National Ass'n of Home Builders v. Environmental Protection Agency

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.

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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

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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

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judgments.”). Because the Amended Renovation Rule remains

within those bounds, the petition for review is

Denied.