Project XL Site-specific Rulemaking for Merck & Co., Inc. Stonewall Plant

SUMMARY: The EPA is proposing to implement a project under the Project

XL program for the Merck & Co., Inc. (Merck) Stonewall Plant, in

Elkton, Virginia. The terms of the project are defined in a proposed

Final Project Agreement (FPA) which is being made available for public

review and comment by this document. In addition, EPA is proposing

today a site-specific rule, applicable only to the Merck Stonewall

Plant, to facilitate implementation of the project. By this document,

EPA solicits comment on the proposed rule, the proposed FPA, and the

project generally.

This proposed site-specific rule is intended to provide regulatory

changes under the Clean Air Act and the Resource Conservation and

Recovery Act (RCRA) to implement Merck's XL project, which will result

in superior environmental performance and, at the same time, provide

Merck with greater operational flexibility. The proposed site-specific

rule would change the Clean Air Act requirements which apply to the

Merck Stonewall Plant for the prevention of significant deterioration

of air quality and certain new source performance standards. EPA also

proposes a site-specific rulemaking under RCRA to provide regulatory

changes pertaining to air emissions standards to implement this XL

project.

DATES: Comments. All public comments must be received on or before

April 30, 1997. If a public hearing is held, the public comment period

will remain open until May 15, 1997.

Public Hearing. A public hearing will be held, if requested, to

provide interested persons an opportunity for oral presentation of

data, views, or arguments concerning this proposed rule to implement

Merck's XL project. If anyone contacts the EPA requesting to speak at a

public hearing by April 10, 1997, a public hearing will be held on

April 14, 1997. Additional information is provided in the section

entitled ADDRESSES.

Request to Speak at Hearing. Persons wishing to present oral

testimony must contact Ms. Robin Moran at the EPA by April 10, 1997.

Additional information is provided in the section entitled ADDRESSES.

ADDRESSES: Comments. Written comments should be submitted in duplicate

to: Ms. Robin Moran, U.S. Environmental Protection Agency, Region III,

Air, Radiation & Toxics Division, 841 Chestnut Street (3AT23),

Philadelphia, PA, 19107-4431, (215) 566-2064.

Docket. A docket containing supporting information used in

developing this proposed rulemaking is available for public inspection

and copying at U.S. EPA, Region III, 841 Chestnut Street, Philadelphia,

PA, 19107-4431, (215) 566-2064, during normal business hours, and at

EPA's Water docket (Docket name ``XL-Merck''); 401 M Street, SW,

Washington, DC 20460. For access to the Water docket materials, call

(202) 260-3027 between 9:00 a.m. and 3:30 p.m. (Eastern time) for an

appointment. A reasonable fee may be charged for copying. A docket is

also available for public inspection at the Virginia Department of

Environmental Quality, Valley Regional Office, 4411 Early Road, P.O.

Box 1129, Harrisonburg, Virginia 22801-1129, (540) 574-7800.

Public Hearing. If a public hearing is held, it will be held at

7:00 p.m. at the following location: Virginia Department of

Environmental Quality, Valley Regional Office, 4411 Early Road, P.O.

Box 1129, Harrisonburg, Virginia 22801-1129, (540) 574-7800. Persons

interested in attending the hearing should notify Ms. Robin Moran,

(215) 566-2064, to verify that a hearing will be held.

FOR FURTHER INFORMATION CONTACT: Ms. Robin Moran, U.S. Environmental

Protection Agency, Region III, Air, Radiation & Toxics Division, 841

Chestnut Street (3AT23), Philadelphia, PA, 19107-4431, (215) 566-2064.

SUPPLEMENTARY INFORMATION:

Outline of This Document

I. Authority

II. Background

A. Overview of Project XL

B. Overview of the Merck XL Project

1. Introduction

2. Merck XL Project Description

3. Environmental Benefits

4. Stakeholder Involvement

5. Compliance

III. Clean Air Act Requirements

A. Summary of Regulatory Requirements for the Merck XL Project

B. Prevention of Significant Deterioration

1. Requirements of the Clean Air Act

2. Permit Modifications

C. State Implementation Plan Requirements

D. New Source Performance Standards

E. Title V Operating Permit

IV. Resource Conservation and Recovery Act Requirements

V. Additional Information

A. Public Hearing

B. Executive Order 12866

C. Regulatory Flexibility

D. Paperwork Reduction Act

E. Unfunded Mandates Reform Act

I. Authority

This regulation is being proposed under the authority of sections

101(b)(1), 110, 111, 161-169, 169A, and 301(a)(1) of the Clean Air Act,

and sections 1006, 2002, 3001-3007, 3010, and 7004 of the Solid Waste

Disposal Act of 1970, as amended by the Resource Conservation and

Recovery Act, as amended (42 U.S.C. 6905, 6921-6927, 6930, and 6974).

EPA has determined that this rulemaking is subject to the provisions of

section 307(d) of the Clean Air Act.

II. Background

A. Overview of Project XL

This proposed site-specific rule is designed to implement a project

developed under Project XL, an important EPA initiative to allow

regulated entities to achieve better environmental results at less

cost. Project XL--for ``excellence and leadership''--was announced on

March 16, 1995, as a central part of the National Performance Review's

and EPA's effort to reinvent environmental protection. See 60 FR 27282

(May 23, 1995). Project XL provides a limited number of private and

public regulated entities an opportunity to develop their own pilot

projects to provide regulatory flexibility that will result in

environmental protection that is superior to what would be achieved

through compliance with current and reasonably anticipated future

regulations. These efforts are crucial to the Agency's ability to test

new regulatory strategies that reduce regulatory burden and promote

economic growth while achieving better environmental and public health

protection. The Agency intends to evaluate the results of this and

other Project XL projects to determine which specific elements of the

project, if any, should be more broadly applied to other regulated

entities to the benefit of both the economy and the environment.

In Project XL, participants in four categories--facilities,

industry sectors, governmental agencies and communities--are offered

the flexibility

[[Page 15305]]

to develop common sense, cost-effective strategies that will replace or

modify specific regulatory requirements, on the condition that they

produce and demonstrate superior environmental performance. To

participate in Project XL, applicants must develop alternative

pollution reduction strategies pursuant to eight criteria--superior

environmental performance; cost savings and paperwork reduction; local

stakeholder involvement and support; test of an innovative strategy;

transferability; feasibility; identification of monitoring, reporting

and evaluation methods; and avoidance of shifting risk burden.1

They must have full support of affected Federal, state and tribal

agencies to be selected.

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\1\ For more information about the XL criteria, readers should

refer to the May 23, 1995 Federal Register notice (60 FR 27282) and

the December 1, 1995 ``Principles for Development of Project XL

Final Project Agreements'' document, both contained in the docket

for this action.

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The XL program is intended to allow EPA to experiment with untried,

potentially promising regulatory approaches, both to assess whether

they provide benefits at the specific facility affected, and whether

they should be considered for wider application. Such pilot projects

allow EPA to proceed more quickly than would be required to undertake

changes on a nationwide basis. As part of this experimentation, EPA may

try out approaches or legal interpretations that depart from or are

even inconsistent with longstanding Agency practice, so long as those

interpretations are within the broad range of discretion enjoyed by the

Agency in interpreting statutes that it implements. EPA may also modify

rules that represent one of several possible policy approaches within a

more general statutory directive, so long as the alternative being used

is permissible under the statute.

Adoption of such alternative approaches or interpretations in the

context of a given XL project does not, however, signal EPA's

willingness to adopt that interpretation as a general matter, or even

in the context of other XL projects. It would be inconsistent with the

forward-looking nature of these pilot projects to adopt such innovative

approaches prematurely on a widespread basis without first finding out

whether or not they are viable in practice and successful in the

particular projects that embody them. Furthermore, as EPA indicated in

announcing the XL program, the Agency expects to adopt only a limited

number of carefully selected projects. These pilot projects are not

intended to be a means for piecemeal revision of entire programs.

Depending on the results in these projects, EPA may or may not be

willing to consider adopting the alternative interpretation again,

either generally or for other specific facilities.

EPA believes that adopting alternative policy approaches and

interpretations, on a limited, site-specific basis and in connection

with a carefully selected pilot project, is consistent with the

expectations of Congress about EPA's role in implementing the

environmental statutes (so long as the Agency acts within the

discretion allowed by the statute). Congress' recognition that there is

a need for experimentation and research, as well as ongoing re-

evaluation of environmental programs, is reflected in a variety of

statutory provisions, such as sections 101(b) and 103 of the Clean Air

Act. In some cases, as in this XL project, such experimentation

requires an alternative regulatory approach that, while permissible

under the statute, was not the one adopted by EPA historically or for

general purposes.

B. Overview of the Merck XL Project

1. Introduction

This proposed site-specific rule supports a draft permit and

Project XL proposed Final Project Agreement (FPA) that have been

developed by the Merck XL stakeholder group, namely Merck, EPA,

Virginia Department of Environmental Quality (VADEQ), U.S. Department

of the Interior (DOI)/National Park Service (NPS), and community

representatives. Several environmental organizations offered valuable

input during the stakeholder process, including Southern Environmental

Law Center, the Virginia Consortium for Clean Air, and the Natural

Resources Defense Council. The proposed FPA and draft permit are

available for review in the docket for today's action and also are

available on the world wide web at http://www.epa.gov/ProjectXL. The

proposed FPA outlines how the project addresses the eight Project XL

criteria, in particular how the project will produce, measure, monitor,

report, and demonstrate superior environmental benefits. In today's

action, the Agency is soliciting comment on proposed site-specific

regulatory changes to implement the project. The draft permit is

available on the world wide web and in the docket file for today's

action; however the draft permit is made available for informational

purposes only. The Commonwealth of Virginia is conducting the official

comment period for the draft permit, and initiated a public comment

period for the draft PSD permit and a proposed variance on January 28,

1997.

EPA also seeks comment on the proposed FPA, which is available on

the world wide web and in the docket file for today's action, in light

of the criteria outlined in the Agency's May 23, 1995, Federal Register

notice (60 FR 27282) regarding Regulatory Reinvention (XL) Pilot

Projects. Those criteria are: (1) Environmental performance superior to

what would be achieved through compliance with current and reasonably

anticipated future regulations; (2) cost savings or economic

opportunity, and/or decreased paperwork burden; (3) stakeholder

support; (4) test of innovative strategies for achieving environmental

results; (5) approaches that could be evaluated for future broader

application; (6) technical and administrative feasibility; (7)

mechanisms for monitoring, reporting, and evaluation; and (8)

consistency with Executive Order 12898 on Environmental Justice

(avoidance of shifting of risk burden).

2. Merck XL Project Description

The Merck Stonewall Plant is a pharmaceutical manufacturing

facility, built in 1941, located near Elkton, Virginia. The facility is

located approximately 2 kilometers from the Shenandoah National Park, a

Federal Class I area under the Clean Air Act. Currently, the plant

employs about 800 people in a range of pharmaceutical manufacturing

activities such as fermentation, solvent extraction, organic chemical

synthesis, and finishing operations. The facility's products include

broad spectrum antibiotics, anti-parasitic drugs for human and animal

health, a cholesterol lowering drug, a drug for the treatment of

Parkinson's disease, and a new drug for the treatment of human

immunodeficiency virus (HIV).

To remain competitive in the worldwide pharmaceutical industry, the

Merck Stonewall Plant must respond rapidly to changing market

conditions and product demands. To get new pharmaceutical products to

market quickly, Merck requires flexible manufacturing operations that

can make a broad range of products with the same manufacturing

equipment using a wide array of raw materials and solvents. Merck also

continually evaluates existing products for yield and process

improvements, which results in a need for frequent manufacturing

changes. Thus, Merck's facilities often modify environmental permits

after a product line is first permitted.

The goal of this XL project is to develop a regulatory structure

for the

[[Page 15306]]

Merck Stonewall Plant that both facilitates flexible manufacturing

operations and achieves superior environmental performance. The

existing preconstruction air permitting regulations that govern

modifications at the facility, specifically the Prevention of

Significant Deterioration (PSD) permitting regulations and the minor

New Source Review (NSR) regulations, require that most changes to

Merck's manufacturing processes must be reviewed and approved in

advance by the VADEQ. In reviewing permit changes, the VADEQ consults

with the Federal Land Manager (FLM) for Shenandoah National Park in

accordance with the Memorandum of Understanding between the DOI/NPS and

VADEQ. Typically, the more changes that are made or the larger the

change, the more time and resources are necessary for permit review.

The complexity of the regulations requires a considerable effort by the

facility as well as the regulators to prepare and review permit

applications for process modifications.

Merck's XL project seeks to replace this complex permitting system

with a simpler system of compliance with criteria air pollutant

regulations. Through a site-specific rulemaking and enforceable permit

conditions, the facility's total emissions of criteria pollutants

(except lead) 2 would be capped below the level at which the plant

operated over recent years (at approximately 1500 tons per year (TPY)).

Within the site-wide total emissions cap, the facility will also be

subject to individual pollutant caps (subcaps), established near or

below recent actual emission levels, for sulfur dioxide (SO2),

nitrogen oxides (NOX), and particulate matter with an aerodynamic

diameter less than 10 microns (PM10). In addition to accepting

these site-wide emissions caps, Merck will modify its existing coal-

burning powerhouse to burn natural gas, a cleaner burning fuel that

generates substantially fewer emissions than coal. Either propane or

number 2 fuel oil would be used as a backup fuel. This multi-million

dollar project is not otherwise required by regulations and the boilers

do not need to be replaced for other reasons (e.g., operation, age or

capacity). The powerhouse conversion would result in an up-front

estimated reduction of over 900 TPY of actual criteria air pollutants,

primarily SO2 and NOX emissions. After this powerhouse

conversion, Merck would reduce its total emissions cap by 20 percent,

thereby permanently retiring at least 300 TPY of criteria pollutant

emissions. Further, Merck also will reduce the pollutant-specific

subcaps for SO2 and NOX by 25 percent and 10 percent,

respectively.

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\2\ The criteria pollutants included in the total emissions cap

are sulfur dioxide, nitrogen oxides, carbon monoxide, ozone (using

volatile organic compounds as a surrogate), and particulate matter

with aerodynamic diameter less than 10 microns. Thus, the total

emissions cap includes all existing criteria pollutants except lead.

Merck will comply directly with any applicable requirements for the

control of lead emissions. Merck currently emits a very low amount

of lead emissions (0.3 tons per year), which will be virtually

eliminated when the facility converts the coal-burning powerhouse to

natural gas. Merck also will comply directly with any applicable

requirements for new criteria pollutants which are not included in

the total emissions cap.

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Merck's XL project would be implemented through issuance of a site-

wide PSD permit, authorized by this proposed site-specific rulemaking.

For the reader's convenience, a copy of the draft PSD permit is

included in the docket for today's action. Under the site-specific rule

and permit, the Merck Stonewall Plant would be required to maintain its

emissions below the total emissions cap, as well as the subcaps for

SO2, NOX and PM10. Under the site-wide emissions caps,

changes or additions to facility operations would no longer need prior

approval under PSD or NSR. The subcaps will keep SO2 and NOX

emissions below recent actual emission levels and PM10 emissions

will not significantly increase above the recent actual emissions

level. The statutory PSD requirements for the VOC and CO emission

increases that are possible under the total emissions cap will be

satisfied pursuant to this site-specific rule and the PSD permit. So

long as the facility complies with the total emissions cap, subcaps,

and other permit requirements, it would have the flexibility to make

modifications and to operate in a manner that supports Merck's

objective to deliver high quality products quickly and efficiently to

improve human and animal health without undergoing permit review for

each modification.

As an alternative to the current PSD permitting system, the total

emissions cap and subcaps will provide an incentive for Merck to

identify and promptly implement ongoing emission reductions at the

facility to provide operating room under the cap for future

modifications and expansions. The XL project also provides an

additional incentive for Merck to minimize emissions--a system of

``tiered'' monitoring, recordkeeping and reporting requirements. The

draft permit provides that the monitoring, recordkeeping and reporting

requirements become more stringent as the facility's actual emissions

approach the total emissions cap. This tiered monitoring system

provides Merck another built-in incentive to minimize emissions and to

find opportunities to implement emission reductions.

3. Environmental Benefits

The Merck XL Project is designed to deliver superior environmental

performance while allowing flexible operations at the facility. The

site-specific rule and simplified air permit would provide significant

benefits to the environment by substantially reducing pollutant

emissions near the Shenandoah National Park and the surrounding

community.

The Merck Stonewall Plant is located within 2 kilometers of

Shenandoah National Park, a Federal Class I area. The facility's

proximity to this nationally significant resource highlights the need

for serious consideration of opportunities for better protection of the

environment. Air quality is of special concern in Shenandoah National

Park. Under the Clean Air Act, as amended in 1977, Shenandoah National

Park was classified as a mandatory Federal Class I air quality area.

Under the PSD program, the Federal Class I designation allows very

little additional deterioration of the air quality from established

baseline concentrations of certain air pollutants, and none of National

Ambient Air Quality Standards (NAAQS) are to be exceeded. The DOI's

Assistant Secretary for Fish and Wildlife and Parks is the Federal Land

Manager (FLM) charged with direct responsibility to protect the air

quality related values (AQRVs) of the Park. In 1990, the FLM for

Shenandoah National Park notified the public that visibility is

seriously degraded, that sensitive streams and watersheds are being

acidified, and that park vegetation is being injured by ozone and

sulfur dioxide levels. See 55 FR 38403-38408 (September 18, 1990).

Certain criteria pollutants have been demonstrated to have a

significant adverse effect on the environmental quality of the

Shenandoah National Park. In particular, SO2 emissions contribute

to visibility problems in the region, and NOX emissions combine

with other chemicals in the atmosphere to form ground-level ozone,

which has been determined to cause vegetation damage. Emissions of

SO2 and NOX also contribute to the formation of acid rain and

associated adverse impacts. Merck's powerhouse conversion would achieve

an up-front reduction of these pollutants--SO2 emissions are

expected to decrease by 679 TPY (94 percent) and NOX emissions are

expected to decrease by 254 TPY (87 percent), from baseline

[[Page 15307]]

actual emission levels. After the powerhouse conversion, the total

emissions cap and subcaps would ensure a continuing, permanent

reduction of these pollutants, as well as provide an ongoing incentive

to minimize actual emissions to preserve the operating margin under the

caps. Besides the significant reduction in criteria pollutants

resulting from the project, the conversion to natural gas also will

result in a reduction of about 47 TPY (65 percent) of hazardous air

pollutants (HAPs), specifically hydrogen chloride and hydrogen

fluoride. These two HAPs are generated by burning coal and are also

associated with the formation of acid rain. Reducing emissions of these

chemicals also will contribute to efforts to improve air quality in the

Shenandoah National Park and the surrounding community.

Although the facility's VOC and CO emissions would be allowed to

increase above recent actual emission levels (but within the total

emissions cap), there are no identified adverse effects from the

maximum allowable levels of these pollutants under the total emissions

cap. Moreover, the statutory PSD requirements for VOC and CO will be

satisfied pursuant to this proposed site-specific rulemaking and

issuance of the PSD permit. Section III.B.1 of the preamble describes

the analysis of possible VOC and CO emission increases.

4. Stakeholder Involvement

The Merck XL project enhances the involvement of the community and

other stakeholders in understanding and evaluating environmental

impacts of the facility. Stakeholders will have an unprecedented

opportunity to participate in the ongoing evaluation of the project and

to recommend any necessary changes to the project. The draft PSD permit

provides that the stakeholders review and evaluate the project at least

every five years. If the project signatories (i.e., signatories to the

Final Project Agreement, namely EPA, VADEQ, Merck, DOI Federal Land

Manager, and Rockingham County Board of Supervisors) give full consent

to any necessary permit changes, the permitting authority may process a

permit modification according to the requisite permit modification

procedures (see Section III.B.2 of this preamble and proposed

Sec. 52.2454(n)). Any stakeholder may raise issues about the project at

any time for discussion by the stakeholder group. The draft permit

(Condition 6.1) identifies numerous issues that may be considered by

the project stakeholders during each five year review, including: (1)

Significant changes in emissions calculation methods; (2) changes in

the list of criteria pollutants or the NAAQS; (3) review of example

``good environmental engineering practice'' control technologies

required for significant new installations or modifications; (4)

adequacy of the monitoring, recordkeeping and reporting requirements;

(5) review procedure for compliance with newly-applicable criteria

pollutant regulations; (6) review of the permit termination criteria;

(7) review of ambient modeling for short-term PM10 and SO2

emissions; (8) review of the determination that the area is NOx-limited

for ozone formation; and (9) review of the periodic review criteria. In

addition to these five-year review criteria, the stakeholders,

including the National Park Service, also will be involved in

considering project changes based on the review of the effects of VOC

emissions on AQRVs in Shenandoah National Park and the review of the

public health effects of VOC emissions, if VOC emissions at the site

reach specified threshold levels. See Condition 6.2 of the draft PSD

permit. The review criteria related to VOC emissions are described in

more detail in Section III.B.1 of the preamble.

The draft PSD permit (Condition 12.6) defines ``project

stakeholders'' as the project signatories to the FPA (i.e., EPA, VADEQ,

Merck, DOI Federal Land Manager, and Rockingham County Board of

Supervisors), plus other parties as follows: (1) Up to three other

community representatives shall be included as nominated by the

Rockingham County Board of Supervisors, and agreed to by full consent

of the project signatories to the FPA. Community representatives are

defined as local government and/or community residents with an ongoing

stake in the project; and (2) Up to one representative from a regional

public interest group shall be included as nominated by any project

signatory and agreed to by full consent of the project signatories.

This group of stakeholders will convene every five years to review

whether changes to the permit are required. As discussed above, the

draft permit establishes that full consent from the project

signatories, and not each member of the stakeholder group, is necessary

before permit changes can be made. This stakeholder process for five-

year reviews is consistent with the process used in the development of

the proposed FPA and draft permit. The Chairman of the Rockingham

County Board of Supervisors is the signatory to the FPA (i.e., a

project signatory) representing community interests. The three

additional members of the community team (two neighbors of the Merck

Stonewall Plant and the Town Manger of Elkton) also actively

participated in the stakeholder group. The County was designated as a

project signatory at the request of the community team in order to

insure long-term representation and continuity of community

interests.3 This model of stakeholder involvement provided all

stakeholders with full information and ability to shape the development

of the project. EPA believes that it is an appropriate model which

should apply in the same manner for the future evaluation of the

project.

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\3\ See July 1, 1996 letter from the Merck XL community

representatives to the County Administrator and Members of the

Rockingham County Board of Supervisors (contained in the docket).

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EPA has received comments expressing concerns about the adequacy of

the role of the stakeholders who are not also signatories--the regional

public interest group and the three community representatives other

than the Rockingham County Board of Supervisors.4 As described

above, the draft permit establishes that full consent from the project

signatories is needed to make permit changes (i.e., to recommend that

the permitting authority process a permit modification). EPA interprets

the permit to be designed such that the non-signatory stakeholders will

be fully involved in the deliberation of all permit issues, as in the

development of the Merck XL project. During the development of the

Merck XL project, all stakeholders, as well as several environmental

groups that were not part of the stakeholder group, provided valuable

comments on the draft permit. These comments were fully considered by

the project signatories and helped to shape the project. EPA expects

that the same interaction among stakeholders will occur during the

five-year permit reviews, and that the project signatories will fully

consider concerns and issues raised by all the stakeholders before

reaching decisions on permit changes. EPA invites public comment on the

approach to stakeholder involvement

[[Page 15308]]

during the implementation of this XL project.

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\4\ See December 18, 1996 letter from David W. Carr, Jr., Staff

Attorney, Southern Environmental Law Center, to EPA Administrator

Carol Browner and Deputy Assistant Administrator Richard D. Wilson;

December 18, 1996 letter from Betty S. Sellers, Community

Representative-Merck XL Project, to EPA Administrator Carol Browner

and Regional Administrator Michael McCabe; and December 20, 1996

letter from Betty S. Sellers to EPA Administrator Carol Browner and

Deputy Assistant Administrator Richard D. Wilson (contained in the

docket).

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This XL project also greatly improves the stakeholders' access to

information about the site's environmental performance. Merck will

provide the stakeholders, and other interested parties, an annual

progress report that describes the site's environmental performance

under the XL project. This report will include a summary of the site's

actual emissions and the total emissions cap and subcaps, a description

of emissions prevented as a result of operating under this proposed

rule and the PSD permit, and other information about the site's

operations.

5. Compliance

Under the terms of this proposed rule and the draft PSD permit,

Merck's actual emissions of criteria pollutants cannot exceed the total

emissions cap, and emissions of SO2, NOx and PM10 cannot

exceed the individual subcaps for the life of the permit. Compliance

with the site-wide total emissions cap and the subcaps will be

determined by using a 12-month rolling total calculation of the site's

actual emissions. The site-wide emissions will be calculated by using

methods described in the permit. In addition to submitting to the

project signatories semi-annual reports documenting the site's

emissions, Merck will submit an annual progress report to the project

stakeholders and other interested parties (as described in the previous

section).

This proposed rule and draft permit will provide EPA and VADEQ with

greater authority to enforce the terms of the permit. As with all

permits, the permit terms can be enforced through standard procedures

under the Clean Air Act (Act). In addition, unlike typical PSD permits,

the draft permit expressly allows for termination of the permit under

the following conditions: (1) If EPA or VADEQ determines that

continuation of this permit is an imminent and substantial endangerment

to public health or welfare, or the environment; (2) if Merck knowingly

falsifies emissions data; (3) if Merck fails to implement the

powerhouse conversion project within 30 months after the effective date

of the PSD permit; (4) if Merck receives four consent orders or two

judgments adverse to Merck arising from non-compliance with this permit

in a five year period that are deemed material; (5) upon full consent

of all project signatories; (6) if Merck's actual emissions exceed the

total emissions cap; and (7) for other reasons for which the VADEQ has

statutory authority to terminate the permit.

EPA and VADEQ will continue to possess all the administrative and

judicial authority to enforce the provisions of the site-specific rule

and permit that is currently available under sections 113 and 307 of

the Act and under Virginia law.5 This site-specific rule and the

PSD permit would not limit the authority of EPA or VADEQ to take

administrative enforcement measures or to seek legal or equitable

relief to enforce the terms of this rule or the permit, including, but

not limited to, the right to seek injunctive relief, and imposition of

statutory penalties, fines and/or punitive damages. Further, this site-

specific rule and the permit would not limit the authority of EPA or

VADEQ to undertake any actions in response to conditions which present

an imminent and substantial endangerment to public health or welfare,

or the environment.

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\5\ EPA plans to delegate the site-specific PSD rule (40 CFR

52.2454) to the VADEQ upon promulgation.

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III. Clean Air Act Requirements

A. Summary of Regulatory Requirements for the Merck XL Project

The alternate regulatory system that would be established under

this proposed site-specific rule and the draft permit addresses the

existing criteria pollutants (and does not include lead). Merck will

fully comply with all requirements for the control of HAPs, including

the forthcoming Maximum Achievable Control Technology (MACT) standard

for the pharmaceutical industry. Merck also will comply with all

existing and future environmental requirements not specifically amended

pursuant to EPA's site-specific rulemaking for this project or pursuant

to the variance expected to be approved by the Commonwealth of

Virginia.

In today's action, EPA proposes a site-specific PSD rule for the

Merck Stonewall Plant in order to implement the proposed XL project for

the site. See proposed Sec. 52.2454. This site-specific rule would

replace (in most circumstances) the existing PSD rules at 40 CFR 52.21

for the Merck Stonewall Plant only, and would establish the legal

authority to issue the PSD permit to the Merck Stonewall Plant. The

proposed site-specific PSD requirements are described in Section

III.B.1 of this preamble.

EPA also proposes a site-specific rule which establishes an

alternative means of compliance for the Merck Stonewall Plant for two

New Source Performance Standards (NSPS)--Subpart Db (Standards of

Performance for Industrial-Commercial-Institutional Steam Generating

Units) and Subpart Kb (Standards of Performance for Volatile Organic

Liquid Storage Vessels). For NSPS other than Subpart Kb that may become

applicable to the site in the future, EPA proposes an alternative

compliance provision that would allow the facility the option of

complying with the NSPS by reducing its site-wide emissions caps.

However, under this latter approach, EPA has an opportunity to require

Merck to comply directly with the applicable NSPS. These alternate

compliance provisions are necessary to implement a simpler compliance

approach for the facility that is more consistent with the principles

of the site-wide emissions caps. The alternate compliance provisions

are described further in Section III.D of this preamble.

On January 28, 1997, VADEQ initiated public comment on a proposed

variance for the Merck Stonewall Plant, pursuant to section 10.1-1307

of the Virginia Air Pollution Control Law. 6 The VADEQ plans to

request that the State Air Pollution Control Board approve the variance

for Merck in April 1997. Among other things, the variance would provide

Merck an alternate means of compliance with newly-applicable criteria

pollutant regulations promulgated by the VADEQ. This alternate

compliance option would allow Merck in most situations either to comply

with new criteria pollutant regulations as written, or to reduce the

total emissions cap (or subcaps, depending on the pollutant) by an

equivalent amount of emission reductions. VADEQ also plans in the

future to promulgate a source-specific regulation for the Merck XL

project that would serve as an alternate to the regulations cited in

the draft permit. EPA understands that VADEQ plans to submit this

regulation to the EPA for approval as a source-specific SIP revision.

EPA would then take action on the expected source-specific SIP revision

in a future rulemaking action. This approach is described further in

Section III.C of this preamble.

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\6\ This variance provision previously has been approved into

the Virginia SIP at 40 CFR 52.2420(c) (15) and (89).

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In addition to Clean Air Act requirements, the Merck XL project

would establish alternate regulatory requirements for the Resource

Conservation and Recovery Act (RCRA) air emission standards. These

requirements are described in Section IV of the preamble.

[[Page 15309]]

B. Prevention of Significant Deterioration

1. Requirements of the Clean Air Act

The NSR program is a preconstruction review and permitting program

applicable to new or modified stationary sources of air pollutants

regulated under the Act. In attainment areas (i.e., areas meeting the

NAAQS), the NSR requirements for the prevention of significant

deterioration of air quality (PSD) under part C of title I of the Act

apply. The PSD provisions of the Act are a combination of air quality

planning and air pollution control technology program requirements for

new or modified stationary sources of air pollution. Each SIP is

required to contain a preconstruction review program for the

construction and modification of any stationary source of air pollution

to assure that the NAAQS are achieved and maintained; to protect areas

of clean air; to protect AQRVs (including visibility) in national parks

and other natural areas of concern; to assure appropriate emission

controls are applied; to maximize opportunities for economic

development consistent with the preservation of clean air resources;

and to ensure that any decision to increase air pollution is made only

after full public consideration of all the consequences of such a

decision. See sections 101(b)(1), 110(a)(2)(C) and 160 of the Act.

The Merck Stonewall Plant is located in an area that meets the

NAAQS for all criteria air pollutants (attainment area) and, thus, the

PSD program under part C of title I of the Act applies. Today, EPA

proposes a site-specific PSD rule for the Merck Stonewall Plant in

order to implement the proposed XL project for the site. Below, EPA

describes how the proposed site-specific rule satisfies the statutory

PSD permitting criteria in section 165(a) of the Act.

Sections 165(a)(1) and 169(2)(c) require Merck to obtain a permit

for a proposed modification setting forth emission limitations which

conform to the requirements of part C of title I of the Act. The

proposed site-specific rule would authorize a permit to be issued to

Merck based, in part, on the establishment of a site-wide emissions cap

for criteria air pollutants (total emissions cap). The criteria

pollutants included in the total emissions cap are SO2, NOX,

PM10, CO and ozone (using VOC as a surrogate). Thus, all existing

criteria pollutants except lead are included in the total emissions

cap. Merck would comply directly with any applicable requirements,

including the existing PSD regulations at 40 CFR 52.21, for the control

of lead emissions and any new criteria pollutants promulgated by

EPA.7 Further, Merck will comply with any applicable requirements,

including the existing PSD regulations at 40 CFR 52.21 for emissions of

non-criteria air pollutants (e.g., hydrogen sulfide, total reduced

sulfur).8

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\7\ The Commonwealth of Virginia currently implements 40 CFR

52.21 under a delegation of authority from EPA. See 40 CFR 52.2451.

\8\ If Merck were to emit significant quantities of non-criteria

air pollutants regulated under 40 CFR 52.21, Merck would be required

to comply directly with any applicable requirements for these

pollutants. For the Merck Stonewall Plant only, EPA proposes in this

rulemaking to extend the policy set forth in the October 16, 1995

policy memorandum entitled ``Definition of Regulated Pollutant for

Particulate Matter for Purposes of Title V,'' which is contained in

the docket for this rulemaking, to consider PM10, and not

particulate matter, as the regulated form of particulate matter for

purposes of PSD applicability.

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This proposed rule would require the PSD permit to contain initial

site-wide emissions caps based on the site's actual emissions during a

time period, within five years of permit issuance, which represents

normal site operation, or a different time period if it is more

representative of normal source operation. The PSD permit that would be

issued in accordance with the proposed site-specific rule would require

the baseline for establishing the site-wide emissions caps to be the

annual average of the facility's actual criteria pollutant emissions

during 1992 and 1993, the recent years considered most representative

of typical operations. Under the total emissions cap, emissions of

SO2, NOx and PM10 would also be capped (subcaps) at the 1992-

93 actual emissions baseline. After the facility converts its coal-

burning powerhouse to natural gas, the total emissions cap would be

reduced by 20% from the baseline level. This cap adjustment will result

in a permanent retiring of approximately 300 tons per year (TPY) of

total criteria pollutants. Similarly, the subcaps for SO2 and NOx

will be reduced by 25% and 10%, respectively, after the powerhouse

conversion. Detailed information about the establishment of the

emission caps, including documentation of the baseline emissions

calculations, is contained in the docket for today's action.

Merck will be allowed to vary its emission levels under the total

emissions cap, constrained by the individual pollutant subcaps.

Modifications at the facility that normally would be considered to

result in emission increases would no longer need prior approval by the

permitting authority under PSD or minor NSR, based on the facility's

site-wide, federally-enforceable emission limitations. The emission

limitations would keep SO2 and NOx emissions well below recent

actual emissions. The emission limitations for PM10 will not

significantly increase above the recent actual emissions level.

Emissions of VOC and CO will not have subcaps, however, the statutory

PSD requirements for increases of VOC and CO will be satisfied pursuant

to this site-specific rulemaking.

The individual pollutant subcaps for SO2, NOx, and PM10

function similarly to plantwide applicability limits (PALs),9 but

with important distinctions. A PAL is an emissions cap established for

a particular pollutant for PSD (or nonattainment NSR) applicability

purposes only. Under a PAL, a source could make modifications without

triggering PSD as long as emissions remain below the PAL. If a source

needed to make a modification that would increase emissions above the

PAL, the source would be able to make the modification after undergoing

PSD or NSR review and obtaining the necessary permits. Unlike a PAL,

under the site-specific rule and permit Merck will no longer be able to

obtain additional PSD permits to increase emissions above the caps. In

fact, pursuant to this site-specific rule, if Merck's emissions were to

exceed the site-wide total emissions cap, the EPA or VADEQ could

terminate the permit (See section II.B.5 of this preamble).

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\9\ See New Source Review Reform proposal, 61 FR 38264-38266

(July 23, 1996).

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Section 165(a)(2) of the Act requires the proposed permit to be

subject to a review in accordance with section 165 of the Act, the

required analysis to be conducted in accordance with regulations

promulgated by the Administrator, and a public hearing to be held. This

proposed site-specific rule would establish the applicable site-

specific PSD regulations for the Merck Stonewall Plant, and would

therefore form the basis for the analysis required by section 165(a)(2)

of the Act. The draft PSD permit that would be issued to the Merck

Stonewall Plant under the authority of the new site-specific PSD rule

is available to the public and contained in the docket file for this

rulemaking. While the Agency may receive public comments on the draft

PSD permit during the public comment period for this proposed

rulemaking, in many instances the Agency may simply forward any such

comments to VADEQ which will conduct the official public comment period

and public hearing for

[[Page 15310]]

the proposed permit.\10\ On January 28, 1997, the VADEQ began a public

comment period for the proposed PSD permit and a proposed variance that

will serve as the Commonwealth's legal mechanism to issue the PSD

permit to Merck. The VADEQ plans to request that the Virginia State Air

Pollution Control Board approve the variance in April 1997. Once EPA's

final site-specific rule for the Merck Stonewall Plant is promulgated,

EPA plans to delegate to VADEQ the authority to issue the permit

pursuant to the site-specific PSD rule. The VADEQ will have authority

to issue the PSD permit to Merck after the Virginia State Air Pollution

Control Board approves the variance and after this delegation is

complete.

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\10\ The VADEQ currently implements the PSD program at 40 CFR

52.21 under a delegation of authority from EPA. See 40 CFR 52.2451.

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Section 165(a)(3) of the Act requires the owner or operator of a

proposed major emitting facility to demonstrate that emissions from

construction or operation of the facility will not cause or contribute

to air pollution in excess of any (a) maximum allowable increase (PSD

increments), (b) national ambient air quality standards (NAAQS), or (c)

any other applicable emission standard or standard of performance.

Under the existing PSD rules at 40 CFR 52.21 (k) and (m), the Merck

permit would not need a PSD increment or NAAQS compliance analysis,

since emissions of SO2 and NOX will not be increased above

baseline levels, and emissions of PM10 will not be increased

significantly above baseline levels. Further, the subcaps for SO2

and NOX will be reduced by 25% and 10%, respectively, below

baseline levels after completion of the powerhouse conversion. EPA

proposes that this site-specific rule also not require a PSD increment

or NAAQS compliance analysis for pollutants which will be capped near

or below baseline emissions levels.11 The draft PSD permit would

not cause or contribute to emissions in excess of any other applicable

emission standard or standard of performance. For more information, see

the permit support document contained in the docket file and Sections

III. C and D of this preamble.

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\11\ Although VOC and CO emissions may increase, there are no

PSD increments for VOC and CO.

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To assure continued compliance with the NAAQS consistent with the

minor NSR program, Merck conducted dispersion modeling to demonstrate

that it does not cause or contribute to a violation of the short-term

PM10 and SO2 NAAQS. This modeling was based on worst case

emission rates. The modeling results added to background levels

indicate that the short-term NAAQS for PM10 and SO2 would not

be violated. Merck's maximum modeled impact was 15% of the 3-hour

SO2 NAAQS, 13% of the 24-hour SO2 NAAQS, and 10% of the 24-

hour PM10 NAAQS. Merck also modeled the worst-case CO emissions

that could be achieved under the total emissions cap. The modeling

demonstrated that Merck's maximum modeled impact would not exceed 1% of

the CO NAAQS. The permit support document contained in the docket

includes a description of the modeling analysis.

Based on the modeling results and other information provided in

support of the draft permit, EPA believes that modifications at the

site occurring within the first five year period of the permit that

comply with this proposed rule and the permit will not cause or

contribute to a violation of the NAAQS for the criteria pollutants

included in the total emissions cap. Merck's ambient impact will be

reevaluated as prescribed in the permit during each five year periodic

review. Condition 6.1.7 of the draft permit requires that Merck perform

an updated modeling analysis for SO2 and PM10 at each five

year review period, if requested by EPA or VADEQ, if major changes have

been made at the site that are not reflected in the most recent

modeling analysis. Merck must submit to the project stakeholders

information necessary to determine whether additional modeling is

required. Such information includes, but is not limited to, the

following: (1) The current plant configuration, including building

locations and dimensions; and (2) information on emission sources,

including stack dimensions, operating parameters, and emission rates

for actual operating conditions as well as worst case short-term (3 and

24-hour) operating conditions.

As Merck operates under the total emissions cap, it is permissible

that over time VOC emissions will increase above the baseline VOC

levels. The Merck Stonewall Plant is located in an area that is

generally recognized to be NOX-limited for ozone formation. The

term ``NOX-limited'' means that the amount of NOX available

is generally the controlling factor in determining how much ozone will

be formed. In a NOX-limited area, reduced NOx emissions will

result in reduced ozone formation, and increased NOX emissions

will result in increased ozone formation. Further, increased VOC

emissions generally will not result in additional ozone formation

unless accompanied by additional NOX emissions.

A report contained in the docket analyzed the worst case potential

impact of VOC emissions on ozone formation in the area, based on an

evaluation of urban airshed modeling developed for State Implementation

Planning purposes in two urban areas. The potential for ozone formation

was evaluated under the following worst case conditions: (1) If Merck

were located in a VOC-limited area; (2) if the reactivity of Merck's

VOC emissions were significantly higher than typical VOCs currently

emitted at the facility (i.e., if the reactivity of Merck's VOC

emissions were that of typical urban air or auto exhaust); and (3) if

Merck's VOC emissions consumed the entire site-wide cap (i.e., a VOC

emissions increase of approximately 600 TPY). Under this worst case

scenario, which is highly improbable, the expected ozone increase from

Merck's VOC emissions would be less than 1 g/m\3\ (.5 ppb),

which is less than 0.5% of the ozone NAAQS. EPA believes that this is a

highly conservative worst case analysis and that the potential ozone

formation would be negligible under actual conditions. The worst case

scenario is highly conservative because in actuality: (1) Merck is

located in a NOX-limited area; (2) the reactivity of the typical

VOC emissions currently emitted by Merck is much lower than that of

typical urban air or auto exhaust; and (3) it is unlikely that VOC

emissions could consume Merck's entire site-wide cap, since a portion

of the cap necessarily will be consumed by SO2, NOX,

PM10 and CO from combustion sources (e.g., the natural gas-fired

boilers) and other sources at the facility. Moreover, the NOX

emission reductions achieved as a result of Merck's powerhouse

conversion and the establishment of permanent NOX subcaps should

help to reduce local ozone formation. Therefore, EPA believes that the

maximum potential VOC emission increases allowed under Merck's site-

wide cap will continue to provide protection of the ozone NAAQS.

One of the five-year periodic review criteria in the draft permit

provides that any project stakeholder may present technical papers or

studies that change the recognized determination that the area is

NOX-limited for ozone formation. Based on the stakeholders''

evaluation of this information, changes to the project may be

considered if necessary.

Section 165(a)(4) of the Act requires the proposed facility to be

subject to the best available control technology for each pollutant

subject to regulation

[[Page 15311]]

under the Act emitted from such facility. Section 169(3) of the Act

defines ``best available control technology'' (BACT) as an emission

limitation based on the maximum degree of reduction of each pollutant

subject to regulation under the Act emitted from or which results from

any major emitting facility, which the permitting authority, on a case-

by-case basis, taking into account energy, environmental, and economic

impacts and other costs, determines is achievable for such facility

through application of production processes and available methods,

systems, and techniques, including fuel cleaning, clean fuels, or

treatment or innovative fuel combustion techniques for control of each

such pollutant.

Under the existing PSD rules at 40 CFR 52.21(j), the Merck permit

would be required to apply BACT only for pollutants which would be

allowed to increase above the significance levels in 40 CFR

52.21(b)(23). Under the site-wide emissions caps, VOC and CO are the

only pollutants that can be increased above the existing PSD

significance levels (i.e., 40 TPY for VOC and 100 TPY for CO). EPA

proposes that this site-specific rule also require BACT (according to

the interpretation proposed below) only for pollutants which will be

allowed to increase significantly under the permit (i.e., VOC and CO).

For purposes of this site-specific rule only, EPA proposes to interpret

section 165(a)(4) to allow the BACT determination for the Merck

Stonewall Plant to take into account the environmental impacts and

benefits of foregoing traditional BACT for VOC and CO emission

increases, and associated compliance costs, in favor of an innovative

BACT determination for VOC and CO emission increases which relies on

otherwise voluntary SO2 and NOX reductions from the

powerhouse conversion and the site-wide emissions caps. Merck will

implement the powerhouse conversion solely as a means of achieving

superior environmental benefit under Project XL. There are no current

or reasonably anticipated regulatory requirements that would require

Merck to replace the coal boilers with natural gas boilers, and the

boilers do not need to be replaced for other reasons (e.g., age,

capacity, performance). The existing coal-fired boilers that will be

replaced were installed in 1982 and have a useful life of about 40

years. Merck estimates that the powerhouse conversion will cost

approximately $10 million in capital cost, and an additional $1 million

per year in increased operational costs due to the currently higher

price of natural gas.

The environmental benefits from the powerhouse conversion include

over 900 TPY (60% of baseline) of up-front criteria pollutant emission

reductions (SO2 and NOX) and about 47 TPY (65% of baseline)

of HAP emissions reductions (hydrogen chloride and hydrogen fluoride).

The 20 percent reduction of the total emissions cap after the

powerhouse conversion will ``lock-in'' at least 300 TPY of these

SO2 and NOX reductions. Further, Merck will have permanent

site-wide emissions caps for SO2 and NOX, established at

levels 25% and 10%, respectively, below recent actual emissions. These

caps will permanently lock in a significant portion of the

environmental benefit from the powerhouse conversion, and provide

incentives for Merck to minimize actual emissions in order to preserve

an operating margin for future growth. The environmental benefits from

the powerhouse conversion and emissions caps include the following: (1)

Visibility in nearby Shenandoah National Park should be improved from

the SO2 reductions; (2) acid deposition should be reduced from the

substantial SO2 and NOX reductions, as well as the hydrogen

chloride and hydrogen fluoride reductions; and (3) local ozone

formation should be reduced from the NOX reductions.

EPA proposes that the significant environmental benefits from the

powerhouse conversion and site-wide emissions caps should be considered

when determining appropriate BACT for future VOC and CO emission

increases under the total emissions cap. EPA believes this is an

approach that, while not the one historically adopted by the Agency

under section 165(a)(4), merits consideration on a pilot project basis.

If the project demonstrates that such an approach leads to superior

environmental and economic results and if EPA determines that such an

approach is transferrable to other situations, it could be considered

for broader application. EPA emphasizes that this innovative approach

to BACT determinations is not being adapted at this time for any source

other than the Merck Stonewall Plant, and that the decision to make it

available at this facility takes into account the totality of the

obligations undertaken by Merck in this project. Thus, EPA believes

that the BACT determination may consider the innovative nature of the

site-wide emissions caps, and the tiered monitoring approach, in

providing incentives for Merck to minimize actual emissions. In

addition, the proposed rule would require Merck to install ``good

environmental engineering practice'' technology on significant new

installations or significant modifications for pollutants covered by

the site-wide emissions cap. The draft PSD permit includes examples of

emission controls that qualify as good environmental engineering

practice technology in the pharmaceutical or batch processing industry.

For example, for VOC control, the draft permit lists carbon adsorption,

condensation, or thermal oxidation as example control technologies that

could be used depending on the concentration and flow rate of the VOC

streams. The EPA believes that the combination of substantial SO2

and NOX reductions, site-wide emissions caps, and the good

environmental engineering practice requirement satisfy the statutory

BACT requirement for possible VOC and CO emission increases as

authorized in this site-specific rule.

There are several other aspects of the Merck XL project that will

serve to keep VOC emissions well-controlled as Merck operates under the

site-wide cap. First, Merck will comply with all requirements for the

control of HAPs under section 112 of the Act, including the forthcoming

MACT standard for the pharmaceutical industry. EPA expects that the

pharmaceutical MACT standard will require control of emissions from

process vents, wastewater, equipment leaks, and storage tanks. Merck's

compliance with the pharmaceutical MACT will also provide co-control of

some VOC emissions. For example, if a process vent stream contains HAPs

as well as VOCs (or HAPs that are also VOC), the VOCs emissions would

likely be controlled in accordance with the MACT standard. Second,

Merck will conduct property line modeling of non-HAP VOCs to determine

whether the emission levels are protective of public health. This

modeling will be conducted when VOC emissions reach 125% of the VOC

baseline (i.e., 510 TPY) and whenever VOC emissions increase by

additional 100 TPY increments (i.e., 610 TPY, 710 TPY, and 810 TPY).

This draft PSD permit provision (Condition 6.2.2) was developed to

address the community stakeholders' concerns about the potential public

health effects of Merck's VOC emissions. Third, the tiered monitoring

provisions were designed to create an added incentive for Merck to

minimize actual emissions. The monitoring, recordkeeping and reporting

requirements increase in stringency as Merck's actual emissions

approach the cap. This approach creates an incentive for Merck to

minimize VOC emission increases, through the use of

[[Page 15312]]

good emissions control technology, pollution prevention, or other

techniques, so that site-wide emissions remain in the lowest tier of

monitoring.

The EPA acknowledges that the BACT provisions, as well as other

provisions, of this proposed rule and the draft permit are in some ways

in conflict with existing Agency guidance and interpretations of the

Act. The Agency believes that it nonetheless has authority to apply

today's proposed rule and the draft permit to Merck under Project XL as

a unique, site-specific pilot project to explore and evaluate this

innovative approach to environmental regulation consistent with the

Act.

Section 165(a)(5) of the Act requires that major emitting

facilities comply with the provisions of section 165(d) with respect to

Federal Class I areas. Section 165(d)(2) provides that the FLM and the

Federal official charged with direct responsibility for management of

any Federal lands within a Class I area have an affirmative

responsibility to protect the AQRVs (including visibility) of such

lands. The FLM has a responsibility to consider, in consultation with

the EPA Administrator, whether a proposed major emitting facility will

have an adverse impact on any AQRV.

The U.S. Department of the Interior (DOI) is the FLM for the

Shenandoah National Park, a Federal Class I area within 2 kilometers of

the Merck Stonewall Plant. The DOI, specifically the National Park

Service (NPS), is a key stakeholder in developing the Merck XL project.

Issues involving the potential impacts of the project on AQRVs in the

Park were discussed at length among the project stakeholders. Because

Merck will convert its powerhouse from burning coal to natural gas, the

proposed XL project will achieve significant up-front reductions of

SO2 and NOX, two pollutants associated with existing adverse

impacts on the Park.12 Another pollutant of concern is ozone,

because of its potential effects on park resources, such as vegetation.

However, ozone levels are not expected to increase as a result of this

project. As explained above, the area generally is considered to be

NOX-limited for purposes of ozone formation and, therefore,

increases in VOC emissions are not expected to cause increased ozone

levels without additional increases of NOX. Thus, the allowable

increase of VOC emissions under Merck's total emissions cap is not

likely to contribute significantly to ozone formation, as described

above. Moreover, the Merck XL project should help reduce the formation

of local ozone due to decreases in NOX emissions.

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\12\ See 55 FR 38403-38408 (September 18, 1990).

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Aside from the impact of VOC emissions as a precursor to ozone

formation, the FLM also expressed concern during the Merck XL

stakeholder discussions regarding the potential impacts of future VOC

emissions increases directly on AQRVs in the Park. Therefore, the draft

PSD permit for the Merck XL project requires Merck to evaluate the

effects of VOC on AQRVs in the Park upon certain ``trigger levels'' of

VOC emission increases. Merck will perform an AQRV assessment upon

either of the following events: (1) After the first time the site-wide

VOC emissions reach a level that is double the baseline VOC emissions

(i.e., if site-wide VOC emissions reach 816 TPY); or (2) after

installation of any individual new process or process modification that

results in a net emissions increase of the site's actual VOC emissions

of 100 TPY or more. Under condition 6.2.1 of the draft permit, if the

project signatories agree that Merck's VOC emissions are the cause of

adverse impact on any AQRVs at the Federal Class I area, Merck shall

implement mitigation measures that are agreed to by the project

signatories. However, Merck does not have the obligation under the

permit to mitigate if there are other contributing sources to the AQRV

adverse impact.

EPA believes that it has the authority under the Clean Air Act to

address adverse impacts on AQRVs in Federal Class I areas from both new

and existing sources. EPA intends to undertake a future rulemaking to

require State Implementation Plans to prevent significant deterioration

of air quality by adopting mitigation measures to address such adverse

impacts. Merck agrees that EPA should undertake the rulemaking

approach, described above, to address environmental problems indicated

by adverse impacts on AQRV's in Federal Class I areas.

DOI also expressed an interest in further understanding the impacts

of VOC emissions generally on resources in Shenandoah National Park.

EPA and DOI have agreed to work cooperatively to better understand

background VOC levels in the Park, through monitoring, sampling or

other appropriate analyses, and their potential impacts on park

resources.13

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\13\ See October 16, 1996 letter from Richard D. Wilson, Deputy

Assistant Administrator, Office of Air and Radiation, U.S.

Environmental Protection Agency, to George Frampton, Assistant

Secretary for Fish and Wildlife and Parks, U.S. Department of the

Interior; and October 17, 1996 letter from George T. Frampton to

Richard D. Wilson (contained in docket file).

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Section 165(a)(6) of the Act requires an analysis of any air

quality impacts projected for the area as a result of growth associated

with the proposed permit. The Merck Stonewall Plant is an existing

source, in operation since 1941. There is not expected to be any

significant growth associated with the Merck Stonewall Plant in the

area that would affect air emissions.

Section 165(a)(7) of the Act requires the owner or operator to

conduct monitoring as may be necessary to determine the effect which

emissions increases may have, or are having, on air quality. Under the

Merck XL project, Merck will not have a significant increase of

SO2, NOX or PM10 above baseline levels. Moreover,

allowable SO2 and NOX emissions (i.e., subcaps) will be

reduced from the actual emissions baseline levels by 25% and 10%,

respectively, after the powerhouse conversion. As described above,

Merck has conducted modeling to demonstrate that its maximum possible

CO emissions under the cap would consume less than 1% of the NAAQS.

Because the area is NOX limited for ozone formation and the Agency

believes that the maximum potential VOC emission increases allowed

under Merck's total emissions cap will not increase ozone levels (see

previous discussion in this section of the preamble), EPA does not

believe that Merck's allowable VOC emission increases warrant a

requirement to conduct ambient ozone monitoring. Therefore, EPA

believes that there are no ambient monitoring requirements necessary to

satisfy this provision of the Act for the Merck project.

2. Permit Modifications

As described in Section II.B.4 of the preamble, the stakeholders

will periodically review the PSD permit and consider whether any

changes are required. Changes to the permit may be made either after

full consent of the project signatories and subject to the permit

modification procedures promulgated in this site-specific rule, or

pursuant to PSD permit modification procedures generally applicable to

other PSD permits.14

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\14\ EPA has not promulgated general procedures to modify PSD

permits. See 40 CFR 124.5(g)(1). The language in the draft PSD

permit is intended to provide that if the Agency were to promulgate

generally applicable regulations, not solely applicable to the Merck

PSD permit, establishing the procedures for sources and permitting

authorities to modify PSD permits, then the Merck PSD permit also

would be subject to such procedures.

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As part of the site-specific PSD rule, EPA is proposing procedures

to be followed by the permitting authority for

[[Page 15313]]

processing modifications to the Merck PSD permit. See proposed

Sec. 52.2454(n). These provisions also define criteria for the types of

changes that may be processed as PSD administrative permit

modifications. See proposed Sec. 52.2454(n)(2). These procedures apply

only to the permit issued pursuant to the site-specific PSD rule for

the Merck Stonewall Plant.

C. State Implementation Plan Requirements

The Merck XL project would involve alternative compliance

provisions for several Virginia SIP requirements. In the next few

months, prior to issuance of the Merck PSD permit, VADEQ plans to

propose that the Virginia State Air Pollution Control Board approve a

variance for the Merck Stonewall Plant, pursuant to section 10.1-1307

of the Virginia Air Pollution Control Law. This variance provision

previously has been approved into the Virginia SIP at 40 CFR 52.2420(c)

(15) and (89). The variance would allow Merck to operate under the PSD

permit, which represents compliance for the Virginia regulations cited

in Section 3 of the draft permit. The permit support document contained

in the docket file for this rulemaking describes the basis for

determining that the XL project should serve as alternative compliance

to these regulations. VADEQ also plans in the future to promulgate a

source-specific regulation for the Merck XL project that would serve as

an alternate to the regulations cited in the draft permit. VADEQ plans

to submit this regulation to the EPA for approval as a source-specific

SIP revision. EPA would then take action on the expected source-

specific SIP revision in a future rulemaking action.

One of the key SIP requirements that the Merck XL project will

replace is minor NSR permitting. The new PSD permit would replace the

previously-issued minor NSR permits for the Stonewall Plant. Merck

currently has 14 minor NSR permits for the Stonewall Plant. Pursuant to

the variance and SIP revision procedure described above, this proposed

rule and the draft permit would be substituted for the existing

Virginia minor NSR SIP program for the Merck Stonewall Plant. The draft

PSD permit requires Merck to continue to operate and maintain the

emission control equipment that is currently permitted. By operating

under the permit, including the site-wide emissions caps, modifications

at the facility would not be required to undergo traditional minor NSR

permit reviews.

If the area in which the Merck Stonewall Plant is located becomes a

nonattainment area for any of the criteria air pollutants included in

the total emissions cap, the facility will be grandfathered from any

new nonattainment NSR requirements, as long as the PSD permit issued

pursuant to this proposed site-specific rulemaking is in effect. This

is because the PSD permit authorizes construction and operation of any

new or modified sources of emissions of the pollutants included in the

total emissions cap. All changes at the facility covered by the PSD

permit would not be subject to any additional major NSR permitting

requirements, whether PSD or nonattainment NSR. This grandfathered

status does not apply to any other Title I nonattainment requirements

(see the following discussion pertaining to newly applicable criteria

pollutant regulations).

The draft permit also contains provisions for Merck to comply in an

alternative means with applicable future criteria pollutant regulations

15 including regulations promulgated pursuant to the AQRV SIP

rulemaking described above. Under this approach, Merck would have the

option of either complying with a new criteria pollutant regulation as

written, or by reducing its total emissions cap or subcaps (depending

on the pollutant). If Merck chooses the option of reducing its total

emissions cap or subcaps, Merck would determine the reduction in total

actual emissions that would result from complying with the regulation,

and reduce its total emissions cap or subcaps by that amount. If the

criteria pollutant regulation would result in the control of SO2,

NOX, or PM10, Merck would reduce its subcaps for SO2,

NOX, or PM10, respectively (or comply directly with the

applicable regulation). If the criteria pollutant regulation would

result in the control of VOC or CO, Merck would reduce its total

emissions cap (or comply directly with the applicable regulation). The

draft permit sets forth the process by which the administering agency

(EPA or VADEQ) will approve Merck's emission reduction determination.

For certain types of criteria pollutant regulations, namely, Federal

Implementation Plans (FIP) and most NSPS, EPA will determine whether

such alternative compliance provisions are appropriate, as discussed

below. For SIP requirements, this approach is contingent on authorizing

language in the Virginia SIP, which will be accomplished initially

through Virginia's approval of a variance. (See previous discussion in

this section). The permit support document contained in the docket

describes this approach in more detail.

---------------------------------------------------------------------------

\15\ These provisions apply only to regulations that would apply

to the criteria pollutants included within the site-wide emissions

cap and listed in Section 1.1 of the draft permit, namely SO2,

NOX, PM10, CO, and ozone (using VOC as surrogate).

---------------------------------------------------------------------------

This alternative compliance option is a significant element of the

overall Merck XL project. Merck has expressed that this option could be

useful when, for example, a rule requires controls on an emission

unit(s) that Merck may be planning to shut down or replace soon after

the rule's compliance date (e.g., phase-out of certain pharmaceutical

products) and it would not be cost-effective to comply with the rule

directly. As another example, Merck may decide that it should achieve

actual emission reductions to keep site-wide actual emissions well

below the cap (e.g., within Tier I monitoring), but the new rule will

not result in cost-effective reductions. In this case, Merck could

choose to reduce the cap in lieu of complying directly with the

regulation, but may voluntarily install more effective emission

controls on other emission units to minimize site-wide actual emissions

and preserve its operating margin under the caps.

The Commonwealth of Virginia plans to include this compliance

option for the Merck Stonewall Plant for SIP rules in a future source-

specific SIP revision. EPA believes that it is acceptable to allow such

a source-specific compliance option for SIP purposes as part of the

Merck XL project, because it is the Commonwealth's responsibility to

design SIP control strategies that ensure that the area attains and

maintains the NAAQS, and the Commonwealth generally determines which

sources must achieve emissions reductions. Virginia is making an up

front decision that, for future SIP regulations, the Commonwealth may

not achieve planned levels of actual emission reductions from the Merck

Stonewall Plant as a result of such regulations (i.e., if Merck chooses

to reduce its total emissions cap or subcaps instead). EPA has informed

Virginia that the Commonwealth could not receive emission reduction

credit in an attainment plan if Merck chooses the option of reducing

its site-wide cap or subcaps. If the criteria pollutant regulation is

promulgated by EPA in a FIP, it would be EPA's responsibility to ensure

adequate emission reductions to attain and maintain the NAAQS.

Therefore, if Merck is subject to a future FIP requirement for criteria

pollutants covered by the total emissions cap the

[[Page 15314]]

draft permit provides that EPA will determine whether it is appropriate

for Merck to have the option of reducing the total emissions cap or

subcaps in lieu of complying with the FIP regulation.

D. New Source Performance Standards

EPA is proposing a site-specific rule that would establish an

alternate means of compliance for the Merck Stonewall Plant for two

existing New Source Performance Standards (NSPS)--Subpart Db (Standards

of Performance for Industrial-Commercial-Institutional Steam Generating

Units) and Subpart Kb (Standards of Performance for Volatile Organic

Liquid Storage Vessels)--as well as for future applicable NSPS. These

alternate compliance provisions are necessary to implement a simpler

compliance approach for the facility that is more consistent with the

principles of the site-wide emissions cap.

A key innovation in this XL project is to demonstrate that

incentives to minimize emissions can be achieved through compliance

with a site-wide total emissions cap, established at a level 20 percent

below recent actual emissions (i.e., an ``actuals-based'' cap), as well

as subcaps for SO2, NOX, and PM10. Thus, under this

project, total criteria pollutant emissions must decrease substantially

from recent actual emissions. Under this proposed rule and the draft

permit, Merck would achieve significant environmental benefits by

converting its coal-burning powerhouse to natural gas and by complying

with the actuals-based site-wide emissions caps.

Under the existing regulations, the new natural-gas fired boilers

would be subject to NSPS Subpart Db. EPA proposes to promulgate a site-

specific NSPS rule establishing an alternate means of compliance for

the Merck Stonewall Plant's planned natural gas-fired boilers that

would be subject to NSPS Subpart Db. See proposed Sec. 60.49b(u). The

key emission limitation requirement of NSPS Subpart Db for natural gas-

fired boilers is a NOX emissions standard of 0.10 lb/mmBTU heat

input. The proposed alternate compliance provisions would require Merck

to install low-NOX technology on the new natural gas-fired boilers

instead of meeting a specific NOX emission standard for the

boilers. See proposed Sec. 60.49b(u)(1)(i). The requirement to comply

with the total emissions cap (established at a level 20 percent below

recent actual emissions), as well as the NOX subcap, establishes

an incentive to minimize actual emissions. In selecting low NOX

technology for installation with the new natural gas boilers, Merck

plans to install technology that will achieve a NOX emission rate

of 0.035 lb/mmBtu--an emission rate well below the applicable NSPS

standard. The docket file contains a letter from Merck stating its

commitment to specify low NOX technology that will achieve a

NOX emission rate of 0.035 lb/mmBtu or less when seeking bids for

the new boilers.16

---------------------------------------------------------------------------

\16\ See letter dated December 11, 1996 from Mr. Tedd Jett,

Manager of Environmental Engineering, Merck & Co., Inc., Stonewall

Plant, included as Appendix 4 of the PSD permit support document

(contained in the docket).

---------------------------------------------------------------------------

Under the alternate compliance provisions, Merck would be required

to perform emissions testing and monitoring requirements that are

substantively equivalent to the requirements of NSPS Subpart Db,

including the emissions monitoring requirements in 40 CFR 60.48b. Merck

would be required to perform a stack test within 180 days of completing

the powerhouse conversion to quantify the criteria pollutant emissions

from the new boilers. Merck also would be required to continuously

monitor and record NOX and opacity using a continuous emissions

monitoring system or predictive emissions monitoring system.

EPA also proposes to promulgate a site-specific NSPS rule

establishing an alternate means of compliance for volatile organic

liquid (VOL) storage vessels (including petroleum liquid storage

vessels) that would be subject to NSPS Subpart Kb. See proposed

Sec. 60.112b(c). The recordkeeping provisions of 40 CFR 60.116b (b) and

(c) require certain records to be kept depending on the size of the

vessel and the vapor pressure of the VOL stored. At this time, the

Merck Stonewall Plant operates VOL storage vessels that are subject

only to these recordkeeping requirements. EPA believes that the

monitoring, recordkeeping and reporting requirements of this proposed

rule and the draft PSD permit are adequate to ensure compliance with

the provisions of the draft PSD permit at the site. Therefore, EPA

proposes that, for storage vessels not subject to the control

technology requirements of Subpart Kb (see discussion below), the

requirements of 40 CFR 60.116b (b) and (c) and the NSPS General

Provisions (40 CFR Part 60, Subpart A) not be applicable to the Merck

Stonewall Plant. See proposed Sec. 60.112b(c)(2).

For storage vessels with a certain design capacity and storing a

VOL with a certain vapor pressure, Subpart Kb (40 CFR 60.112b (a) and

(b)) requires that the storage vessels be equipped with control

technology. The control technology options of 40 CFR 60.112b(a)

include: (1) A fixed roof tank with an internal floating roof; (2) an

external floating roof; (3) a closed vent system and control device

with 95% control efficiency; and (4) a system of equivalent control to

options 1-3. In addition, certain EPA notifications are applicable for

such new or modified facilities in accordance with the NSPS General

Provisions (Subpart A). Storage vessels storing material with high

vapor pressures do not have the option to use floating roof controls,

but must be equipped with a closed vent system and control device or

meet an equivalent standard (40 CFR 60.112b(b)). Merck currently has no

storage vessels that are subject to the Subpart Kb control technology

requirements. EPA also proposes to promulgate a site-specific NSPS rule

establishing an alternate means of compliance that would apply if in

the future Merck installs such storage vessels, or changes the

operation of existing storage vessels, such that they would otherwise

be subject to the control technology requirements of Subpart Kb (40 CFR

60.112b (a) or (b)). EPA proposes that Merck would have the option of

reducing the site-wide emissions cap in lieu of complying directly with

the NSPS Subpart Kb requirements. This option would be implemented in

the same manner as that described above for alternate compliance for

SIP rules (see Section III.C of this preamble). See proposed

Sec. 60.112b(c)(1) and condition 1.2.2.c.iii. of the draft PSD permit.

For future applicable NSPS other than Subpart Kb, including future

promulgated NSPS, this proposed rule and the draft permit would allow

Merck to seek the same alternative compliance option as for Subpart Kb,

that is, the option to reduce the site-wide emissions cap(s) in lieu of

complying directly with the applicable NSPS rule. See proposed

Sec. 60.1(d). However, the proposed rule and draft permit provide EPA

an opportunity to require Merck to comply with the NSPS regulation as

written, rather than exercise the option to reduce the site-wide

emissions cap(s). See proposed Sec. 60.1(d)(3). Condition 1.2.2.c.iii.

of the draft PSD permit provides that, for any NSPS other than Subpart

Kb, Merck shall implement the regulation as written by the compliance

date if: (1) EPA determines that compliance with the regulation instead

of a cap adjustment is necessary for achieving the objectives of the

regulation, and (2) EPA notifies Merck in writing within 60 days of

Merck's notification that it is newly subject to the regulation.

[[Page 15315]]

EPA emphasizes that the alternative approaches to compliance with

Clean Air Act requirements adopted in this rule are being adopted only

for this facility, on a pilot project basis. The approach is not

available to other facilities, and the decision to make it available at

this facility is linked to the full set of the facility's obligations

in this project. Based on the experience in this project, EPA could

propose to adopt such an approach more widely at some future time, but

the rule proposed today is limited to the Merck Stonewall Plant and

should not be interpreted as a more general revision of NSPS

regulations, or even as initiating a process toward such a general

revision.

E. Title V Operating Permit

Today's proposed site-specific rulemaking does not amend or add any

new Title V requirements for the Merck Stonewall Plant. Merck will be

required to obtain a Title V operating permit, pursuant to the

applicable Title V program in the Commonwealth of Virginia. The 40 CFR

Part 71 Federal Operating Permit Program is currently effective in

Virginia.17 However, EPA plans in the near future to propose

approval of Virginia's Title V program pursuant to 40 CFR Part 70

(State Operating Permit Programs), which, when finalized, would replace

the Part 71 program in Virginia. EPA expects that Merck's Title V

permit would be issued under Virginia's Title V program after it is

approved, rather than under the Part 71 program requirements. However,

Merck has requested that EPA clarify some interpretations about how the

Part 71 program would apply to the facility, particularly, how the

provisions of the PSD permit would be treated as an underlying set of

applicable requirements within the Title V permit.

---------------------------------------------------------------------------

\17\ See 61 FR 34202-34249 (July 1, 1996).

---------------------------------------------------------------------------

As part of Merck's Title V permit, the new PSD permit would become

the principal set of applicable requirements for criteria pollutants

for the facility. Other applicable requirements would include the

future pharmaceutical MACT and any other requirements pertaining to HAP

emissions, any SIP or NSPS rules that the facility complies with

directly, as well as any other rules promulgated in the future that

would apply to the facility.

The draft PSD permit has substantial requirements for monitoring,

recordkeeping and reporting in order to ensure compliance with the PSD

permit. As described previously in this preamble, the monitoring,

recordkeeping and reporting provisions of the PSD permit increase in

stringency as Merck's emissions approach the total emissions cap. EPA

does not believe that any additional monitoring requirements (e.g.,

periodic monitoring or ``gap-filling'') would need to be added to

Merck's Title V permit in order to demonstrate compliance with the PSD

permit. Therefore, EPA interprets that the monitoring, recordkeeping

and reporting requirements of the PSD permit constitute compliance with

the monitoring requirements of 40 CFR 71.6(a)(3) that would be

applicable to the PSD permit (as a set of applicable requirements in

the Title V permit). Similarly, EPA interprets that the recordkeeping

and reporting requirements of the draft PSD permit satisfy compliance

with the recordkeeping and reporting requirements of 40 CFR

71.6(a)(3)(ii) and 71.6(a)(3)(iii)(A) that would be applicable to

provisions of the PSD permit (as a set of applicable requirements in

the Title V permit). See condition 3.4.2 of the draft PSD permit.

Further, EPA intends that the forthcoming Compliance Assurance

Monitoring (CAM) rule would not impose additional monitoring

requirements through Merck's Title V permit for applicable requirements

in the PSD permit.

Merck also wants to ensure that the Title V permit modification

provisions would not undermine the flexibility gained through the XL

project. Because the draft PSD permit would not require modifications

at the site to undergo case-by-case permitting approval, so long as

Merck is in compliance with the site-wide emission caps, EPA expects

that there would be relatively few changes at the site that would

necessitate a Title V permit revision. Merck specifically asked EPA to

clarify what type of Title V permit revision process would apply to an

operational change that would add, delete or otherwise change Title V

permit terms related to MACT standards promulgated under 112(d) of the

Act (e.g., adding a process unit that would be subject to MACT permit

terms already listed in the permit for other emission units). Under the

existing 40 CFR 70 and 71, EPA interprets that the minor permit

modification process generally would apply to a change at the site that

would affect permit terms related to MACT standards, so long as the

change did not specifically meet the conditions for a significant

permit modification (e.g., relaxation of applicable monitoring,

recordkeeping or reporting requirements). The minor permit modification

would apply in a situation where a physical change or a change in

method of operation of a source changed the applicability of a 112(d)

standard by deleting an existing 112(d) requirement that no longer

applied to the source. For example, if use of a storage tank is changed

from storage of a high vapor pressure solvent to a low vapor pressure

solvent, that change in method of operation may eliminate a 112(d)

requirement to control emissions from the tank and perhaps add a new

recordkeeping requirement. Such a change in the applicability of the

112(d) standard to the source would not be considered a ``relaxation of

monitoring, recordkeeping and reporting requirements,'' and therefore,

would qualify for the minor permit modification procedure. The minor

permit modification process allows the source to operate the change

immediately after the source files the Title V permit application for

the modification. EPA plans to promulgate final revisions to the Part

70 regulations in the near future. EPA expects that the final Part 70

rules may provide options for an even more streamlined permit revisions

process for certain types of changes to MACT permit terms.

IV. Resource Conservation and Recovery Act Requirements

The RCRA subpart AA, BB, and CC air emission standards under 40 CFR

parts 264 and 265 are applicable to certain existing hazardous waste

units at the Merck Stonewall Plant. These standards also may be

applicable to equipment brought into hazardous waste service in the

future. The RCRA air standards contain both substantive emission

control requirements and administrative requirements (e.g., reporting

and recordkeeping) applicable to certain hazardous waste management

units. Under this XL project, the Merck Stonewall Plant will be subject

to a site-specific exemption from the RCRA air emission standards under

40 CFR parts 264 and 265. Additionally, the Merck Stonewall Plant will

be subject to an enforceable PSD permit, as described in Section II.B.2

of this preamble, and will continue to conduct a preventive maintenance

program. Although the PSD permit and the preventive maintenance program

address both inorganic and organic air emissions from many types of

units located at the plant, the RCRA air emission standards only

address organic air emissions from RCRA hazardous waste management

units.

The following hazardous waste management equipment is currently in

operation at the Merck Stonewall Plant: A RCRA-permitted container

storage area; three accumulation tanks; less than

[[Page 15316]]

90-day accumulation containers; three pumps; approximately 50 valves;

and associated fittings (e.g., flanges and sampling connections). In

absence of this XL project, this hazardous waste management equipment

would be subject to both the substantive and administrative

requirements contained in the RCRA air standards. Any new hazardous

waste management units, or existing units newly placed in hazardous

waste service, would also be subject to those substantive and

administrative requirements.

For hazardous waste tanks and containers located at the Merck

Stonewall Plant, the PSD permit includes air emission control

requirements that are identical to the substantive requirements under

the RCRA air standards. For process vents that would otherwise be

subject to the subpart AA process vent regulations, and for equipment

that would otherwise be subject to the subpart BB equipment leak

regulations, the Merck Stonewall Plant will implement air emission

control requirements that are similar, though not identical, to those

that are included in the nationwide standards.

For all affected hazardous waste equipment, this site-specific

regulation will exempt the Merck Stonewall Plant from the

administrative requirements of the RCRA air standards; the PSD permit

and, when issued, the Clean Air Act (CAA) Title V permit, will subject

the plant to alternative administrative requirements. The nationwide

RCRA air standards contain an allowance that a unit operated with air

emission controls, in compliance with a CAA standard in 40 CFR parts

60, 61, or 63, is exempt from the RCRA standards. Among other

requirements, this nationwide allowance exempts a unit from the

administrative requirements of the RCRA air standards, provided that

the air emission controls on that unit are operated in compliance with

the requirements of the CAA part 60, 61, or 63 standard, including

administrative requirements. In such cases, the administrative

requirements would ultimately be enforceable through a CAA permit.

Under this XL project, the Agency is allowing the Merck Stonewall Plant

to comply with the administrative requirements that will be contained

in the plant's CAA PSD and Title V permits, which is analogous to the

existing nationwide RCRA air standards provision that allows facilities

the alternative to operate air emission controls in compliance with

standards under 40 CFR parts 60, 61 or 63. Thus, the Agency considers

the administrative requirements under this XL project for affected

hazardous waste management units at the Merck Stonewall Plant to be

equivalent to the administrative requirements of the nationwide RCRA

air standards.

The Merck Stonewall Plant does not currently have any units or

emission points that would be subject to the subpart AA process vent

standards. Over the life of the PSD permit, it is conceivable that the

Merck Stonewall Plant may make facility or process alterations

resulting in emission points that become newly subject to subpart AA.

To address this possibility, the terms of the PSD permit require the

Merck Stonewall Plant to route any hazardous waste process vent

emissions to a secondary brine condenser or thermal oxidizer, and

monitor the performance of these organic control devices. The subpart

AA nationwide standards would require that these process vent emissions

be routed to a 95% organic emission control device and monitor control

device performance, only if the total facility-wide hazardous waste

process vent emissions exceed 3.1 tons per year or 3 pounds per hour.

However, under the PSD permit, all hazardous waste process vents which

would otherwise be subject to subpart AA will be controlled for organic

emissions, regardless of the facility-wide emission rates. Because the

PSD permit will require organic air emission controls on each hazardous

waste process vent operated at the Merck Stonewall Plant, the Agency

considers that compliance with the PSD permit will achieve greater

emission reductions from these hazardous waste process vents than would

be achieved by compliance with the nationwide subpart AA standards.

For subpart BB leak detection and repair requirements, the Merck

Stonewall Plant does have hazardous waste management units that are

subject to the RCRA air standards. Under this XL project, the Merck

Stonewall Plant will be addressing the organic emissions which would

otherwise be addressed through compliance with the subpart BB

nationwide standards, through the continued performance of a preventive

maintenance program that is in place at its facility. This maintenance

program is applicable to all existing and future equipment that would

otherwise be subject to the nationwide subpart BB standards. The

program includes semi-annual, quarterly, and monthly visual

inspections, depending on the equipment type, and routine maintenance

and repair procedures. The Merck Stonewall Plant has submitted site-

specific leak rate data for subpart BB equipment which has been subject

to this program; that data indicates low leak rates and low incidence

of leaking equipment for all the hazardous waste components at the

plant. For this XL project, the Agency is assuming that the continued

performance of this program will result in similar leak rates over the

life of the PSD permit.

The sampling connection systems and open-ended valves or lines that

would otherwise be subject to subpart BB standards are designed and

operated in a manner consistent with the requirements of the subpart BB

standards. The preventive maintenance program includes periodic visual

inspections and subsequent repair of detected leaks for flanges and

other connectors, which is consistent with the subpart BB requirements

under 40 CFR part 264.1058(a) for that equipment. Because the Merck

Stonewall Plant preventive maintenance program includes these

requirements, the Agency is assuming that this program will effectively

accomplish the same organic emission controls as the substantive

subpart BB nationwide standards for flanges and other connectors,

sampling connection systems, and open-ended valves or lines at that

Plant.

The EPA has reviewed facility-specific component leak rate data

provided by the Merck Stonewall Plant and found that less than 2% of

the affected valves leak, and none of the three hazardous waste pumps

leak or have detectable emissions. Under the provisions of subpart BB

in 40 CFR part 264.1061, a facility at which less than 2% of affected

valves leak can choose to comply with subpart BB through a performance

standard that includes an annual performance test using EPA Method 21

instrument monitoring. Under subpart BB in 40 CFR part 264.1052, these

hazardous waste pumps, which are in light liquid service, would be

subject to monthly leak detection and repair monitoring using EPA

Method 21. Under this XL project, this hazardous waste equipment will

be exempt from the subpart BB standards. Instead, the Merck Stonewall

Plant will include this hazardous waste equipment in their preventive

maintenance program; this program includes visual inspection of all

valves and pumps and repair of any detected leaks. In allowing this

alternative for the Merck Stonewall Plant, the Agency is assuming that

the preventive maintenance program for valves and pumps will maintain

the low leak rates that have been previously demonstrated for these

existing hazardous waste valves and pumps, and will achieve similarly

low leak rates for any valves and pumps placed in hazardous waste

service in the future. The component -

[[Page 15317]]

specific leak rates demonstrated for this equipment are within the

range that the Agency would expect to be achieved by compliance with

the subpart BB nationwide standards for hazardous waste valves and

pumps. The preventive maintenance program has been in place at the

Merck Stonewall Plant for several years, and the EPA is assuming that

the very low leak rates for the affected equipment have resulted from a

combination of: the effectiveness of the Merck Stonewall Plant

preventive maintenance program; the quality of the valves, pumps and

associated equipment that are used at the plant; the properties of the

hazardous waste which this equipment contacts; and the specific

parameters for the hazardous waste processes. The Agency is also

assuming that requiring the Merck Stonewall Plant to continue this

preventive maintenance program under this XL project will preserve the

low component leak rates for hazardous waste management units at the

plant.

For subpart CC standards applicable to tanks and containers, the

Merck Stonewall Plant is currently in compliance with the substantive

organic air emission control requirements of those nationwide

standards. For the hazardous waste containers at the Merck Stonewall

Plant, the nationwide subpart CC standards would require that the

containers be operated with covers that have no visible openings; the

PSD permit includes this same requirement for all hazardous waste

containers currently operated, or operated in the future, at the plant.

For the hazardous waste accumulation and/or storage tanks at the Merck

Stonewall Plant, the nationwide subpart CC standards would require that

the tanks be operated with a cover that has no visible openings or

gaps; the PSD permit contains this same requirement for all hazardous

waste accumulation and/or storage tanks currently operated, or operated

in the future, at the plant. The Merck Stonewall Plant does not operate

any hazardous waste tanks that would be classified as Level 2 tanks

under the RCRA subpart CC standards. However, it is conceivable that

during the life of the PSD permit, the plant may operate this type of

tank. To address this possibility, the PSD permit contains a

requirement that any hazardous waste treatment tank operated at the

plant must be equipped with a fixed cover and either a floating roof or

a vent system that routes the tank emissions to a secondary brine

condenser or a thermal oxidizer. These requirements are among the

compliance options allowed under the nationwide subpart CC standards,

and would constitute compliance with the substantive requirements of

those nationwide standards. Therefore, the Agency considers the

requirements of the PSD permit for the hazardous waste containers and

tanks at the Merck Stonewall Plant to be the same as the substantive

requirements of the nationwide RCRA air rules for those units.

The Merck Stonewall Plant does not currently operate any hazardous

waste surface impoundments, nor do they expect to operate any in the

future. For this reason, the Plant is not seeking relief from the

surface impoundment RCRA air emission standards. The Merck Stonewall

Plant has agreed that any hazardous waste surface impoundment that may

be operated at the facility in the future will be installed and

operated to comply with the applicable requirements of the nationwide

subpart CC air emission standards. Therefore, the site-specific

regulation exempts the Merck Stonewall Plant from all the subpart CC

requirements except for the requirements that are applicable to surface

impoundments.

Overall, the Agency considers this to be a viable approach to

addressing organic air emission from hazardous waste units, which is

worthy of further evaluation through the Project XL program.

V. Additional Information

A. Public Hearing

A public hearing will be held, if requested, to provide opportunity

for interested persons to make oral presentations regarding the

proposed regulation in accordance with section 307(d)(5) of the Clean

Air Act. Persons wishing to make oral presentation on the proposed rule

to implement Merck's XL project should contact the EPA at the address

given in the ADDRESSES section of this document. Any member of the

public may file a written statement before, during, or within 30 days

after the hearing. Written statements should be sent to EPA at the

addresses given in the ADDRESSES section of this document. If a public

hearing is held, a verbatim transcript of the hearing and written

statements will be available for inspection and copying during normal

business hours at the EPA addresses given in the ADDRESSES section of

this document.

B. Executive Order 12866

Under Executive Order 12866 (58 FR 51735, October 4, 1993) the

Agency must determine whether the regulatory action is ``significant''

and therefore subject to Office of Management and Budget (OMB) review

and the requirements of the Executive Order. The Order defines

``significant regulatory action'' as one that is likely to result in a

rule that may:

(1) Have an annual effect on the economy of $100 million or more or

adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, of State, local, or tribal governments or

communities;

(2) Create a serious inconsistency or otherwise interfere with an

action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlement, grants,

user fees, or loan programs of the rights and obligations of recipients

thereof; or

(4) Raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

the Executive Order.

Because the annualized cost of this final rule would be

significantly less than $100 million and would meet none of the other

criteria specified in the Executive Order, it has been determined that

this rule is not a ``significant regulatory action'' under the terms of

Executive Order 12866, and is therefore not subject to OMB review.

C. Regulatory Flexibility

The Regulatory Flexibility Act (RFA) generally requires an agency

to conduct a regulatory flexibility analysis of any rule subject to

notice and comment rulemaking requirements unless the agency certifies

that the rule will not have a significant economic impact on a

substantial number of small entities. Small entities include small

businesses, small not-for-profit enterprises, and small governmental

jurisdictions. This proposed rule would not have a significant impact

on a substantial number of small entities because it only affects one

source, the Merck Stonewall Plant, which is not a small entity.

Therefore, EPA certifies that this action will not have a significant

economic impact on a substantial number of small entities.

D. Paperwork Reduction Act

This action applies only to one company, and therefore requires no

information collection activities subject to the Paperwork Reduction

Act, and therefore no information collection request (ICR) will be

submitted to the Office of Management and Budget (OMB) for review in

compliance with the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

[[Page 15318]]

E. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public

Law 104-4, establishes requirements for Federal agencies to assess the

effects of their regulatory actions on State, local, and tribal

governments and the private sector. Under section 202 of the UMRA, EPA

generally must prepare a written statement, including a cost-benefit

analysis, for proposed and final rules with ``Federal mandates'' that

may result in expenditures to State, local, and tribal governments, in

the aggregate, or to the private sector, of $100 million or more in any

one year. Before promulgating an EPA rule for which a written statement

is needed, section 205 of the UMRA generally requires EPA to identify

and consider a reasonable number of regulatory alternatives and adopt

the least costly, most cost-effective or least burdensome alternative

that achieves the objectives of the rule. The provisions of section 205

do not apply when they are inconsistent with applicable law. Moreover,

section 205 allows EPA to adopt an alternative other than the least

costly, most cost-effective or least burdensome alternative if the

Administrator publishes with the final rule an explanation why that

alternative was not adopted. Before EPA establishes any regulatory

requirements that may significantly or uniquely affect small

governments, including tribal governments, it must have developed under

section 203 of the UMRA a small government agency plan. The plan must

provide for notifying potentially affected small governments, enabling

officials of affected small governments to have meaningful and timely

input in the development of EPA regulatory proposals with significant

Federal intergovernmental mandates, and informing, educating, and

advising small governments on compliance with the regulatory

requirements.

As noted above, this rule is limited to Merck's facility in Elkton,

Virginia. EPA has determined that this rule contains no regulatory

requirements that might significantly or uniquely affect small

governments. EPA has also determined that this rule does not contain a

Federal mandate that may result in expenditures of $100 million or more

for State, local, and tribal governments, in the aggregate, or the

private sector in any one year. Thus, today's rule is not subject to

the requirements of sections 202 and 205 of the UMRA.

List of Subjects

40 CFR Part 52

Environmental protection, Air pollution control, Carbon monoxide,

Intergovernmental Relations, Lead, Nitrogen dioxide, Ozone, Particulate

matter, Reporting and recordkeeping requirements, Sulfur oxides,

Volatile organic compounds.

40 CFR Part 60

Environmental protection, Air pollution control, Carbon monoxide,

Intergovernmental Relations, Lead, Nitrogen dioxide, Particulate

matter, Reporting and recordkeeping requirements, Sulfur oxides,

Volatile organic compounds.

40 CFR Part 264

Environmental protection, Air pollution control, Container, Control

device, Hazardous waste, Monitoring, Reporting and recordkeeping

requirements, Surface impoundment, Tank, Treatment storage and disposal

facility, Waste determination.

40 CFR Part 265

Environmental protection, Air pollution control, Container, Control

device, Hazardous waste, Monitoring, Reporting and recordkeeping

requirements, Surface impoundment, Tank, Treatment storage and disposal

facility, Waste determination.

Dated: March 21, 1997.

Carol M. Browner,

Administrator.

For the reasons set forth in the preamble, parts 52, 60, 264 and

265 of chapter I of title 40 of the Code of Federal Regulations are

proposed to be amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

1. The authority citation for part 52 continues to read as follows:

Authority: 42 U.S.C. 7401-7671q.

Subpart VV--[Amended]

2. Subpart VV is amended by adding a new Sec. 52.2454 to read as

follows:

Sec. 52.2454 Prevention of significant deterioration of air quality

for Merck & Co., Inc.'s Stonewall Plant in Elkton, Virginia

(a) Applicability.

(1) This section applies only to the pharmaceutical manufacturing

facility, commonly referred to as the Stonewall Plant, located at Route

340 South, in Elkton, Virginia (``site').

(2) This section sets forth the prevention of significant

deterioration of air quality preconstruction review requirements for

the following pollutants only: carbon monoxide, nitrogen oxides, ozone

(using volatile organic compounds as surrogate), particulate matter

with an aerodynamic diameter less than 10 microns (PM-10), and sulfur

dioxide. This section applies in lieu of Sec. 52.21 for the pollutants

identified in this paragraph as well as particulate matter; however,

the preconstruction review requirements of Sec. 52.21, or other

preconstruction review requirements that the Administrator approves as

part of the plan, shall remain in effect for any pollutant which is not

specifically identified in this paragraph and is subject to regulation

under the Act.

(b) Definitions. For the purposes of this section:

12-month rolling total for an individual pollutant or the total

criteria pollutants, as specified in paragraph (d) of this section, is

calculated on a monthly basis as the sum of all actual emissions of the

respective pollutant(s) from the previous 12 months.

Act means the Clean Air Act, as amended, 42 U.S.C. 7401, et seq.

Completion of the powerhouse conversion means the date upon which

the new boilers, installed pursuant to paragraph (g) of this section,

are operational. This determination shall be made by the site based on

the boiler manufacturer's installation, startup and shakedown

specifications.

Permitting authority means either of the following:

(1) The Administrator, in the case of an EPA-implemented program;

or

(2) The State air pollution control agency, or other agency

delegated by the Administrator, pursuant to paragraph (o) of this

section, to carry out this permit program.

Process unit means:

(1) Manufacturing equipment assembled to produce a single

intermediate or final product, and

(2) Any combustion device.

Responsible official means:

(1) The president, secretary, treasurer, or vice-president of the

business entity in charge of a principal business function, or any

other person who performs similar policy or decision-making functions

for the business entity; or

(2) A duly authorized representative of such business entity if the

representative is responsible for the overall operation of one or more

manufacturing, production, or operating facilities applying for or

subject to a permit and either:

(i) The facilities employ more than 250 persons or have gross

annual sales or expenditures exceeding $25 million (in second quarter

1980 dollars); or

(ii) The authority to sign documents has been assigned or delegated

to such

[[Page 15319]]

representative in accordance with procedures of the business entity.

Site means the contiguous property at Route 340 South, Elkton,

Virginia, under common control by Merck & Co., Inc., and its successors

in ownership, known as the Stonewall site.

(c) Authority to issue permit. The permitting authority may issue

to the site a permit which complies with the requirements of paragraphs

(d) through (n) of this section. The Administrator may delegate, in

whole or in part, pursuant to paragraph (o) of this section, the

authority to administer the requirements of this section to a State air

pollution control agency, or other agency authorized by the

Administrator.

(d) Site-wide emissions caps. The permit shall establish site-wide

emissions caps as provided in this paragraph.

(1) Initial site-wide emissions caps. The initial site-wide

emissions caps shall be based on the site's actual emissions during a

time period, within five years of the date of permit issuance, which

represents normal site operation. The permitting authority may allow

the use of a different time period upon a determination that it is more

representative of normal source operation. Actual site-wide emissions

shall be calculated using the actual operating hours, production rates,

and types of materials processed, stored, or combusted during the

selected time period.

(i) Total criteria pollutant emissions cap. The permit shall

establish a total criteria pollutant emissions cap (total emissions

cap). The criteria pollutants included in the total emissions cap are

the following: carbon monoxide, nitrogen oxides, ozone (using volatile

organic compounds as surrogate), particulate matter with an aerodynamic

diameter less than 10 microns, and sulfur dioxide.

(ii) Individual pollutant caps. The permit shall establish

individual pollutant caps for sulfur dioxide, nitrogen oxides and PM-

10.

(2) Adjustments to the site-wide emissions caps.

(i) The permit shall require that upon completion of the powerhouse

conversion, the site shall reduce the site-wide emissions caps as

follows:

(A) The total emissions cap shall be reduced by 20 percent from the

initial site-wide emissions cap established pursuant to paragraph

(d)(1)(i) of this section.

(B) The sulfur dioxide cap shall be reduced by 25 percent from the

initial site-wide emissions cap established pursuant to paragraph

(d)(1)(ii) of this section.

(C) The nitrogen oxide cap shall be reduced by 10 percent from the

initial site-wide emissions cap established pursuant to paragraph

(d)(1)(ii) of this section.

(ii) The permit may specify other reasons for adjustment of the

site-wide emissions caps.

(e) Operating under the site-wide emissions caps.

(1) The permit shall require that the site's actual emissions of

criteria pollutants shall not exceed the total emissions cap

established pursuant to paragraph (d) of this section.

(2) The permit shall require that the site's actual emissions of

sulfur dioxide, nitrogen oxides and PM-10 shall not exceed the

respective individual pollutant cap established pursuant to paragraph

(d) of this section.

(3) Compliance with the total emissions cap and individual

pollutant caps shall be determined by comparing the respective cap to

the 12-month rolling total for that cap. Compliance with the total

emissions cap and individual pollutant caps shall be determined within

one month of the end of each month based on the prior 12 months. The

permit shall set forth the emission calculation techniques which the

site shall use to calculate site-wide actual criteria pollutant

emissions.

(4) Installation of controls for significant modifications and

significant new installations.

(i) This paragraph applies to significant modifications and

significant new installations. Significant modifications for the

purposes of this section are defined as changes to an existing process

unit that result in an increase of the potential emissions of the

process unit, after consideration of existing controls, of more than

the significance levels listed in paragraph (e)(4)(ii) of this section.

Significant new installations for the purposes of this section are

defined as new process units with potential emissions before controls

that exceed the significance levels listed in paragraph (e)(4)(ii) of

this section. For purposes of this section, potential emissions means

process unit point source emissions that would be generated by the

process unit operating at its maximum capacity.

(ii) The significance levels for determining significant

modifications and significant new installations are: 100 tons per year

of carbon monoxide; 40 tons per year of nitrogen oxides; 40 tons per

year of sulfur dioxide; 40 tons per year of volatile organic compounds;

and 15 tons per year of PM-10.

(iii) For any significant modification or significant new

installation, the permit shall require that the site install, at the

process unit, emission controls, pollution prevention or other

technology that represents good environmental engineering practice in

the pharmaceutical or batch processing industry, based on the emission

characteristics (such as flow, variability, pollutant properties) of

the process unit.

(f) Operation of control equipment. The permit shall require that

the site shall continue to operate the emissions control equipment that

was previously subject to permit requirements at the time of issuance

of a permit pursuant to this section. This equipment shall be operated

in a manner which minimizes emissions, considering the technical and

physical operational aspects of the equipment and associated processes.

This operation shall include an operation and maintenance program based

on manufacturers' specifications and good engineering practice.

(g) Powerhouse conversion. The permit shall require that the site

convert the steam-generating powerhouse from burning coal as the

primary fuel to burning natural gas as the primary fuel and either No.

2 fuel oil or propane as backup fuel.

(1) The new boilers shall be equipped with low nitrogen oxides

technology.

(2) The site shall complete the powerhouse conversion (completion

of the powerhouse conversion) no later than 30 months after the

effective date of the permit.

(h) Monitoring, recordkeeping and reporting.

(1) The permit shall set forth monitoring, recordkeeping, and

reporting requirements sufficient to demonstrate compliance with the

site-wide emissions caps. The monitoring, recordkeeping and reporting

requirements shall be structured in a tiered system, such that the

requirements become more stringent as the site's emissions approach the

total emissions cap.

(2) At a minimum, the permit shall require that the site submit to

the permitting authority semi-annual reports of the site-wide criteria

pollutant emissions (expressed as a 12-month rolling total) for each

month covered by the report. These reports shall include a calculation

of the total emissions cap, as well as, the emissions of sulfur

dioxide, nitrogen oxides, carbon monoxide, volatile organic compounds

and PM-10.

(3) Any reports required by the permit to be submitted on an annual

or semi-annual basis shall contain a certification by the site's

responsible official that to his belief, based on reasonable inquiry,

the information submitted in the report is true, accurate, and

complete.

[[Page 15320]]

(4) Any records required by the permit shall be retained on site

for at least five years.

(i) Air quality analysis. The permittee shall demonstrate, prior to

permit issuance and on a periodic basis which shall be specified in the

permit, that emissions from construction or operation of the site will

not cause or contribute to air pollution in excess of any:

(1) maximum allowable increase or maximum allowable concentration

for any pollutant, pursuant to Sec. 165 of the Act;

(2) national ambient air quality standard or;

(3) other applicable emission standard or standard of performance

under the Act.

(j) Termination.

(1) The permit may be terminated as provided in this paragraph for

reasons which shall include the following, as well as any other

termination provisions specified in the permit:

(i) If the Administrator or the permitting authority determines

that continuation of the permit is an imminent and substantial

endangerment to public health or welfare, or the environment;

(ii) If the permittee knowingly falsifies emissions data;

(iii) If the permittee fails to implement the powerhouse conversion

pursuant to paragraph (g);

(iv) If the permittee receives four consent orders or two judgments

adverse to the site arising from non-compliance with this permit in a

five year period that are deemed material by the Administrator or the

permitting authority; or

(v) If the total emissions cap is exceeded.

(2) In the event of termination, the Administrator or the

permitting authority shall provide the permittee with written notice of

its intent to terminate the permit. Within 30 calendar days of the

site's receipt of this notice, the site may take corrective action to

remedy the cause of the termination. If this remedy, which may include

a corrective action plan and schedule, is deemed acceptable by the

Administrator or the permitting authority (whichever agency provided

written notice of its intent to terminate the permit), the action to

terminate the permit shall be withdrawn. Otherwise, the permit shall be

terminated in accordance with procedures specified in the permit.

(3) Termination of the permit does not waive the site's obligation

to complete any corrective actions relating to non-compliance under the

permit.

(k) Inspection and entry.

(1) Upon presentation of credentials and other documents as may be

required by law, the site shall allow authorized representatives of the

Administrator and the permitting authority to perform the following:

(i) Enter upon the site;

(ii) Have access to and copy, at reasonable times, any records that

must be kept under the conditions of the permit;

(iii) Have access at reasonable times to batch and other plant

records needed to verify emissions.

(iv) Inspect at reasonable times any facilities, equipment

(including monitoring and control equipment), practices, or operations

required under the permit;

(v) Sample or monitor any substances or parameters at any location,

during operating hours, for the purpose of assuring permit compliance

or as otherwise authorized by the Act.

(2) No person shall obstruct, hamper, or interfere with any such

authorized representative while in the process of carrying out his

official duties. Refusal of entry or access may constitute grounds for

permit violation and assessment of civil penalties.

(3) Such site, facility and equipment access, and sampling and

monitoring shall be subject to the site's safety and industrial hygiene

procedures, and Food and Drug Administration Good Manufacturing

Practice requirements (21 CFR 210 and 211) in force at the site.

(l) Transfer of ownership. The terms of the permit are transferable

to a new owner upon sale of the site, in accordance with provisions

specified by the permit.

(m) Permit issuance. The permitting authority shall provide for

public participation prior to issuing a permit pursuant to this

section. At a minimum, the permitting authority shall:

(1) Make available for public inspection, in at least one location

in the area of the site, the information submitted by the permittee,

the permitting authority's analysis of the effect on air quality

including the preliminary determination, and a copy or summary of any

other materials considered in making the preliminary determination;

(2) Notify the public, by advertisement in a newspaper of general

circulation in the area of the site, of the application, the

preliminary determination, and of the opportunity for comment at a

public hearing as well as written public comment;

(3) Provide a 30-day period for submittal of public comment;

(4) Send a copy of the notice of public comment to the following:

theTAdministrator, through the appropriate Regional Office; any other

State or local air pollution control agencies, the chief executives of

the city and county where the site is located; any State, Federal Land

Manager, or other governing body whose lands may be affected by

emissions from the site.

(5) Provide opportunity for a public hearing for interested persons

to appear and submit written or oral comments on the air quality impact

of the site, the control technology required, and other appropriate

considerations.

(n) Permit modifications. The permit shall specify the conditions

under which the permit may be modified by the permitting authority. The

permitting authority shall modify the permit in accordance with the

procedures set forth in this paragraph.

(1) Permit modifications that require public participation. For any

change that does not meet the criteria for an administrative permit

modification established in paragraph (n)(2)(i) of this section, the

permitting authority shall provide an opportunity for public

participation, consistent with the provisions of paragraph (m) of this

section, prior to processing the permit modification.

(2) Administrative permit modification.

(i) An administrative permit modification is a permit revision

that:

(A) Corrects typographical errors;

(B) Identifies a change in the name, address, or phone number of

any person identified in the permit, or provides a similar minor

administrative change at the site;

(C) Requires more frequent monitoring, recordkeeping, or reporting

by the permittee;

(D) Allows for a change in ownership or operational control of a

source where the permitting authority determines that no other change

in the permit is necessary, provided that a written agreement

containing a specific date for transfer of permit responsibility,

coverage, and liability between the current and new permittee has been

submitted to the permitting authority.

(E) Updates the emission calculation methods specified in the

permit, provided that the change does not also involve a change to any

site-wide emissions cap.

(F) Changes the monitoring, recordkeeping or reporting requirements

for equipment that has been shutdown or is no longer in service.

(G) Any other change that is stipulated in the permit as qualifying

as an administrative permit modification,

[[Page 15321]]

provided that the permit condition which includes such stipulation has

already undergone public participation in accordance with paragraph (m)

of this section.

(ii) An administrative permit modification may be made by the

permitting authority consistent with the following procedures:

(A) The permitting authority shall take final action on any request

for an administrative permit modification within 60 days from receipt

of the request, and may incorporate such changes without providing

notice to the public, provided that the permitting authority designates

any such permit revisions as having been made pursuant to this

paragraph.

(B) The permitting authority shall submit a copy of the revised

permit to the Administrator.

(C) The site may implement the changes addressed in the request for

an administrative permit modification immediately upon submittal of the

request to the permitting authority.

(o) Delegation of authority.

(1) The Administrator shall have the authority to delegate the

responsibility to implement this section in accordance with the

provisions of this paragraph.

(2) Where the Administrator delegates the responsibility for

implementing this section to any agency other than a Regional Office of

the Environmental Protection Agency, the following provisions shall

apply:

(i) Where the delegate agency is not an air pollution control

agency, it shall consult with the appropriate State and local air

pollution control agency prior to making any determination under this

section. Similarly, where the delegate agency does not have continuing

responsibility for managing land use, it shall consult with the

appropriate State and local agency primarily responsible for managing

land use prior to making any determination under this section.

(ii) The delegate agency shall send a copy of any public comment

notice required under paragraph (n) of this section to the

Administrator through the appropriate Regional Office.

PART 60--STANDARDS OF PERFORMANCE FOR NEW STATIONARY SOURCES

1. The authority citation for part 60 continues to read as follows:

Authority: 42 U.S.C. 7401-7671q.

2. Section 60.1 is amended by adding paragraph (d) to read as

follows:

Sec. 60.1 Applicability.

* * * * *

(d) Site-specific standard for Merck & Co., Inc.'s Stonewall Plant

in Elkton, Virginia. (1) This paragraph applies only to the

pharmaceutical manufacturing facility, commonly referred to as the

Stonewall Plant, located at Route 340 South, in Elkton, Virginia

(``site'').

(2) Except for compliance with 40 CFR 60.49b(u), the site shall

have the option of either complying directly with the requirements of

this part, or reducing the site-wide emissions caps in accordance with

the procedures set forth in a permit issued pursuant to 40 CFR 52.2454.

If the site chooses the option of reducing the site-wide emissions caps

in accordance with the procedures set forth in such permit, the

requirements of such permit shall apply in lieu of the otherwise

applicable requirements of this part.

(3) Notwithstanding the provisions of paragraph (d)(2) of this

section, for any provisions of this part except for Subpart Kb, the

owner/operator of the site shall comply with the applicable provisions

of this part if the Administrator determines that compliance with the

provisions of this part is necessary for achieving the objectives of

the regulation and the Administrator notifies the site in accordance

with the provisions of the permit issued pursuant to 40 CFR 52.2454.

3. Section 60.49b is amended by adding paragraph (u) to read as

follows:

Sec. 60.49b Reporting and recordkeeping requirements.

* * * * *

(u) Site-specific standard for Merck & Co., Inc.'s Stonewall Plant

in Elkton, Virginia.

(1) This paragraph applies only to the pharmaceutical manufacturing

facility, commonly referred to as the Stonewall Plant, located at Route

340 South, in Elkton, Virginia (``site'') and only to the natural gas-

fired boilers installed as part of the powerhouse conversion required

pursuant to 40 CFR 52.2454(g). The requirements of this paragraph shall

apply, and the requirements of 40 CFR 60.40b through 60.49b shall not

apply, to the natural gas-fired boilers installed pursuant to 40 CFR

52.2454(g).

(i) The site shall equip the natural gas-fired boilers with low

nitrogen oxide (NOX) technology.

(ii) The site shall install, calibrate, maintain, and operate a

continuous monitoring and recording system for measuring NOX

emissions discharged to the atmosphere and opacity using a continuous

emissions monitoring system or a predictive emissions monitoring

system.

(iii) Within 180 days of the completion of the powerhouse

conversion, as required by 40 CFR 52.2454, the site shall perform a

stack test to quantify criteria pollutant emissions.

(2) [Reserved]

4. Section 60.112b is amended by adding paragraph (c), to read as

follows:

Sec. 60.112b Standard for volatile organic compounds (VOC).

* * * * *

(c) Site-specific standard for Merck & Co., Inc.'s Stonewall Plant

in Elkton, Virginia. This paragraph applies only to the pharmaceutical

manufacturing facility, commonly referred to as the Stonewall Plant,

located at Route 340 South, in Elkton, Virginia (``site'').

(1) For any storage vessel that otherwise would be subject to the

control technology requirements of paragraph (a) or (b) of this

section, the site shall have the option of either complying directly

with the requirements of this subpart, or reducing the site-wide total

criteria pollutant emissions cap (total emissions cap) in accordance

with the procedures set forth in a permit issued pursuant to 40 CFR

52.2454. If the site chooses the option of reducing the total emissions

cap in accordance with the procedures set forth in such permit, the

requirements of such permit shall apply in lieu of the otherwise

applicable requirements of this subpart for such storage vessel.

(2) For any storage vessel at the site not subject to the

requirements of 40 CFR 60.112b (a) or (b), the requirements of 40 CFR

60.116b (b) and (c) and the General Provisions (Subpart A of this part)

shall not apply.

PART 264--STANDARDS FOR OWNERS AND OPERATORS OF HAZARDOUS WASTE

TREATMENT, STORAGE, AND DISPOSAL FACILITIES

1. The authority citation for part 264 continues to read as

follows:

Authority: 42 U.S.C. 6905, 6912(a), 6924, and 6925.

Subpart AA--[Amended]

2. Section 264.1030 is amended by adding paragraph (d) to

Sec. 264.1030 to read as follows:

Sec. 264.1030 Applicability.

* * * * *

(d) The requirements of this subpart do not apply to the

pharmaceutical manufacturing facility, commonly referred to as the

Stonewall Plant, located at Route 340 South, Elkton,

[[Page 15322]]

Virginia, provided that facility is operated in compliance with the

requirements contained in a Clean Air Act permit issued pursuant to 40

CFR 52.2454. The requirements of this subpart shall apply to the

facility upon termination of the Clean Air Act permit issued pursuant

to 40 CFR 52.2454.

3. Subpart BB is amended by adding paragraph (g) to Sec. 264.1050

to read as follows:

Sec. 264.1050 Applicability.

* * * * *

(g) The requirements of this subpart do not apply to the

pharmaceutical manufacturing facility, commonly referred to as the

Stonewall Plant, located at Route 340 South, Elkton, Virginia, provided

that facility is operated in compliance with the requirements contained

in a Clean Air Act permit issued pursuant to 40 CFR 52.2454. The

requirements of this subpart shall apply to the facility upon

termination of the Clean Air Act permit issued pursuant to 40 CFR

52.2454.

4. Subpart CC is amended by adding paragraph (e) to Sec. 264.1080

to read as follows:

Sec. 264.1080 Applicability.

* * * * *

(e)(1) Except as provided in paragraph (e)(2) of this section, the

requirements of this subpart do not apply to the pharmaceutical

manufacturing facility, commonly referred to as the Stonewall Plant,

located at Route 340 South, Elkton, Virginia, provided that facility is

operated in compliance with the requirements contained in a Clean Air

Act permit issued pursuant to 40 CFR 52.2454. The requirements of this

subpart shall apply to the facility upon termination of the Clean Air

Act permit issued pursuant to 40 CFR 52.2454.

(2) Notwithstanding paragraph (e)(1) of this section, any hazardous

waste surface impoundment operated at the Stonewall Plant is subject

to:

(i) the standards in Sec. 264.1085 and all requirements related to

hazardous waste surface impoundments that are referenced in or by

Sec. 264.1085, including the closed-vent system and control device

requirements of Sec. 264.1087 and the recordkeeping requirements of

Sec. 264.1089(c); and

(ii) the reporting requirements of Sec. 264.1090 that are

applicable to surface impoundments and/or to closed-vent systems and

control devices associated with a surface impoundment.

PART 265--INTERIM STATUS STANDARDS FOR OWNERS AND OPERATORS OF

HAZARDOUS WASTE TREATMENT, STORAGE, AND DISPOSAL FACILITIES

1. The authority citation for part 265 continues to read as

follows:

Authority: 42 U.S.C. 6905, 6906, 6912, 6922, 6923, 6924, 6925,

6935, 6936, and 6937, unless otherwise noted.

2. Subpart AA is amended by adding paragraph (c) to Sec. 265.1030

to read as follows:

Sec. 265.1030 Applicability.

* * * * *

(c) The requirements of this subpart do not apply to the

pharmaceutical manufacturing facility, commonly referred to as the

Stonewall Plant, located at Route 340 South, Elkton, Virginia, provided

that facility is operated in compliance with the requirements contained

in a Clean Air Act permit issued pursuant to 40 CFR 52.2454. The

requirements of this subpart shall apply to the facility upon

termination of the Clean Air Act permit issued pursuant to 40 CFR

52.2454.

3. Subpart BB is amended by adding paragraph (f) to Sec. 265.1050

to read as follows:

Sec. 265.1050 Applicability.

* * * * *

(f) The requirements of this subpart do not apply to the

pharmaceutical manufacturing facility, commonly referred to as the

Stonewall Plant, located at Route 340 South, Elkton, Virginia, provided

that facility is operated in compliance with the requirements contained

in a Clean Air Act permit issued pursuant to 40 CFR 52.2454. The

requirements of this subpart shall apply to the facility upon

termination of the Clean Air Act permit issued pursuant to 40 CFR

52.2454.

4. Subpart CC is amended by adding paragraph (e) to Sec. 265.1080

to read as follows:

Sec. 265.1080 Applicability.

* * * * *

(e)(1) Except as provided in paragraph (e)(2) of this section, the

requirements of this subpart do not apply to the pharmaceutical

manufacturing facility, commonly referred to as the Stonewall Plant,

located at Route 340 South, Elkton, Virginia, provided that facility is

operated in compliance with the requirements contained in a Clean Air

Act permit issued pursuant to 40 CFR 52.2454. The requirements of this

subpart shall apply to the facility upon termination of the Clean Air

Act permit issued pursuant to 40 CFR 52.2454.

(2) Notwithstanding paragraph (e)(1) of this section, any hazardous

waste surface impoundment operated at the Stonewall Plant is subject to

the standards in Sec. 265.1086 and all requirements related to

hazardous waste surface impoundments that are referenced in or by

Sec. 265.1086, including the closed-vent system and control device

requirements of Sec. 265.1088 and the recordkeeping requirements of

Sec. 265.1090(c).

[FR Doc. 97-7949 Filed 3-28-97; 8:45 am]

BILLING CODE 6560-50-P