                     FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

WILLIAM LEWIS,                                   No. 04-17414
                  Plaintiff-Appellant,
                  v.                               D.C. No.
                                                CV-03-01578-GGH
MICHAEL    J. ASTRUE,*
                                                    OPINION
                 Defendant-Appellee.
                                            
        Appeal from the United States District Court
           for the Eastern District of California
      Gregory G. Hollows, Magistrate Judge, Presiding

                      Argued and Submitted
                      November 17, 2006**
                     San Francisco, California

                         Filed July 3, 2007

     Before: J. Clifford Wallace and Sidney R. Thomas,
    Circuit Judges, and David A. Ezra,*** District Judge.

                    Opinion by Judge Wallace




  *Michael J. Astrue is substituted for his predecessor Jo Anne Barnhardt
as Commissioner of the Social Security Administration. Fed. R. App. P.
43(c)(2).
  **This panel unanimously finds this case suitable for decision without
oral argument. See Fed. R. App. P. 34(a)(2).
  ***The Honorable David A. Ezra, United States District Judge for the
District of Hawaii, sitting by designation.

                                 7991
                        LEWIS v. ASTRUE                    7993
                         COUNSEL

Bess M. Brewer and Eugenie Denise Mitchell, Brewer &
Mitchell, LLP, Sacramento, California, for the plaintiff-
appellant.

Peter D. Keisler and McGregor W. Scott, Social Security
Administration, San Francisco, California, for the defendant-
appellee.


                          OPINION

WALLACE, Senior Circuit Judge:

   William Lewis appeals from the district court’s judgment
following an order denying his motion for summary judgment
and granting the Commissioner of Social Security’s (Com-
missioner) motion for summary judgment. We have jurisdic-
tion under 28 U.S.C. § 1291, and affirm the district court’s
summary judgment in favor of the Commissioner.

                               I.

  Lewis applied for supplementary security income on May
24, 2000 and it was denied. Lewis requested a hearing, which
was held on April 18, 2002. Lewis testified at the hearing, as
did Stephen Schmidt, a vocational expert. Irwin Weinreb,
M.D., an internist, testified by telephone as a medical expert.

   The administrative law judge (ALJ) conducted a five-step
sequential evaluation process in determining that Lewis was
not disabled under section 1614(a)(3)(A) of the Social Secur-
ity Act, 42 U.S.C. § 1382c(a)(3)(A). See 20 C.F.R.
§ 416.920(a) (providing for a five-step evaluation process). At
Step 1, the ALJ determined that Lewis had not performed
substantial gainful activity since April 18, 1988. Next, at Step
7994                    LEWIS v. ASTRUE
2, she considered whether Lewis had a “severe impairment.”
She concluded that Lewis was “impaired as a result of status
post laminectomy and diabetes mellitus” and that due to these
impairments, Lewis could not perform heavy lifting and was
severely impaired. At Step 3, the ALJ determined that
Lewis’s severe impairments did not meet or equal a listed
impairment under the regulations.

   Next, at Step 4, the ALJ analyzed whether Lewis was able
to do past relevant work, and determined that he was not. In
reaching this conclusion, the ALJ considered the effects of
Lewis’s prior back surgery and diabetes. In addition to the
back pain and diabetes, the ALJ also considered his “trochan-
teric bursitis and osteoarthritis of the left knee.” The ALJ
stated that Dr. Madireddi, a physiatrist who examined Lewis,
observed that Lewis had a full range of motion in all joints
and good motor strength; that he had reduced sensation in the
left leg; that he needed a brace to walk long distances; that he
was restricted from prolonged standing and walking; that he
could not do repetitive squatting, kneeling, crouching, and
crawling; and that he complained of pain with prolonged sit-
ting. Further, the ALJ observed that x-rays of Lewis’s knees
showed “spurring at the patella,” which the radiologist had
interpreted as “minimal osteoarthritic changes of the left
knee.”

   The ALJ also recounted some evidence that tended to show
that Lewis engaged in drug-seeking behavior. Evidence of
drug addiction included testimony from doctors, Lewis’s
behavior in hospitals, Lewis’s admitted history of drug addic-
tion, and the strength of the narcotics that Lewis was taking.
The ALJ agreed with Dr. Weinreb, who testified that Lewis
engaged in drug-seeking behavior. She also found Lewis’s
testimony not credible.

  At Step 5, the ALJ accepted the vocational expert’s testi-
mony concerning the existence of jobs that could accommo-
date Lewis’s limitations. She found that the number of jobs
                           LEWIS v. ASTRUE                        7995
cited by the vocational expert constituted a significant number
of jobs in the economy, and concluded that Lewis was not dis-
abled.

   Lewis requested review of the ALJ decision by the Appeals
Council. The Appeals Council denied review, making the ALJ
decision the final decision of the Commissioner. Lewis sought
judicial review of the ALJ decision by the district court. The
district court concluded that the ALJ’s assessment was fully
supported by substantial evidence in the record, and based on
proper legal standards. Lewis timely appealed.

                                  II.

   Lewis contends that the ALJ erred by failing to consider his
bursitis at Step 2 of the sequential analysis.1 We review de
novo the district court’s order upholding the Commissioner’s
final denial of benefits. Tidwell v. Apfel, 161 F.3d 599, 601
(9th Cir. 1999) (as amended). We affirm the district court if
the Commissioner’s decision was supported by substantial
evidence and based on proper legal standards. Sandgathe v.
Chater, 108 F.3d 978, 980 (9th Cir. 1997). “Substantial evi-
dence is more than a scintilla but less than a preponderance
— it is such relevant evidence that a reasonable mind might
accept as adequate to support the conclusion.” Orteza v. Sha-
lala, 50 F.3d 748, 749 (9th Cir. 1995). “[I]f evidence is sus-
ceptible of more than one rational interpretation, the decision
of the ALJ must be upheld.” Id.

   The medical records reflect that Lewis underwent knee sur-
gery in 1984 and suffered from “left-sided greater trochanter
bursitis” after the operation. In addition to medical records
supporting that Lewis had a knee injury, Lewis’s counsel
stated at the April hearing that the injury prevented Lewis
  1
    We have addressed Lewis’s other contentions in an unpublished dispo-
sition.
7996                    LEWIS v. ASTRUE
from “performing the necessary physical exertional work to
engage in any sedentary work . . . .”

   [1] Even assuming that the ALJ erred in neglecting to list
the bursitis at Step 2, any error was harmless. Cf. Stout v.
Comm’r, Soc. Sec. Admin., 454 F.3d 1050, 1054-55 (9th Cir.
2006) (discussing harmless error analysis in the Social Secur-
ity context). The ALJ extensively discussed Lewis’s bursitis
at Step 4 of the analysis, observing that “[t]he claimant also
had left-sided greater trochanteric bursitis.” The decision also
stated that x-rays showed osteoarthritic changes in Lewis’s
left knee; that Lewis’s straight leg raise was “negative”; that
Lewis had decreased sensation in his left leg; that Lewis was
restricted from prolonged standing and walking; and that
Lewis could not do repetitive squatting, kneeling, crouching,
and crawling. The decision reflects that the ALJ considered
any limitations posed by the bursitis at Step 4. As such, any
error that the ALJ made in failing to include the bursitis at
Step 2 was harmless.

  AFFIRMED.
