Court Opinion

ID: 802908
Source: CourtListenerOpinion
Date Created: 2012-06-22 15:10:52+00
Date Added: 2024-06-11T18:00:06.017822
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 1, 2011                 Decided June 22, 2012

                         No. 10-1183

    NATIONAL ASSOCIATION OF HOME BUILDERS, ET AL.,
                    PETITIONERS

                               v.

           ENVIRONMENTAL PROTECTION AGENCY,
                     RESPONDENT

          On Petition for Review of a Final Rule of
           the Environmental Protection Agency

        Thomas C. Jackson argued the cause and filed the briefs
for petitioners.

        Stephanie J. Talbert, Attorney, U.S. Department of
Justice, argued the cause for respondent. With her on the briefs
was John C. Cruden, Deputy Assistant Attorney General.

       Aaron Colangelo was on the brief for amicus curiae
National Center for Healthy Housing in support of respondent.

   Before: ROGERS and GARLAND, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.

    Opinion for the Court filed by Circuit Judge GARLAND.
                               2

     GARLAND, Circuit Judge: In 2008, the Environmental
Protection Agency (EPA) issued a rule regulating renovation
and remodeling activities that create health hazards arising from
lead paint. The rule contained an “opt-out” provision, which
exempted owner-occupied housing from the rule’s requirements
if the homeowner certified that no pregnant women or young
children lived there. In 2010, EPA amended the rule to
eliminate the opt-out provision.

     The National Association of Home Builders and other trade
associations petition for review of the amended rule on two
grounds: that the decision to abandon the opt-out provision was
arbitrary and capricious, in violation of the Administrative
Procedure Act; and that EPA failed to convene a panel of
representatives of small businesses before issuing the new rule,
in violation of the Regulatory Flexibility Act. Because we
conclude that EPA’s decision was not arbitrary or capricious,
and because we lack jurisdiction to entertain the petitioners’
second challenge, we deny the petition for review.

                                I

     Finding that low-level lead poisoning affected millions of
American children, Congress passed the Residential Lead-Based
Paint Hazard Reduction Act of 1992, Pub. L. No. 102-550, 106
Stat. 3897 (1992), with the purpose of “eliminat[ing] lead-based
paint hazards in all housing as expeditiously as possible.” 42
U.S.C. § 4851a(1). The Act amended another statute, the Toxic
Substances Control Act, 15 U.S.C. §§ 2601 et seq., by adding
Title IV, entitled “Lead Exposure Reduction.” Section 402(a)
directed EPA to “promulgate final regulations governing
lead-based paint activities to ensure that individuals engaged in
such activities are properly trained; that training programs are
accredited; and that contractors engaged in such activities are
certified.” 15 U.S.C. § 2682(a)(1). The section further directed
                                   3

that the regulations “contain standards for performing
lead-based paint activities, taking into account reliability,
effectiveness, and safety.” Id. Another provision, section
402(c)(3), required EPA within four years to revise the
regulations to apply “to renovation or remodeling activities in
target housing, public buildings constructed before 1978, and
commercial buildings that create lead-based paint hazards.” Id.
§ 2682(c)(3). The statute defines “target housing” as “any
housing constructed prior to 1978,” with certain exceptions not
relevant here. Id. § 2681(17).

     Pursuant to these provisions, in 2008 EPA issued a final
rule establishing work-practice, training, and recordkeeping
requirements for “renovations performed for compensation in
target housing and child-occupied facilities.” See Lead;
Renovation, Repair, and Painting Program, 73 Fed. Reg. 21,692,
21,759 (Apr. 22, 2008) [hereinafter Renovation Rule].1 Among
other things, the Renovation Rule requires renovators to post
warning signs outside the work area, to cover the work area with
plastic sheets to prevent the diffusion of lead dust, and to clean
the area thoroughly after the work is completed. Id. at 21,704-
05.

     The 2008 Renovation Rule contained an exemption for
owner-occupied target housing in which no pregnant women or
children under six resided and that did not otherwise meet the
definition of a child-occupied facility. An owner-occupant

     1
      The Rule defined “child-occupied facility” as a “a building, or
portion of a building, constructed prior to 1978, visited regularly by
the same child, under 6 years of age, on at least two different days
within any week (Sunday through Saturday period), provided that each
day’s visit lasts at least 3 hours and the combined weekly visits last at
least 6 hours, and the combined annual visits last at least 60 hours.”
73 Fed. Reg. at 21,702.
                               4

could “opt out” by signing a statement certifying that the
housing qualified for this exemption, and renovations could then
proceed without following the training, certification, and work-
practice requirements of the rule. EPA acknowledged that most
commenters opposed this “opt-out” amendment because it left
guests, older children, and adults unprotected, as well as those
who move into recently renovated housing. Id. at 21,709-10.
After balancing the relevant considerations, however, EPA
decided that a more protective rule, without the opt-out
provision, would not be “an effective use of society’s
resources.” Id. at 21,710.

     Several petitions for review were filed in this court. In
August 2009, EPA signed an agreement with environmental and
health advocacy groups to settle their petitions. Pursuant to the
agreement, EPA committed to propose amendments to the
Renovation Rule, including one eliminating the opt-out
provision.       Thereafter, EPA proposed, and ultimately
promulgated, the amended rule that is the subject of the instant
case. See Lead; Amendment to the Opt-Out and Recordkeeping
Provisions in the Renovation, Repair, and Painting Program, 75
Fed. Reg. 24,802 (May 6, 2010) [hereinafter Amended
Renovation Rule]. The Amended Renovation Rule removed the
opt-out provision. EPA explained that, “[b]y removing the
opt-out provision, the rule will go farther toward protecting
children under age 6 and pregnant women, as well as older
children and adult occupants of target housing where no child
under age 6 or pregnant woman resides.” Id. at 24,804.
“[I]mplementing the regulations without the opt-out provision,”
EPA concluded, “promotes, to a greater extent, the statutory
directive to promulgate regulations covering renovation
activities in target housing.” Id. at 24,806.

    The National Association of Home Builders (NAHB) and
other trade associations now petition for review of the Amended
                               5

Renovation Rule on two grounds. First, they contend that
EPA’s decision to remove the opt-out provision was arbitrary
and capricious, in contravention of the Administrative Procedure
Act, 5 U.S.C. § 706(2)(A). Second, they charge that EPA
violated the Regulatory Flexibility Act, 5 U.S.C. §§ 601 et seq.,
because it failed to convene a small business advocacy review
panel to assess the impact of eliminating the opt-out provision,
see id. § 609(b). We address the first contention in Part II and
the second in Part III.

                               II

     The Toxic Substances Control Act (TSCA) authorizes
judicial review of EPA regulations under the standard
prescribed by the Administrative Procedure Act (APA), 5 U.S.C.
§ 706. See 15 U.S.C. § 2618(c)(1)(A), (B). The APA authorizes
a court to set aside agency action that is “arbitrary, capricious
[or] an abuse of discretion.” 5 U.S.C. § 706(2)(A). “The scope
of review under the ‘arbitrary and capricious’ standard is narrow
and a court is not to substitute its judgment for that of the
agency. Nevertheless, the agency must examine the relevant
data and articulate a satisfactory explanation for its action
including a ‘rational connection between the facts found and the
choice made.’” Motor Vehicle Mfrs. Ass’n v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting Burlington Truck
Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)). The
petitioners contend that removing the opt-out provision from the
Renovation Rule was arbitrary and capricious for multiple
reasons. Although we have given careful consideration to all of
the petitioners’ arguments, we address only the strongest ones
below.
                                6

                                A

     The essence of the petitioners’ argument is that it was
arbitrary and capricious for EPA to change its mind about the
opt-out provision. In 2008, they maintain, EPA “provided a
reasoned basis for its approach that was consistent with
congressional intent.” NAHB Br. 16. “In contrast,” they
continue, “EPA has provided no justification for its decision to
reverse course . . . that is grounded in any information or
experience that was not available to the Agency when it
included the Opt Out Provision in the original rule.” Id. Rather,
EPA “merely revisited old arguments that had already been
addressed as part of the original rulemaking.” Id. Although the
petitioners acknowledge that “a federal agency has the authority
to change its mind,” they insist in these circumstances that
“under the APA, the agency has to be held to a higher standard”
when it does. Oral Arg. Recording at 2:20-:55.

    This kind of argument is largely foreclosed by FCC v. Fox
Television Stations, Inc., 556 U.S. 502 (2009), in which the
Supreme Court declared that there is “no basis in the
Administrative Procedure Act or in our opinions for a
requirement that all agency change be subjected to more
searching review.” Id. at 514. As the Court explained:

         The Act mentions no such heightened standard. . . . To
         be sure, the requirement that an agency provide
         reasoned explanation for its action would ordinarily
         demand that it display awareness that it is changing
         position. An agency may not, for example, depart from
         a prior policy sub silentio or simply disregard rules that
         are still on the books. And of course the agency must
         show that there are good reasons for the new policy.
         But it need not demonstrate to a court’s satisfaction
         that the reasons for the new policy are better than the
                                  7

          reasons for the old one; it suffices that the new policy
          is permissible under the statute, that there are good
          reasons for it, and that the agency believes it to be
          better, which the conscious change of course
          adequately indicates.

Id. at 514-15 (citation omitted).

     In light of Fox, we must reject the petitioners’ contention
that, “because the Rule eliminates a provision that was
consistent with congressional intent, the Court should not defer
to EPA in making such a decision.” NAHB Br. 19-20. The fact
that the original opt-out provision was consistent with
congressional intent is irrelevant as long as the amended rule is
also “permissible under the statute.” Fox, 556 U.S. at 515. The
petitioners acknowledge that, although they believe the original
rule was better, the amended rule is permissible. Oral Arg.
Recording at 17:40-:43. As Fox made clear, that “suffices” as
far as the court is concerned. Fox, 556 U.S. at 515.2

     Fox likewise dispenses with the petitioners’ complaint that
the Amended Renovation Rule merely revisits old evidence and
arguments, rather than adduces “new data” or experience.
NAHB Br. 17. As Fox noted, the Supreme Court has “neither
held nor implied that every agency action representing a policy
change must be justified by reasons more substantial than those
required to adopt a policy in first instance.” Fox, 556 U.S. at
514 (citing State Farm, 463 U.S. at 42). To the contrary, the

     2
      The petitioners’ opening brief suggested that the amended rule
exceeds EPA’s statutory authority. NAHB Br. 24-27. The petitioners
appeared to abandon the argument in their reply brief by relegating it
to a footnote, see NAHB Reply Br. 10 n.2, and then conceded at oral
argument that the TSCA permits the action the agency took, Oral Arg.
Recording at 17:43.
                                8

State Farm case affirmed that “‘[a]n agency’s view of what is in
the public interest may change, either with or without a change
in circumstances.’” State Farm, 463 U.S. at 57 (quoting Greater
Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C. Cir.
1970)); see Am. Trucking Ass’ns v. Atchison, Topeka & Santa Fe
Ry. Co., 387 U.S. 397, 416 (1967) (declaring that an agency, “in
light of reconsideration of the relevant facts and its mandate,
may alter its past interpretation and overturn past administrative
rulings”).

     It is true, as the petitioners stress, that an agency changing
course is sometimes obligated to “provide a more detailed
justification than what would suffice for a new policy created on
a blank slate . . . -- when, for example, its new policy rests upon
factual findings that contradict those which underlay its prior
policy.” Fox, 556 U.S. at 515. “In such cases, . . . a reasoned
explanation is needed for disregarding facts and circumstances
that underlay . . . the prior policy.” Id. at 516. But the
petitioners cannot point to any new findings, let alone
contradictory ones, upon which EPA relied. See Oral Arg.
Recording at 6:00-:51, 8:43-9:30. To the contrary, the gravamen
of their complaint is that EPA offered no new evidence to
support its decision. See NAHB Br. 21. And in that respect, the
petitioners are correct: EPA did not rely on new facts, but rather
on a reevaluation of which policy would be better in light of the
facts. See, e.g., 75 Fed. Reg. at 24,804 (explaining that removal
of the opt-out provision “will go farther toward protecting
children under age 6 and pregnant women, as well as older
children and adult occupants of target housing where no child
under age 6 or pregnant woman resides” (emphasis added)).
Fox makes clear that this kind of reevaluation is well within an
agency’s discretion. 556 U.S. at 514-15.

     That leaves us with the responsibility to ensure that EPA
satisfied the core requirement that Fox makes clear an agency
                                  9

must meet when changing course: it must “provide reasoned
explanation for its action,” which “would ordinarily demand that
it display awareness that it is changing position.” Fox, 556 U.S.
at 515.3 In this case, there is no doubt that EPA knew it was
changing its position. See, e.g., Proposed Rule, Lead;
Amendment to the Opt-out and Recordkeeping Provisions in the
Renovation, Repair, and Painting Program, 74 Fed. Reg. 55,506,
55,506 (Oct. 28, 2009) (“proposing to eliminate” the opt-out
provision); Amended Renovation Rule, 75 Fed. Reg. at 24,802
(“eliminating” the provision). Nor is there any doubt that the
agency provided a reasoned explanation for its decision. In the
following discussion, we set forth only the more significant
aspects of that explanation.

    First, EPA explained that the opt-out provision -- which
exempted renovation and remodeling of owner-occupied
buildings from lead-paint work-practice standards if no children
under six or pregnant women lived there -- was “not sufficiently
protective [even] for children under age 6 and pregnant women,
the most vulnerable populations.” Amended Renovation Rule,
75 Fed. Reg. at 24,804. EPA noted, for example, that “the
opt-out provision does not protect families with young children
who may purchase recently renovated target housing.” Id.
Although the agency had originally thought this problem could

     3
      The failure to satisfy this core requirement explains why we
vacated agency orders in the cases the petitioners’ briefs bring to our
attention. See, e.g., Williams Gas Processing-Gulf Coast Co. v.
FERC, 475 F.3d 319, 329 (D.C. Cir. 2006) (vacating FERC orders
because, “instead of openly acknowledging its intention to reverse
course to bring order to its case law, FERC attempted to gloss over its
prior holding” (internal quotation marks and alteration omitted));
Ramaprakash v. FAA, 346 F.3d 1121, 1130 (D.C. Cir. 2003) (vacating
FAA orders because they were “unexplained departures from
precedent”).
                               10

be mitigated by a rule requiring sellers of target housing to
disclose known lead-based paint hazards to purchasers, upon
reconsideration it concluded that a rule that “only requires
disclosure of known hazards . . . would not require disclosure of
renovation activities or that the owner opted out of the
[Renovation] rule requirements.” Id. EPA was also concerned
that “[v]isiting children who do not spend enough time in the
housing to render it a child-occupied facility may nevertheless
be exposed to lead from playing in dust-lead hazards created by
renovations.” Id. And EPA further worried that “[r]enovations
on the exterior of a residence can spread leaded dust and debris
some distance from the renovation activity,” creating dangers
for families with young children living nearby. Id.; see
Economic Analysis for the TSCA Lead Renovation, Repair, and
Painting Program Opt-out and Recordkeeping Final Rule, at 5-
12 (2010) [hereinafter 2010 Economic Analysis] (J.A. 290)
(concluding, based on census data, that 23,000 children under
age six living in homes attached to renovated target housing
would be protected by eliminating the opt-out provision).

     Second, EPA determined that the “opt-out provision d[id]
not sufficiently account for the importance of the health effects
of lead exposure on adults and children age 6 and older.”
Amended Renovation Rule, 75 Fed. Reg. at 24,805-06. Citing
studies finding that “lead paint dust exposure can cause adverse
health effects” in older children and adults, EPA determined that
“work practices should be followed in target housing without
regard to the age of the occupants.” Id. at 24,806.

    In light of these and other (re)considerations, EPA
concluded that the amended rule “promotes, to a greater extent,
the statutory directive to promulgate regulations covering
renovation activities in target housing.” Id. (emphasis added).
This conclusion was not impermissible under the TSCA. As the
agency explained, the statutory definition of target housing is
                                 11

broad -- “‘any housing constructed prior to 1978,’” with
exceptions not relevant here.           Id. (quoting 15 U.S.C.
§ 2681(17)). And the statute says nothing, one way or the other,
about restricting the protection afforded by renovation
regulations to pregnant woman and children under six; instead,
the TSCA simply “directs EPA to promulgate regulations that
apply to renovation activities that create lead-based paint
hazards in target housing.” Id. (citing 15 U.S.C. § 2682(c)(3)).
Moreover, because the Act directs EPA to promulgate
regulations that “contain standards for performing lead-based
paint activities, taking into account reliability, effectiveness, and
safety,” 15 U.S.C. § 2682(a)(1), it was hardly arbitrary or
capricious for EPA to issue an amended rule it reasonably
believed would be more reliable, more effective, and safer than
the original rule. The agency’s explanation thus readily satisfies
the standard of judicial review elucidated in Fox and State
Farm.

                                 B

     In addition to charging that the Amended Renovation Rule
constitutes an arbitrary and capricious change in course, the
petitioners contend it is arbitrary and capricious because its costs
outweigh its benefits.

    We note first that EPA does not have a statutory duty to
demonstrate that the benefits of the amended rule outweigh its
costs. The TSCA was passed in 1976 with the following
preface: “It is the intent of Congress that the Administrator shall
carry out this chapter in a reasonable and prudent manner, and
that the Administrator shall consider the environmental,
economic, and social impact of any action the Administrator
takes or proposes to take under this chapter.” 15 U.S.C.
§ 2601(c) (emphasis added). Although the TSCA thus
“expressly requires the Administrator to consider” the
                               12

“economic consequences” of action taken under the Act, Envtl.
Def. Fund v. EPA, 636 F.2d 1267, 1276 (D.C. Cir. 1980), this
does not mean that the regulation’s benefits must outweigh its
costs. Cf. Nat’l Wildlife Fed’n v. EPA, 286 F.3d 554, 570-71
(D.C. Cir. 2002) (noting that although the Clean Water Act
“requires that, when setting [new source performance
standards], the [EPA] Administrator must take costs into
consideration,” it “does not require that she conduct a
cost-benefit analysis”). Indeed, when Congress amended the
TSCA in 1992 to authorize regulations addressing lead-paint
hazards, it instructed EPA to “tak[e] into account reliability,
effectiveness, and safety” -- but did not mention cost. 15 U.S.C.
§ 2682(a)(1).

     Notwithstanding the absence of a statutory duty, EPA did
undertake a cost-benefit analysis before promulgating the
Amended Renovation Rule -- an analysis that it concluded
supported eliminating the opt-out provision. See 2010
Economic Analysis (J.A. 185); see also Amended Renovation
Rule, 75 Fed. Reg. at 24,811-12 (summary of the economic
analysis). And when an agency decides to rely on a cost-benefit
analysis as part of its rulemaking, a serious flaw undermining
that analysis can render the rule unreasonable. See City of
Portland v. EPA, 507 F.3d 706, 713 (D.C. Cir. 2007) (noting
that “we will [not] tolerate rules based on arbitrary and
capricious cost-benefit analyses”); Owner-Operator Indep.
Drivers Ass’n v. Fed. Motor Carrier Safety Admin., 494 F.3d
188, 206 (D.C. Cir. 2007) (vacating regulatory provisions
because the cost-benefit analysis supporting them was based on
an unexplained methodology). Nonetheless, we review such a
cost-benefit analysis deferentially. See Nat’l Wildlife Fed’n, 286
F.3d at 563 (holding that “we do not review EPA’s cost figuring
de novo, but accord EPA discretion to arrive at a cost figure
within a broad zone of reasonable estimate” (internal quotation
marks omitted)). And “in view of the complex nature of
                                13

economic analysis typical in the regulation promulgation
process, [the petitioners’] burden to show error is high.” Id.; see
Charter Commc’ns, Inc. v. FCC, 460 F.3d 31, 42 (D.C. Cir.
2006) (noting that “cost-benefit analyses epitomize the types of
decisions that are most appropriately entrusted to the expertise
of an agency” (internal quotation marks omitted)).

     At first blush, the petitioners offer a plausible argument that
EPA “stacked the deck” in favor of rescission by comparing the
additional costs of the Amended Renovation Rule with its total
benefits. NAHB Reply Br. 13. As the petitioners note, in
calculating the costs of the amended rule, the agency considered
only “the additional cost of the rule, beyond what renovators are
already doing.” Id. (quoting EPA, Response to Public
Comments at 22 (J.A. 349)); see 2010 Economic Analysis at 4-
50 (J.A. 236). By contrast, the petitioners contend that, in
calculating the benefits of the rule, EPA “estimate[d] the total
benefits” by “assum[ing] . . . that no contractors are employing
work practices required under the [original Renovation] Rule in
the ‘opt-out’ scenarios.” NAHB Reply Br. 15 (citing, but not
quoting, 2010 Economic Analysis at 5-5 (J.A. 283)). In short,
the petitioners charge that EPA was comparing apples to
oranges.

     There are two problems with this argument. First, it was
never raised in either the rulemaking comments or the
petitioners’ opening appellate brief. See Oral Arg. Recording at
32:22 (acknowledgment by petitioners’ counsel). Because this
deprived EPA of a meaningful opportunity to respond to the
argument, it is waived. See Nat’l Wildlife Fed’n, 286 F.3d at
562 (declining to reach the merits of challenges to cost estimates
because “issues not raised in comments before the agency are
waived”); Lake Carriers’ Ass’n v. EPA, 652 F.3d 1, 9 n.9 (D.C.
Cir. 2011) (per curiam) (“[A]rguments not raised until the reply
brief are waived.”).
                                14

     In any event, the argument appears to be based on a faulty
premise. The page of the 2010 Economic Analysis cited by the
petitioners merely explains that, to calculate the benefits of the
rule, EPA used an average measure of benefits from the 2008
Economic Analysis it had conducted for its original Renovation
Rule, and then multiplied the average by the number of people
specifically affected by eliminating the opt-out provision. 2010
Economic Analysis at 5-5 (J.A. 283). But in calculating the
benefits, the 2008 Economic Analysis did take into account the
fact that some contractors were already effectively in
compliance with the requirements of the Renovation Rule. See
Economic Analysis for the TSCA Lead Renovation, Repair, and
Painting Program, at 5-26 (Mar. 2008) (explaining that, in
estimating the benefits of the Renovation Rule, “[t]he baseline
against which the regulatory options are compared takes into
account current practices”). Accordingly, it appears that EPA
was comparing apples to apples after all -- a point the petitioners
acknowledged at oral argument. Oral Arg. Recording at 21:24-
:44.

     In sum, because the petitioners have offered no justification
for questioning the reasonableness of EPA’s calculation of costs
and benefits, we reject this challenge to the removal of the opt-
out provision as well.

                                III

     The petitioners’ second contention is that EPA violated the
Regulatory Flexibility Act (RFA) by failing to convene a small
business advocacy review panel to assess the impact of
removing the opt-out provision from the Renovation Rule.
Section 604 of the RFA generally requires an agency to prepare
a final regulatory flexibility analysis when it promulgates a final
rule. 5 U.S.C. § 604; see id. § 605(b), (c). With exceptions,
section 603 of the Act requires the agency to prepare an initial
                               15

regulatory flexibility analysis before issuing a notice of
proposed rulemaking as well. Id. § 603; see id. § 605(b), (c).
And when an initial flexibility analysis is required, section
609(b) directs the agency to convene a small business advocacy
review panel for the purpose of obtaining advice and
recommendations about the potential impact of the proposed
rule. Id. § 609(b). Although EPA convened such a review panel
prior to promulgating the original Renovation Rule, it did not do
so again before issuing the amended rule. The petitioners claim
that this failure violated the RFA.

     But the RFA renders this kind of claim unreviewable.
Section 611(c) of the RFA provides that “[c]ompliance or
noncompliance by an agency with the provisions of this chapter
shall be subject to judicial review only in accordance with this
section.” 5 U.S.C. § 611(c) (emphasis added). Section
611(a)(2) grants this court “jurisdiction to review any claims of
noncompliance with sections 601, 604, 605(b), 608(b), and
610.” 5 U.S.C. § 611(a)(2); see id. § 611(a)(1). The section
further provides that “[a]gency compliance with sections 607
and 609(a) shall be judicially reviewable in connection with
judicial review of section 604.” Id. § 611(a)(2); see id.
§ 611(a)(1). Conspicuously absent from these lists of
reviewable claims is a claim alleging noncompliance with
section 609(b) -- the provision that requires the convening of
small business advocacy review panels. Accordingly, as we
held in Allied Local & Regional Manufacturers Caucus v. EPA,
this court “has no jurisdiction to review challenges” to an
agency’s compliance with that section. 215 F.3d 61, 80 n.21
(D.C. Cir. 2000).

     The petitioners urge us to take either of two ways around
this jurisdictional impasse.
                                16

     First, they note that, even if they cannot directly obtain
review of agency compliance with section 609(b), the statute
does authorize review of compliance with the final regulatory
flexibility analysis requirement of section 604. And they
maintain that we can regard the “failure to convene a [review]
[p]anel” as a failure that “renders the final regulatory flexibility
analysis defective.” NAHB Reply Br. 16. This argument is
foreclosed, however, by section 611(a)(2), which expressly
authorizes judicial review of “[a]gency compliance with sections
607 and 609(a) . . . in connection with judicial review of section
604,” but does not authorize review of compliance with section
609(b) -- even in connection with a section 604 claim.4

     Second, the petitioners contend that the failure to convene
a review panel is evidence that the agency acted arbitrarily and
capriciously in contravention of the APA. It is true that the RFA
grants us jurisdiction to review claims of noncompliance with
section 604, the final regulatory impact analysis provision, “in
accordance with” the APA. 5 U.S.C. § 611(a)(2). It is also true,
as we said in Allied Local, that although we may not review
certain challenges “in terms of the agency’s compliance with the
RFA, we may consider them in determining whether EPA
complied with the overall requirement that an agency’s
decisionmaking be neither arbitrary nor capricious.” 215 F.3d
at 79. But the challenges we reviewed in Allied Local were
unlike the challenge the petitioners raise here. In that case, the
allegations were that, in the course of promulgating a rule, the
agency had failed to “respond to significant points raised during
the comment period” and “consider significant alternatives to

    4
      Section 607 deals with the preparation of “quantifiable or
numerical” analyses in connection with initial and final regulatory
impact analyses. 5 U.S.C. § 607. Section 609(a) describes procedures
(other than review panels) for ensuring that small entities have an
opportunity to participate in rulemakings.
                               17

the course it ultimately ch[o]se.” Id. at 80. Those kinds of
failings may best be described as “quasi-procedural” rather than
“procedural.” “At bottom, they focus not on the kind of
procedure that an agency must use to generate a record, but
rather on the kind of decisionmaking record the agency must
produce to survive judicial review . . . . Their concern is not
with the external process by which litigants present their
arguments to the agency, but with the internal thought process
by which an agency decisionmaker reaches a rational decision.
Thus, these requirements can be said to flow not from the APA’s
procedural dictates, but from its substantive command that
agency decisionmaking not be ‘arbitrary’ or ‘capricious.’”
Merrick B. Garland, Deregulation and Judicial Review, 98
HARV. L. REV. 505, 530 (1985); see id. at 510 n.23, 526-31, 545.

     The small business advocacy review panel, by contrast, is
a purely procedural device, a process by which interested parties
can present their views to the agency. See Oral Arg. Recording
at 41:00-:14 (acknowledgment by petitioners that the absence of
a review panel is “a process point,” and that they cannot cite any
information they could not have presented during the normal
notice-and-comment period). And courts may not, under the
guise of the APA’s arbitrary-and-capricious review standard,
impose procedural requirements that the APA’s procedural
provisions, e.g., APA § 4, 5 U.S.C. § 553, do not themselves
impose. Compare Vermont Yankee Nuclear Power Corp. v.
NRDC, 435 U.S. 519, 524 (1978) (noting that the notice-and-
comment procedures prescribed by section 4 of the APA are
“the maximum procedural requirements which Congress was
willing to have the courts impose upon agencies in conducting
rulemaking procedures”), with State Farm, 463 U.S. at 50
(holding that the requirements of explanation and consideration
of alternatives do not “impose additional procedural
requirements upon an agency” in contravention of Vermont
Yankee); see Garland, supra, at 528-30. A fortiori, courts may
                               18

not, under the guise of APA review, enforce compliance with a
procedural requirement that the RFA clearly excludes from our
purview. It is for this reason that in Allied Local, although we
did examine the petitioners’ claims that EPA had failed to
consider significant comments and alternatives, we expressly
found the claim that the agency had failed to convene a review
panel to be outside our jurisdiction. 215 F.3d at 80 n.21.

                               IV

     The petitioners find EPA’s change of heart largely
inexplicable, arguing that the “only event of note between the
inclusion and removal of the Opt-Out Provision was a settlement
agreement which obligated the Agency to undertake certain
actions.” NAHB Br. 11-12. But there were in fact two other
events of note, both of which preceded that settlement, that go
a long way toward explaining why EPA reconsidered the opt-out
provision: namely, the inauguration of a new President and the
confirmation of a new EPA Administrator.

     And there’s the rub. As then-Justice Rehnquist wrote in his
separate opinion in State Farm: “A change in administration
brought about by the people casting their votes is a perfectly
reasonable basis for an executive agency’s reappraisal of the
costs and benefits of its programs and regulations. As long as
the agency remains within the bounds established by Congress,
it is entitled to assess administrative records and evaluate
priorities in light of the philosophy of the administration.” 463
U.S. at 59 (Rehnquist, J., concurring in part and dissenting in
part); see Chevron, 467 U.S. at 865 (“[A]n agency to which
Congress has delegated policy-making responsibilities may,
within the limits of that delegation, properly rely on the
incumbent administration’s views of wise policy to inform its
                           19

judgments.”). Because the Amended Renovation Rule remains
within those bounds, the petition for review is

                                                 Denied.