Nat'l Ass'n of Home Builders v. Envtl. Prot. Agency

• Decision Date: 22 June 2012
• Docket Number: No. 10–1183.,10–1183.
• Citation: 682 F.3d 1032,401 U.S.App.D.C. 227
• Parties: NATIONAL ASSOCIATION OF HOME BUILDERS, et al., Petitioners v. ENVIRONMENTAL PROTECTION AGENCY, Respondent.
• Court: U.S. Court of Appeals — District of Columbia Circuit

682 F.3d 1032

401 U.S.App.D.C. 227

NATIONAL ASSOCIATION OF HOME BUILDERS, et al., Petitioners

v.ENVIRONMENTAL PROTECTION AGENCY, Respondent.

No. 10–1183.

United States Court of Appeals,District of Columbia Circuit.

Argued Nov. 1, 2011.

Decided June 22, 2012.

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.

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 expeditiouslyas 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 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.” SeeLead; 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 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. SeeLead; 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 explainedthat, “[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 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. See15 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, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983) (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (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.

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, 129 S.Ct. 1800, 173 L.Ed.2d 738 (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, 129 S.Ct. 1800. 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 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, 129 S.Ct. 1800 (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...