cal. App. 4th at p. 475.) "Once this determination of threshold exemption is made, ... none of the CEQA requirements or procedures apply." (Kennedy v. City of Hayward, supra, 105 Cal. App. 3d at p. 962.)

(20) To sum up, CEQA has no application to exemption determinations made during an agency's preliminary review, such as the one at issue here. Since CEQA does not apply, compliance with its procedural requirements is not required. Applying that principle here, there is no basis for overturning the District's exemption determination based on claims that it failed to proceed in the manner required by law.
 
Substantial evidence

That brings us to the question of whether the challenged categorical exemption is supported by substantial evidence in the administrative record. Our analysis of that question proceeds in two steps: first, we consider the factual predicate for the District's exemption determination; next, we examine evidence supporting the appellant's claim of exceptions to the exemption.

Exemption: The first step of the analysis concerns the exemption.

At the administrative level, the agency determines whether the project qualifies for a statutory or categorical exemption from CEQA. (Guidelines, § 15061, subd. (a).) There must be "substantial evidence that the [activity is] within the exempt category of projects." (Magan v. County of Kings, supra, 105 Cal. App. 4th at p. 475.) That evidence may be found in the information submitted in connection with the project, including at any hearings that the agency chooses to hold. (See Dehne v. County of Santa Clara, supra, 115 Cal. App. 3d at p. 843 [record of CEQA compliance included applicant's "detailed report" and information presented at five public hearings, "none of which were required by law"].)

When called upon to review an agency's exemption decision, the court's task is to "determine whether, as a matter of law, the [activity meets] the definition of a categorically exempt project." (Santa Monica Chamber of Commerce v. City of Santa Monica, supra, 101 Cal. App. 4th at p. 792.) As to that question, "we apply a de novo standard of review, not a substantial evidence standard." (Ibid; see also, e.g., Western States Petroleum Assn. v. Superior Court, supra, 9 Cal. 4th at p. 573 ["the substantiality of the evidence supporting [quasi-legislative] administrative decisions is a question of law"].) But in undertaking our independent analysis, we bear in mind the "highly deferential" review standard that applies to the agency's factual determinations. (Western States Petroleum Assn., at p. 572.) As our high court has said, "the factual bases of quasi-legislative administrative decisions are entitled to the same deference as the factual determinations of trial courts ... ." (Id. at p. 573.) That deference limits the scope of judicial review as well. Generally speaking, the court "may consider only the administrative record in determining whether a quasi-legislative decision was supported by substantial evidence within the meaning of Public Resources Code section 21168.5." (Ibid., fn. omitted.)

Turning to the case at hand, we begin by interpreting the exemption, starting with its plain language. In doing so, we keep in mind that CEQA is concerned only with physical changes to the environment. (Guidelines, § 15358, subd. (b); see, e.g., City of Pasadena v. State of California, supra, 14 Cal. App. 4th at p. 829.) The interpretation of the exemption presents a question of law. (Fairbank v. City of Mill Valley, supra, 75 Cal. App. 4th at p. 1251.)

(21) By statute, CEQA "does not apply to the closing of [a] public school ... or the transfer of students from that public school to another school if the only physical changes involved are categorically exempt" under the Guidelines. (§ 21080.18.) From the Guidelines, the pertinent categorical exemption is Class 14, which covers "minor additions to existing schools within existing school grounds where the addition does not increase original student capacity by more than 25% or ten classrooms, whichever is less. The addition of portable classrooms is included in this exemption." (Guidelines, § 15314.)

The critical phrase here is original student capacity. (Guidelines, § 15314.) Because CEQA is concerned solely with physical changes to the environment, "student capacity" must refer to the receptor school's physical space for housing students. (Cf. Cal. Code Regs., tit. 2, § 1859.35 ["existing school building capacity" is determined by multiplying number of classrooms times number of students]; compare East Peninsula, supra, 210 Cal. App. 3d at p. 175 [in dicta, equating receptor school's original student capacity with "previous enrollment"]. ) We therefore interpret "student capacity" to mean the number of students that can be accommodated physically at the receptor school. That interpretation is bolstered by the juxtaposition of the term "original student capacity" with the portion of the guideline specifying the maximum number of classrooms: The exemption is available where the addition to the school "does not increase original student capacity by more than 25% or ten classrooms, whichever is less." (Guidelines, § 15314, italics added.) By this juxtaposition, the guideline equates student capacity and number of classrooms. That comparison makes no sense unless "student capacity" refers to physical space for housing students. As for the modifier ("original"), we take that to mean the receptor school's capacity as it exists prior to any structural additions to the campus resulting from the project.

To sum up our legal interpretation of the pertinent exemption: A school closure and accompanying transfer of students is exempt from CEQA so long as any resulting physical changes are categorically exempt. (§ 21080.18.) Minor additions to the receptor school are categorically exempt. (Guidelines, § 15314.) A minor addition is defined as the lesser of: (1) the addition of 10 or fewer classrooms; or (2) an increase in original student capacity of 25 percent or less. (Ibid.) In this context, original student capacity means the receptor school's preexisting physical ability to house students.

With that interpretation in mind, we next examine the evidence supporting the District's exemption determination. As explained above, the substantiality of that evidence presents a question of law for our independent review. (Western States Petroleum Assn. v. Superior Court, supra, 9 Cal. 4th at p. 573; Santa Monica Chamber of Commerce v. City of Santa Monica, supra, 101 Cal. App. 4th at p. 792.)

To a large extent, the relevant evidence is contained in the March 2003 report of the SSCC task force, which made the closure recommendations. That report contains data about the four individual elementary schools, including their capacity, their student populations, and the number of additional portable classrooms that would be required at each campus for it to operate as a receptor school.

As for the north valley schools, BCE's "current capacity" was listed at 675. BCE's student population then stood at 403; adding Redwood's 288 students would bring the total to 691 pupils at the consolidated campus. n6 The transfer of Redwood students to BCE thus represented an increase in BCE's original student capacity amounting to less than 2.4 percent--far below the 25 percent ceiling spelled out in the Class 14 guideline. (Guidelines, § 15314.) In terms of classrooms, BCE would need one additional portable to accommodate consolidation, plus replacements for two others in poor condition. That number likewise falls far below the ceiling of 10 additional classrooms in the guideline. (Ibid.)

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n6 The initial study, which was later prepared by the environmental consultant, reflects slightly different student population numbers than the SSCC reported. The initial study indicates that BCE would gain 249 students, bringing its total enrollment to 649, while SLE would add 350 pupils, for a total enrollment of 718 students. These differences do not affect the availability of the Class 14 categorical exemption.
 

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In the south valley, SLE's indicated capacity was 700. With a student population of 338, plus the transfer of Quail Hollow's 397 students, SLE would end up with 735 pupils. n7 The consolidation of students at SLE thus resulted in an increase in its original student capacity of 5 percent--again, well below the 25 percent maximum set forth in the guideline. (Ibid.) As for classrooms, SLE would need three additional portables to accommodate consolidation, plus replacements for another three. That number likewise is below the guideline's ceiling of 10 additional classrooms. (Ibid.)

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n7 See footnote 6, ante.
 

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As a matter of law, the foregoing constitutes substantial evidence supporting the District's determination that its closure decision qualifies for a Class 14 categorical exemption from CEQA. (Cf., e.g., Fairbank v. City of Mill Valley, supra, 75 Cal. App. 4th at p. 1259 [proposed "5,855-square-foot retail/office" qualifies for Class 3 exemption, which allows up 10,000 square feet in urban area].)

Exception: The second step in the analytic process addresses exceptions to the categorical exemption.

At the administrative level, once an agency "determines, based on substantial evidence in the record, that the project falls within a categorical exemption ... , the burden shifts to the challenging party ... to produce substantial evidence ... that one of the exceptions to categorical exemption applies." (Santa Monica Chamber of Commerce v. City of Santa Monica, supra, 101 Cal. App. 4th at p. 796, internal quotation marks and citation omitted.)

(22) The exceptions are contained in Guidelines section 15300.2. As relevant here, that section provides: "A categorical exemption shall not be used for an activity where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances." (Guidelines, § 15300.2, subd. (c).) Thus, a "party challenging an agency's exemption decision must produce substantial evidence that the project has the potential for a substantial adverse environmental impact." (Ukiah, supra, 2 Cal. App. 4th at p. 728.)

(23) In order to warrant application of the exception, the claimed environmental impact must satisfy certain substantive requirements. First, the impact must constitute a change in environmental conditions. (Guidelines, § 15382.) "When reviewing the evidence, we will not consider evidence or arguments about the impact from the existent ... plant." (Silveira v. Las Gallinas Valley Sanitary Dist. (1997) 54 Cal. App. 4th 980, 993 [63 Cal. Rptr. 2d 244] [affirming negative declaration, where there was no evidence that the project would alter the existing effects]; see also, e.g., Ukiah, supra, 2 Cal. App. 4th at p. 735 [affirming exemption, where there was "no evidence that construction of the house would have any additional effect on runoff"].) Second, the impact must affect the environment. For that reason, "we must differentiate between adverse impacts upon particular persons and adverse impacts upon the environment of persons in general." (Ukiah, supra, 2 Cal. App. 4th at p. 734.) For the exception to apply, there must be evidence that the project "would adversely affect the environment of persons in general." (Ibid.) Third, the impact must constitute a physical environmental change, as opposed to a social or economic one. (See, e.g., Citizen Action to Serve All Students v. Thornley, supra, 222 Cal. App. 3d at p. 758.) "The decision to close a popular ... school is a decision of educational policy with political and social overtones" but our review of that decision "is delimited by the confines of environmental law." (Id. at p. 759.) Fourth, there must be a reasonable possibility that the environmental impact will be significant. As defined in the Guidelines, that means "a substantial, or potentially substantial, adverse change" resulting from the project. (Guidelines, § 15382.)

Moreover, for the exception to apply, there must be substantial evidence of qualifying environmental impacts. Under the rule generally applicable to CEQA issues, "substantial evidence includes fact, a reasonable assumption predicated upon fact, or expert opinion supported by fact." (§ 21080, subd. (e)(1); see also Guidelines, § 15384, subd. (b).) "Substantial evidence is not argument, speculation, unsubstantiated opinion or narrative, [or] evidence that is clearly inaccurate or erroneous ... ." (§ 21080, subd. (e)(2); see also Guidelines, § 15384, subd. (a).)

When disputes over the evidentiary basis for an exception become the subject of litigation, the proper review standard must be applied. "There is a split of authority on the appropriate standard of judicial review" when the issue is "the applicability of the Guidelines section 15300.2(c) exception to a project that has been found to fall within a categorical exemption." (Fairbank v. City of Mill Valley, supra, 75 Cal. App. 4th at p. 1259.) "Some courts have relied on cases involving review of a negative declaration, holding that a finding of categorical exemption cannot be sustained if there is a 'fair argument' based on substantial evidence that the project will have significant environmental impacts, even where the agency is presented with substantial evidence to the contrary." (Ibid.) "Other courts apply an ordinary substantial evidence test ... , deferring to the express or implied findings of the local agency that has found a categorical exemption applicable." (Id. at pp. 1259-1260; see also, e.g., Ukiah, supra, 2 Cal. App. 4th at p. 728, fn. 7; Santa Monica Chamber of Commerce v. City of Santa Monica, supra, 101 Cal. App. 4th at p. 796; Banker's Hill, Hillcrest, Park West Community Preservation Group v. City of San Diego (2006), 139 Cal. App. 4th 249 [42 Cal. Rptr. 3d 537].) We need not resolve that dispute here.

In the case at hand, regardless of what review standard we apply, we find no substantial evidence to support the exception claimed by appellant SLV CARE here. (See Santa Monica Chamber of Commerce v. City of Santa Monica, supra, 101 Cal. App. 4th at p. 796 [even under fair argument standard, challenger failed to demonstrate reasonable possibility of significant environmental effect]; Fairbank v. City of Mill Valley, supra, 75 Cal. App. 4th at p. 1260 [same].)

With respect to much of the evidence cited by SLV CARE in support of its claims of environmental impacts, it is not clear that it was part of the administrative record, which confines our review. (Western States Petroleum Assn. v. Superior Court, supra, 9 Cal. 4th at p. 573.) The scope of our review is properly limited to the administrative record, even though CEQA procedures may limit a challenger's "opportunity to create a record evidencing potential adverse impacts on the environment." (Magan v. County of Kings, supra, 105 Cal. App. 4th at p. 477.) But as we now explain, even when all of appellant's evidence is considered, regardless of its source, it does not support a fair argument of significant environmental effects.

We address each ground put forth by SLV CARE as a basis for the claimed exception: (1) mold; (2) geologic hazards; (3) septic failure; and (4) traffic hazards and related issues (parking and emergency access).

(1) Mold: SLV CARE posits a potential "increase in mold due to more bodies [and] opening more rooms," as well as the "potential for adverse reactions to mold due to increase in sensitive receptors." As evidentiary support for those claims, SLV CARE points to a series of letters and reports concerning indoor air quality tests at BCE and other District schools, which were prepared by MACS Lab and signed by its Director of Field Services, Maheen B. Doctor. In early April 2003, Doctor confirmed "slightly elevated levels of some fungal elements," but stated that "the level of elevation is not considered significant." Acknowledging that there are "no established regulatory standards for the determination of 'acceptable' levels of mold" and that "individual sensitivities vary from person-to-person," Doctor continued to recommend "more vigilant housekeeping" to counteract the problem. The presence of mold and mildew in some portable classrooms at BCE also was noted by the SSCC task force in its report.

(24) Having analyzed the foregoing evidence, we conclude that neither the SSCC information nor the MACS Lab correspondence supports the environmental impact claim urged by SLV CARE. The cited evidence fails on three grounds. First, there is no indication that the presence of mold is a change in environmental conditions. The mold was a preexisting condition at BCE, and there is no evidence that it will be exacerbated by the presence of additional pupils. A change in physical conditions is a necessary predicate for a finding of environmental impact. (See Silveira v. Las Gallinas Valley Sanitary Dist., supra, 54 Cal. App. 4th at p. 993; Ukiah, supra, 2 Cal. App. 4th at p. 735.) Second, as to the indoor air quality reports and letters, which were signed by Doctor on behalf of MACS Lab, while they suggest that particular individuals may have adverse reactions to mold, they do not demonstrate that school consolidation "would adversely affect the environment of persons in general." (Ukiah, at p. 734.) Finally, there is no evidence that any possible environmental impact from the mold will be significant. In fact, the evidence is to the contrary--Doctor's letter states that the level of indoor spores "is not considered significant."

(2) Geologic Hazards: SLV CARE identifies geologic dangers as a significant environmental impact, citing a March 1990 letter to the District from a geological consultant, Woodward-Clyde. That letter acknowledges that the Ben Lomond fault lies approximately 100 feet southwest of the BCE campus. But under the heading "CONCLUSIONS," the letter states: "The information obtained during the course of our studies leading to this review appears to justify further downgrading the already minimal risk assigned to construction adjacent to the Ben Lomond fault, which traverses the general area in which the School District is located. We are no longer indicating it to be a potential earthquake source."

Assuming that the cited 1990 letter was part of the administrative record, it does not constitute substantial evidence of environmental impact. Neither that letter nor anything else in the appellate record suggests that any geologic hazard is new, so as to constitute a change in environmental conditions. Nor is there any evidence suggesting that the closure decision amplifies any preexisting hazard, either because of the increase in student population at BCE or because of physical changes on that campus, including the addition of portable classrooms. (See Citizen Action to Serve All Students v. Thornley, supra, 222 Cal. App. 3d at p. 757 [finding "no evidence in the record" that the school closure "might cause an increased vulnerability to earthquake-related harm" and characterizing arguments to the contrary as mere speculation that "there might be such a danger, without hard fact"]; Ukiah, supra, 2 Cal. App. 4th at p. 735 [rejecting hearsay statements "that the site was on an earthquake fault" and finding that those statements did not constitute substantial evidence to overcome the categorical exemption].)

(3) Septic: As yet another environmental impact, SLV CARE lists septic problems at both receptor schools. As evidentiary support, SLV CARE points to one of the District's five-year maintenance plans; it also cites a February 2002 letter to the District from the California Regional Water Quality Control Board. The maintenance plan, which covers school years beginning in 1997 and ending in 2002, describes the septic fields at SLE and BCE as "failing." The February 2002 letter from the Regional Water Quality Control Board refers to septic problems dating back to 1998 at the District's shared high school campus in Felton. But the administrative record also contains more recent information, which addresses the then-current condition of the septic systems at each of the receptor schools. One such document is an e-mail sent March 31, 2003, from Dave Elliott, the District's Director of Maintenance and Operations, to Julie Haff, the District's Superintendent. In that e-mail, Elliott states: "The septic system at Boulder Creek below the two-story building was replaced in August of 2001 and is working as designed." Elliott also states: "At this time, I see no need for any further improvements to the septic systems at Boulder Creek Elementary." In addition, information presented to the District's Board from the SSCC task force notes both BCE's "new septic" and SLE's "shared septic (new)."

The evidence offered by SLV CARE on this point is deficient in several regards. First, as indicated by the District's more current information, the evidence of septic problems is outmoded. As such, it is "clearly inaccurate or erroneous" and does not constitute substantial evidence. (§ 21080, subd. (e)(2); see also Guidelines, § 15384, subd. (a).) Second, as with appellant's other claims, the proffered evidence does not represent the requisite change in environmental conditions. SLV CARE argues that the District failed to "consider the impact of doubling SLE's enrollment on the already failing septic system." But it offers no evidence that the claimed problem would be exacerbated by the presence of additional pupils. (See Magan v. County of Kings, supra, 105 Cal. App. 4th at p. 477 [rejecting challenger's arguments about potential impacts, as "based entirely on speculation"].)

(4) Traffic, Parking, Emergency Access: SLV CARE posits the existence of traffic and parking hazards at both receptor schools, citing written public comments by parents of Redwood students. On the issue of traffic, a Redwood parent who routinely ferried children to both of the District's north valley elementary schools wrote: "It takes longer to drop off 1 child at Boulder Creek Elementary (excluding travel time) than it does to drop off 7 children at Redwood (excluding travel time). The hills up to Boulder Creek Elementary are steep and very narrow. There are a lot of pedestrians (mostly children) walking on all sides of these roads. ... I don't feel this is safe to add more children to this school (Boulder Creek Elementary)." On the issue of parking, another Redwood parent wrote: "Redwood Elementary has parking for dropping off and picking up students. Parking at Boulder Creek Elementary is minimal, and the facilities for dropping off or picking up students--especially if the student body swells--are both inadequate and dangerous. I expect cars will be lined up around the block." Information from the SSCC's transportation subcommittee reflects some of these same concerns. On the issue of emergency access, SLV CARE cites a letter with attachments, dated March 25, 2003, from Sam Robustelli, Chief of the Boulder Creek Fire Department. That document includes factual comparisons between the north valley schools based on emergency response, fire response, and highway access.

The data and opinions proffered by SLV CARE do not support its claim to the "significant effects" exception to the categorical exemption for school consolidation. As explained ante, that exception applies "where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances." (Guidelines, § 15300.2, subd. (c), italics added.) To sustain the exception, the evidence must show "some feature of the project that distinguishes it" from others in the exempt class. (Fairbank v. City of Mill Valley, supra, 75 Cal. App. 4th at p. 1260; see also, e.g., Santa Monica Chamber of Commerce v. City of Santa Monica, supra, 101 Cal. App. 4th at p. 801.)

(25) SLV CARE offers no evidence that the traffic, parking, or access problems cited here are unusual circumstances in the context of school consolidations. In that respect, this case resembles Fairbank v. City of Mill Valley. There, the plaintiff cited "various comments from the administrative record, by which project opponents voiced concerns about the existing traffic and parking problems in downtown Mill Valley, and the prospect of the project exacerbating those problems." (Fairbank v. City of Mill Valley, supra, 75 Cal. App. 4th at p. 1260.) The court rejected the opponent's claim to an exception, finding "no showing whatsoever of any 'unusual circumstances' surrounding the construction of this small commercial structure giving rise to any risk of 'significant' effects upon the environment. (Guidelines, § 15300.2(c).) While the addition of any small building to a fully developed downtown commercial area is likely to cause minor adverse changes in the amount and flow of traffic and in parking patterns in the area, such effects cannot be deemed 'significant' without a showing of some feature of the project that distinguishes it from any other small, run-of-the-mill commercial building or use. Otherwise, no project that satisfies the criteria set forth in Guidelines section 15303(c) could ever be found to be exempt." (Ibid.) As the court concluded, "in the absence of any evidence of unusual circumstances nullifying the grant of a categorical exemption, there can be no basis for a claim of exception under Guidelines section 15300.2(c)." (Id. at pp. 1260-1261 ; see also, e.g., Ukiah, supra, 2 Cal. App. 4th at p. 736 [the claimed "potential environmental impacts" were "normal and common considerations in the construction of a single-family residence" and did not constitute unusual circumstances].) The same is true here--there is no evidence of unusual circumstances setting this school consolidation apart from others in the exempt class.
 
C. Summary of Conclusions

In this case, we are required to undertake only the first tier of the CEQA analysis. That analysis leads us to the following conclusions: (1) The school consolidation decision at issue here constitutes a "project" for purposes of CEQA. (2) The District properly determined that its decision is exempt from CEQA. First, in making that determination, the District did not violate any procedural requirements of CEQA, because none apply. Moreover, as a matter of law, substantial evidence supports the District's determination that its closure decision qualifies for categorical exemption from CEQA under section 21080.18 and Guidelines section 15314. SLV CARE did not carry its burden of showing an exception to the categorical exemption; it failed to offer sufficient evidence of significant environmental impacts on any of the proffered grounds.
 
II. BOND LAW

SLV CARE next argues that the District violated constitutional and statutory provisions governing use of bond funds. At issue is the District's use of proceeds from Measure S, an $ 18.5 million school facilities bond issue approved by local voters in 2000. As before, we begin by setting forth the relevant legal principles.
 
A. General Principles

(26) "The usual method of funding new school construction in California has been for school districts to obtain voter approval for the issuance of general obligation bonds. ... The bonds are repaid by an annual levy of an ad valorem tax on real (and certain personal) property located within the area of the district." (62 Ops. Cal. Atty. Gen. 209, 210 (1979), fn. and citations omitted.)

Various provisions of law govern school bond financing. Some are constitutional. (See, e.g., Cal. Const., art. XIIIA, § 1, subd. (b); id., art. XVI, § 18.) Others are statutory. (See, e.g., Ed. Code, § 15100 et seq.) n8

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n8 In this section of the opinion (pt. II), which discusses bond law, further unspecified statutory references are to the Education Code.
 

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(27) Generally speaking, school bond financing is restricted to projects of a capital or permanent character. (See Marin U. Junior College Dist. v. Gwinn (1930) 106 Cal. App. 12, 13-14 [288 P. 799]; 87 Ops. Cal. Atty. Gen. 157, 162 (2004).) That restriction is apparent from several constitutional provisions. We mention two such provisions, which are instructive because of their detail, although they do not apply directly to this case. First, under the constitutional provision added by Proposition 39, bond proceeds from voter-approved taxes or special assessments may be used only for "the construction, reconstruction, rehabilitation, or replacement of school facilities" and not "for any other purpose, including teacher and administrator salaries and other school operating expenses." (Cal. Const., art. XIIIA, § 1, subd. (b)(3).) n9 Similarly, bonds issued after voter approval to exceed the debt limit may be used only for "the construction, reconstruction, rehabilitation, or replacement of school facilities, including the furnishing and equipping of school facilities, or the acquisition or lease of real property for school facilities. ..." (Cal. Const., art XVI, § 18, subd. (b).)

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n9 Proposition 39, enacted in November 2000, "amended the Constitution to allow the issuance of bonds for the construction of school facilities if approved by 55 percent of a school district's voters and if specified conditions are met." (87 Ops. Cal. Atty. Gen., supra, at p. 157.) "Normally, approval of a school district's bonded indebtedness would require a two-thirds approval vote of a district's voters." (Id. at p. 157, fn. 1.) Legislation implementing Proposition 39 is codified at Education Code sections 15264-15284.
 

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There are additional restrictions, including some that are statutory; for example, proceeds "shall not be applied to any other purposes than those for which the bonds were issued." (Ed. Code, § 15146, subd. (b).)
 
1. Nature of the relationship between the District and the electorate

According to appellant SLV CARE: "A bond proposition submitted to the voters of a school district is a contract between the district and its voters."

Appellant's characterization does not find universal support in the cases. "The relationship arising out of a bond election has been defined in a number of California cases." (Associated Students of North Peralta Community College v. Board of Trustees (1979) 92 Cal. App. 3d 672, 676 [155 Cal. Rptr. 250] (Peralta).) As explained in the Peralta case, some "early decisions" found "a contractual relationship between the public entity and individual electors." (Ibid.) "However, a later decision, now regarded as the leading case on the subject, retreated from this classification of the relationship as contractual." (Ibid., citing Peery v. City of Los Angeles (1922) 187 Cal. 753 [203 P. 992].) In that later decision, the California Supreme Court "concluded that it was unnecessary to consider the relationship between public entity and electorate as strictly contractual, the status being merely analogous to a contract." (Peralta, at pp. 676-677.)

(28) In any event, precise characterization of the relationship may be academic. "It is clear that proceeds of a bond issue may be expended only for the purpose authorized by the voters in approving issue of the bonds [citation]. Whether the limitation be deemed to be contractual [citation] or of a status analogous to such relation [citation] or a restriction implied by the requirement of popular approval of the bonds [citation], it does restrict the power of the public body in the expenditure of the bond issue proceeds, and hence in the nature of the project to be completed and paid for. The statutes and ordinances under which the public body acts in submitting the bond issue proposal to the voters must be considered with the ballot proposition in determining the extent of this restriction [citations]." (Mills v. S. F. Bay Area Rapid Transit Dist. (1968) 261 Cal. App. 2d 666, 668 [68 Cal. Rptr. 317].)
 
2. Elements of the relationship

(29) In Peralta, the court identified four elements that typically comprise the relationship between the entity issuing a bond and its voters. (Peralta, supra, 92 Cal. App. 3d at pp. 677-678.) First, there are the authorizing statutes, which are "presumptively within the knowledge of each elector. ..." (Id. at p. 677.) Second, the "resolution by which the bonding entity resolves to submit the issue to the District's electors has also been regarded as part of the 'contract' between the entity and its electors." (Ibid.) "A third element of the 'contract' is the ballot proposition submitted to the voters." (Ibid.) "The fourth and final element is assent or ratification" by the voters. (Id. at p. 678.)

Depending on the circumstances of the particular case, there may be other factors beyond the four basic elements described above. (Peralta, supra, 92 Cal. App. 3d at p. 678.) "Extrinsic documents may be added to the primary elements comprising the relationship." (Ibid.) But "no case or statutory authority supports the proposed incorporation into the 'bond contract' of the ballot argument submitted to the voters prior to the election." (Id. at pp. 678-679.) To the contrary, at least one case has held that "statements 'disseminated to the general public' before the election ... cannot be deemed to modify the intentionally broad language of the proposition in fact submitted to the voters, the call of election published to them, and the statutes authorizing the procedure adopted [citation]." (Mills v. S. F. Bay Area Rapid Transit Dist., supra, 261 Cal. App. 2d at p. 669; cf. Los Angeles County Transportation Com. v. Richmond (1982) 31 Cal. 3d 197, 203 [182 Cal. Rptr. 324, 643 P.2d 941] [in the case of state-wide voter initiatives, "ambiguities may be resolved by referring to the ballot summary, the arguments and analysis presented to the electorate, and the contemporaneous construction of the Legislature"]; City and County of San Francisco v. Farrell (1982) 32 Cal. 3d 47, 52 [184 Cal. Rptr. 713, 648 P.2d 935] [same].)
 
B. Application

The Peralta case provides a useful approach for assessing appellant's argument that the District violated its bond obligations. We therefore begin our analysis by applying each of the elements identified in Peralta to the relationship between the District and the voters arising out of the November 2000 bond election. (See Peralta, supra, 92 Cal. App. 3d at pp. 677-679.) We then discuss the specific violations claimed by SLV CARE. Because the relevant facts are not in dispute, the issues presented are questions of law, which we review de novo. (See, e.g., Service Employees Internat. Union v. Board of Trustees (1996) 47 Cal. App. 4th 1661, 1665 [55 Cal. Rptr. 2d 484] [interpreting Education Code provisions].)
 
1. Elements

(30) The first of the elements that make up the entity-electorate relationship is the authorizing legislation. (Peralta, supra, 92 Cal. App. 3d at p. 677.) Here, the relevant statute is Education Code section 15100, which permits school districts to seek bond financing for a variety of purposes, including: (a) buying school land; (b) buying or constructing school buildings; (c) making "alterations or additions" to school buildings other than "current maintenance, operation, or repairs"; (d) "repairing, restoring, or rebuilding ... any school building damaged, injured, or destroyed by fire or other public calamity"; (e) acquiring "furniture, equipment, or necessary apparatus of a permanent nature"; and (f) permanently improving school grounds. (Ed. Code, § 15100, subds. (a)-(f).) n10 The statutorily a