[Federal Register Volume 62, Number 195 (Wednesday, October 8, 1997)]
[Rules and Regulations]
[Pages 52622-52642]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26442]



[[Page 52621]]

_______________________________________________________________________

Part II





Environmental Protection Agency





_______________________________________________________________________



40 CFR Parts 52, 60, 264, and 265



Project XL Site-Specific Rulemaking for Merck & Co., Inc. Stonewall 
Plant; Final Rule

  Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / 
Rules and Regulations  

[[Page 52622]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52, 60, 264 and 265

[FRL-5905-3]


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

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The EPA is implementing 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 Final Project Agreement (FPA) 
which is available in the docket for this action. In addition, EPA is 
promulgating today a site-specific rule, applicable only to the Merck 
Stonewall Plant, to facilitate implementation of the project.
    This site-specific rule provides 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 site-specific rule changes the 
requirements under the Clean Air Act which apply to the Merck Stonewall 
Plant for the prevention of significant deterioration of air quality 
and certain new source performance standards. EPA also is promulgating 
a site-specific rulemaking under RCRA to provide regulatory changes 
pertaining to air emissions standards.

DATES: This rule is effective on October 8, 1997.
ADDRESSES: Docket. A docket containing supporting information used in 
developing this 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.

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
III. Summary of Regulatory Requirements for the Merck XL Project
    A. Clean Air Act
    1. Prevention of Significant Deterioration
    2. New Source Performance Standards
    3. State Implementation Plan Requirements
    B. Resource Conservation and Recovery Act
IV. Summary of Response to Key Public Comments
    A. General Support of Project
    B. Superior Environmental Performance
    1. General
    2. Level of Emissions Caps
    3. Volatile Organic Compound (VOC) Emissions
    4. PM-10 Emissions
    C. National Ambient Air Quality Standards (NAAQS)
    1. Future Nonattainment Situation
    2. Ozone NAAQS--General
    3. New Ozone and Particulate Matter NAAQS
    D. Public Participation Issues
    1. Summary
    2. Permit Term
    3. Stakeholder and Public Involvement
    a. General
    b. Project Signatory Consent to Permit Changes During Five-Year 
Reviews
V. Administrative Requirements
    A. Effective Date
    B. Executive Order 12866
    C. Regulatory Flexibility
    D. Paperwork Reduction Act
    E. Unfunded Mandates Reform Act

I. Authority

    This regulation is being promulgated 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, and 3010 of the Solid 
Waste Disposal Act of 1970, as amended by the Resource Conservation and 
Recovery Act, as amended (42 U.S.C. 6905, 6912, 6921-6927, and 6930). 
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 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 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

[[Page 52623]]

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 site-specific rule supports a proposed permit and Project XL 
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. On March 
31, 1997, EPA published a notice of proposed rulemaking to seek public 
comment on the proposed site-specific rule. See 62 FR 15304-15322. In 
this notice, EPA also sought public comment on the proposed FPA and the 
project generally. At the request of the Southern Environmental Law 
Center, a public hearing was held on April 14, 1997, in Harrisonburg, 
Virginia. The comment period closed on May 15, 1997. EPA received 60 
comment letters during the public comment period, and 8 comment letters 
after the close of the comment period. EPA's response to the key issues 
raised by commenters is contained in Section IV of this preamble. A 
separate Response to Comments Document, which fully addresses the 
comments, is contained in the docket for this action and is available 
on the world wide web at http://www.epa.gov/ProjectXL.
    The FPA and proposed permit are contained in the docket for today's 
action and also are available on the world wide web at http://
www.epa.gov/ProjectXL. The FPA outlines how the project addresses the 
Project XL criteria, in particular how the project will produce, 
measure, monitor, report, and demonstrate superior environmental 
benefits.
    The Commonwealth of Virginia conducted the official comment period 
for the proposed PSD permit. The Commonwealth's public comment period 
for the proposed PSD permit and a proposed variance began on January 
28, 1997, and closed on May 30, 1997. The VADEQ held a public hearing 
to solicit comment on the proposed permit and variance on February 27, 
1997. The VADEQ plans to request the State Air Pollution Control Board 
(Board) to adopt the variance in the near future.
    In the near future, EPA plans to delegate, with EPA oversight, the 
authority to implement and enforce the PSD site-specific rule (40 CFR 
52.2454) to the Commonwealth of Virginia. This delegation would 
authorize the VADEQ to issue the PSD permit to Merck. The VADEQ expects 
to issue the PSD permit after the Board approves the variance, and 
after EPA's delegation of authority is effective.
2. Merck XL Project Description
    The Merck XL project was described in detail in the preamble to the 
proposed site-specific rulemaking. See 62 FR 15305-15306 (March 31, 
1997). The goal of the Merck XL project is to develop a regulatory 
structure for the Merck Stonewall Plant that both facilitates flexible 
manufacturing operations and achieves superior environmental 
performance. Merck's XL project seeks to replace the current air 
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 (PM10). 
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 PM2.5 or 
new criteria pollutants which are not included in the total 
emissions cap.
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    Merck's XL project will be implemented through issuance of a site-
wide PSD permit, authorized by this site-specific rulemaking. Under the 
site-specific rule and permit, the Merck Stonewall Plant will be 
required to maintain its emissions below the total emissions cap, as 
well as the subcaps for SO2, NOX and 
PM10. Under the site-

[[Page 52624]]

 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 
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. 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 will 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 actual emission levels. After 
the powerhouse conversion, the total emissions cap and subcaps will 
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 site-specific rulemaking and issuance of the 
PSD permit. See the preamble to the proposed site-specific rule (62 FR 
15309-15312, March 31, 1997).

III. Summary of Regulatory Requirements for the Merck XL Project

A. Clean Air Act

    The alternate regulatory system that is established under this 
site-specific rule and the 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.
    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 
today's rule is limited to the Merck Stonewall Plant and should not be 
interpreted as a more general revision of regulations, or even as 
initiating a process toward such a general revision.
1. Prevention of Significant Deterioration
    In today's action, EPA is promulgating a site-specific PSD rule for 
the Merck Stonewall Plant in order to implement the XL project for the 
site. See 40 CFR 52.2454. This site-specific rule replaces (in most 
circumstances) the existing PSD rules at 40 CFR 52.21 for the Merck 
Stonewall Plant only, and establishes the legal authority to issue the 
PSD permit to the Merck Stonewall Plant. The site-specific PSD 
requirements were described in detail in the preamble to the proposed 
rulemaking. See 62 FR 15309-15312 (March 31, 1997).
    The Merck Stonewall Plant is located in an area that currently 
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. The 
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 
52.21,3 for the control of lead emissions, 
PM2.5,4 and any new criteria pollutants 
promulgated by EPA. If in the future EPA were to promulgate standards 
for other forms of fine particulates (e.g., PM1.0), Merck 
also would be required to comply directly with any associated

[[Page 52625]]

applicable requirements. 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).5
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    \3\ The Commonwealth of Virginia currently implements 40 CFR 
52.21 under a delegation of authority from EPA. See 40 CFR 52.2451.
    \4\ Particulates with an aerodynamic diameter less than or equal 
to a nominal 2.5 micrometers.
    \5\ 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 extends 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 as the regulated form of 
particulate matter for purposes of PSD applicability; however, this 
rulemaking does not extend the policy to PM2.5.
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    Merck will be allowed to vary its emission levels under the total 
emissions cap, constrained by the individual pollutant subcaps. Changes 
at the facility that might otherwise 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 are 
satisfied pursuant to this site-specific rulemaking.
    The site-specific PSD rule (40 CFR 52.2454) is being promulgated as 
proposed, with the exception of a clarification that the site-specific 
rule does not apply in lieu of the PSD regulations at 40 CFR 52.21 for 
PM2.5. See 40 CFR 52.2454(a)(2). This revision to the final 
rule is described further in Section IV.C.3 of this preamble. In 
response to public comments, the proposed PSD permit has been changed 
to address issues regarding requirements for the control of 
PM2.5, RCRA hazardous waste accumulation and/or storage 
vessels, and monitoring device data availability. These issues and 
associated permit changes are described in sections V.C, VI, and 
VIII.D, respectively, of the Response to Comments Document (contained 
in the docket and on the world wide web at http://www.epa.gov/
ProjectXL).
2. New Source Performance Standards
    EPA also is promulgating 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). See 40 CFR 60.1(d); 40 CFR 60.49b(u); and 40 
CFR 60.112b(c). For NSPS other than Subpart Kb that may become 
applicable to the site in the future, EPA is promulgating 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 NSPS alternative means 
of compliance is described in detail in the preamble to the proposed 
site-specific rulemaking. See 62 FR 15314-15315 (March 31, 1997).
    The NSPS site-specific rule is being promulgated as proposed, with 
the exception of a correction to a citation. In 40 CFR 60.49b(u)(1) 
(pertaining to alternate compliance for the new natural gas-fired 
boilers), EPA has corrected an error in the citation contained in the 
proposed rule such that the second sentence now reads, ``The 
requirements of this paragraph shall apply, and the requirements of 40 
CFR 60.40b through 60.49b(t) shall not apply, to the natural gas-fired 
boilers installed pursuant to 40 CFR 52.2454(g).'' The proposed rule 
cited 40 CFR 60.49b, rather than 40 CFR 60.49b(t), which would have 
mistakenly included as not applicable the new paragraph 40 CFR 
60.49(u).
3. State Implementation Plan Requirements
    On January 28, 1997, VADEQ requested 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 the near future. 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 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. For a further description of Merck's 
compliance with SIP requirements under this XL project, see the 
preamble to the proposed site-specific rule (62 FR 15313, March 31, 
1997).
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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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B. Resource Conservation and Recovery Act

    In addition to Clean Air Act requirements, today EPA also is 
establishing alternate regulatory requirements for the RCRA air 
emission standards for the Merck Stonewall Plant. 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. Under this XL Project, the hazardous waste management units at 
the Merck Stonewall Plant that would otherwise be subject to those 40 
CFR parts 264 and 265 standards will be regulated through an 
enforceable PSD permit and a preventive maintenance program. See 62 FR 
15315 (March 31, 1997).
    For hazardous waste tanks and containers located at the Merck 
Stonewall Plant, the proposed 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.

[[Page 52626]]

    For all affected hazardous waste equipment, today's site-specific 
regulation will exempt the Merck Stonewall Plant from the 
administrative requirements of the RCRA air standards; the proposed PSD 
permit and a future 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. See 40 CFR 265.1080(b)(7); 61 FR 59971 
(November 25, 1996). 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 
facility'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 Agency continues to consider the requirements contained in the 
proposed PSD permit to be a viable approach to addressing organic air 
emission from hazardous waste units at the Merck Stonewall Plant. 
Therefore, the site-specific exemption from requirements of 40 CFR 
parts 264 and 265 is being finalized today exactly as it was proposed. 
See 62 FR 15303 (March 31, 1997). The Response to Comments Document 
describes a change to the proposed PSD permit that was made to address 
a commenter's question about the permit requirements for RCRA hazardous 
waste accumulation and/or storage vessels. This comment and the 
associated change to the proposed PSD permit are described in Section 
VI of the Response to Comments Document (contained in the docket).

IV. Summary of Response to Key Public Comments

    EPA received 60 comment letters on the proposed Merck XL project 
during the public comment period. An additional eight comment letters 
were received after the close of the comment period. These letters 
primarily reflected comments similar to those received during the 
comment period; therefore, EPA's response to comments generally 
addresses issues raised in the late comments as well. In the following 
section, the Agency responds to several of the key issues raised by 
commenters. A comprehensive response to comments is contained in a 
separate document, ``Merck XL Site-Specific Rulemaking--Response to 
Comments Document'' which is contained in the docket and available on 
the world wide web at http://www.epa.gov/ProjectXL.

A. General Support of Project

    General support for the Merck XL project was expressed by several 
citizens, government officials, industry associations, state 
environmental agencies, businesses, and the Merck workers union. 
Several citizens commented that Merck is a good environmental steward 
and a good corporate neighbor. Some commenters expressed that, besides 
the project's immediate benefits to environmental quality in the area, 
the project will further benefit the community by making the Stonewall 
Plant more attractive as a site for product expansion and new product 
introduction, resulting in increased employment opportunities for 
people living in the Shenandoah Valley. Many comments also supported 
the simplified regulatory process and increased operational flexibility 
afforded to Merck. Two state environmental agencies commented that the 
project is an excellent example of innovative permitting, and commended 
EPA for its efforts. These states believe that the project is a great 
example of EPA's reinventing environmental regulation initiative, and 
will provide significant environmental performance while allowing Merck 
the flexibility warranted by such a permit. One state added that it 
supports the permit's strong incentives to minimize air emissions of 
criteria pollutants on an ongoing basis. Industry associations and 
companies commented that the project will benefit future permitting 
strategies that seek better ways to protect the environment. A Virginia 
industry association urged EPA to advance the project to the 
implementation stage where the value of the increased operational 
flexibility can be clearly demonstrated.

B. Superior Environmental Performance

1. General
    Numerous commenters, including citizens, environmental groups, 
state environmental agencies, industry groups, and political officials, 
expressed support for the emission reductions that will be achieved by 
Merck converting its coal-fired boilers to burn natural gas. Many of 
the citizen and environmental group commenters supported the permanent 
reduction of criteria air pollutants by 300 TPY, as well as the upfront 
reduction of criteria pollutants by 900 TPY, and of hazardous air 
pollutants by 47 TPY. These comments specifically addressed the 
importance of this project's environmental benefits to Shenandoah 
National Park. A citizen commenter added support for the other positive 
elements of the project, including the provision that the project does 
not allow the sale or acquisition of emission credits, and that annual 
or semi-annual reports must be submitted to the project signatories.
2. Level of Emissions Caps
    There were some comments from environmental groups and a citizen 
regarding the level of reduction of certain emission caps from the 
baseline levels. One environmental group questioned why the site-wide 
total emissions cap was set at a level of 20% less than recent actual 
emissions when there will be a 60% emissions reductions of criteria 
pollutants from the replacement of coal-fired boilers.
    The baseline for the site-wide emissions cap is the average of 
annual actual emissions during the years 1992-93 (approximately 1500 
TPY), the recent years most representative of normal facility 
operations. See 62 FR 15309 (March 31, 1997). Detailed information 
about the establishment of the emissions caps is contained in the 
rulemaking docket. The site-wide emissions cap will be reduced by 20% 
from the baseline level (i.e., the reduced cap level will be 1200 TPY, 
thereby permanently retiring 300 TPY of emissions) after the powerhouse 
conversion. Thus, Merck's new ``allowable'' emissions (the cap) will be 
20% lower than recent actual emissions. In fact, Merck's allowable 
emissions in the baseline period were approximately 2700 TPY, so its 
new allowable emissions (i.e., the total emissions cap) will be less 
than half of the old allowable limit. The only reason that Merck is 
able to reduce its baseline cap by 20% is because of the significant 
actual emission reductions that will be

[[Page 52627]]

achieved from the powerhouse conversion (switching from burning coal to 
natural gas, a much cleaner burning fuel). The powerhouse conversion 
will reduce criteria pollutant emissions by approximately 900 TPY, 
bringing post-conversion site-wide actual criteria pollutant emissions 
to approximately 600 TPY (i.e., 1500 TPY minus 900 TPY). With the 20% 
cap reduction, Merck's ``margin for growth'' under the cap will be 
approximately 600 TPY (i.e., 1200 TPY minus 600 TPY). If the cap were 
set at the facility's post-powerhouse conversion level, as suggested by 
the commenter, Merck would have no operating margin for growth, and, 
thus, no incentive to enter into this project or implement the 
powerhouse conversion. In order to provide the regulatory and 
operational flexibility of this XL project, it is necessary to have an 
adequate margin for growth under the cap. EPA anticipates that Merck's 
emissions will remain far below the total emissions cap for a long 
period of time after the powerhouse conversion, in part because the 
tiered monitoring system provides an incentive to minimize emissions.
    As long as Merck operates under this PSD permit, Merck will no 
longer be able to obtain permits to increase emissions above the cap, 
since an exceedance of the total emissions cap is a basis for 
termination of the permit. Under the current permitting system, Merck 
would not be constrained by a site-wide emissions cap, and could 
continue to increase emissions as long as the proper permits were 
obtained.
    Another environmental group commenter supported the overall 
permanent emission reductions that will be achieved (300 TPY), but 
expressed concern about the volatile organic compound (VOC) emission 
increases allowed under the cap. The commenter expressed concern that 
while NOX emissions will initially decrease, the permanent 
reduction assured is only 29 TPY (i.e., a 10% reduction of the 
NOX subcap from baseline emissions); meanwhile, VOC 
emissions can increase substantially above current levels. The 
commenter believes that, given that both NOX and VOC 
emissions contribute to ozone formation, Merck's contribution to ozone 
formation could increase rather than decrease over time. The commenter 
suggests that a lower NOX cap could correct this problem. 
Alternatively, Merck commented that the setting of the individual 
emission caps was the subject of extensive debate during the 
stakeholder meetings, and that the levels prescribed in the proposed 
permit are the result of full agreement from the stakeholder group. 
Merck stated that it is not aware of any new and compelling information 
to substantiate any need for changes to the emission caps.
    EPA does not believe there is a need to set a lower NOX 
cap. The impact of the potential VOC emission increases under the cap 
on ozone formation is described elsewhere in this document and in the 
preamble to the proposed site-specific rulemaking. See 62 FR 15310 
(March 31, 1997). Merck's NOX emissions cap guarantees that 
its future actual NOX emissions will always be at least 10% 
less than recent actual emissions. Further, Merck's current permitted 
NOX emissions are 569 TPY; thus, by taking a NOX 
cap at a level that is 10% less than current actual emissions (i.e., 
262 TPY), Merck also is relinquishing the ability to emit NOx at the 
currently permitted levels. In the preamble to the proposed site-
specific rulemaking, EPA described an analysis (contained in the 
docket) that had been conducted to demonstrate that Merck's worst-case 
VOC emissions would continue to provide protection of the ozone NAAQS. 
See 62 FR 15310 (March 31, 1997). Because this analysis demonstrates 
that Merck's worst-case VOC emissions will continue to provide 
protection of the ozone NAAQS, and because Merck's worst-case 
NOX emissions will be less than recent emissions, EPA does 
not believe that Merck's contribution to ozone formation under this 
project would increase rather than decrease over time, compared to 
Merck's current emissions levels and its ability to increase emissions 
under the current permitting system. Therefore, EPA does not agree that 
it is necessary to establish a lower NOX subcap.
3. Volatile Organic Compound (VOC) Emissions
    Several citizens and environmental groups expressed concern about 
the potential increase in VOC emissions from recent levels, as Merck 
operates under the site-wide emissions cap. Some commented that since 
there is no specific cap on VOC emissions, Merck would be able to 
increase VOCs by about 650 TPY from recent emission levels. One citizen 
commented on the tradeoff of VOCs and CO for reductions in other 
pollutants, and questioned the value of that tradeoff and whether there 
is a way to measure it. Some commenters believed that since VOCs are a 
major source of ozone, the potential VOC increases would have a 
detrimental effect on respiratory health, the health of the forests in 
Shenandoah National Park and elsewhere, tourism, and crop yields.
    As Merck operates under the total emissions cap, it is permissible 
over time for VOC emissions to increase above the baseline VOC levels. 
The baseline VOC emission level is 408 TPY. If all other pollutants 
remain at their expected post-powerhouse conversion levels, the maximum 
VOC emissions increase (above baseline VOC emissions level) under the 
cap would be approximately 650 TPY. It should be noted that if Merck 
were to increase VOC emissions by this amount it would no longer have a 
margin for growth under the site-wide emissions cap and would have to 
implement the most stringent tier of monitoring, recordkeeping and 
reporting. Thus, Merck has an incentive not to reach this level of 
emissions. Nevertheless, an analysis was conducted to determine the 
impact on the ozone NAAQS if Merck were to increase VOC emissions to 
the maximum amount under the cap. In the preamble to the proposed site-
specific rulemaking, EPA described an analysis (contained in the 
docket) that had been conducted to demonstrate that Merck's worst-case 
VOC emissions would continue to provide protection of the ozone NAAQS. 
See 62 FR 15310 (March 31, 1997).
    The Merck Stonewall Plant is located in an area that is 
NOX-limited for ground-level 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 increased 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. See 62 FR 15310 
(March 31, 1997) and the docket. In summary, this report analyzed a 
worst case scenario which showed that the expected ozone increase from 
Merck's potential VOC emissions would be less than 0.5 parts per 
billion (ppb), which is less than 0.5% of the 120 ppb ozone standard, 
and 0.625% of the 80 ppb ozone standard. EPA believes that the analysis 
portrayed a highly conservative worst case scenario and that the 
potential ozone formation would be negligible under actual conditions. 
Moreover, the NOX emission reductions achieved as a result 
of Merck's powerhouse conversion and the establishment of

[[Page 52628]]

permanent NOx subcaps will 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.
    Other commenters stated that the permit's review structure would 
put severe limitations on incorporating any future knowledge about VOCs 
into the permit's conditions. One citizen commenter suggested that 
Merck should be required to contribute to an EPA-approved study of the 
contribution of VOCs to air pollution. This commenter expressed the 
need to study the effects of the various chemicals that will be emitted 
on the natural, historic and human resources of the Shenandoah area.
    The proposed PSD permit has numerous provisions that were designed 
specifically to address the effects of Merck's VOC emissions. Any 
future knowledge about the environmental or public health effects of 
VOCs will be implemented in the Merck permit in the following ways. 
First, Merck will be required to comply with any generally applicable 
future regulation designed to control VOCs, and generally would have 
the option to reduce the cap in lieu of directly implementing the 
regulation (Section 1.2.2 of the permit). Second, Merck will conduct an 
assessment of VOC emissions for impacts on air quality related values 
(AQRVs) in Shenandoah National Park if VOC emissions reach specified 
levels. See Section 6.2.1 of the permit. Third, Merck is required to 
comply directly with any requirements for the control of hazardous air 
pollutants (HAPs), including the forthcoming maximum achievable control 
technology (MACT) standard for the pharmaceutical industry. Compliance 
with the pharmaceutical MACT and other HAP requirements also will 
control VOC emissions, because some of the HAPs used or emitted by 
Merck are also VOCs. Finally, 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). If this modeling assessment predicts an exceedance 
of the Significant Ambient Air Concentrations (SAAC), which are based 
on a fraction of the Threshold Limit Values 7, Merck must 
either demonstrate that the site's emissions produce no endangerment to 
human health, or implement changes at the site resulting in ambient 
concentrations that are below the SAAC or that are otherwise acceptable 
to VADEQ. This permit provision (Section 6.2.2) was developed to 
address the community stakeholders' concerns about the potential public 
health effects of Merck's VOC emissions. Because the AQRV assessment 
and the non-HAP VOC public health assessment are actions that will 
happen at some future point in time, if Merck reaches the respective 
VOC trigger levels, the permit provides for any new information about 
VOCs to be considered at the time the assessments are conducted. 
Similarly, any future regulations promulgated to control VOC emissions 
will take into account the latest information about the effects of 
VOCs.
---------------------------------------------------------------------------

    \7\ Threshold Limit Values, established for many chemicals, are 
workplace limits based on chronic and acute health effects, and are 
listed in the American Conference of Governmental Industrial 
Hygienists handbook.
---------------------------------------------------------------------------

    While the Merck project does not require that the permit be 
reopened to factor in new information about VOCs, the project offers an 
important opportunity for stakeholders to raise issues of concern to be 
considered at the five-year permit reviews. It is important to note 
that the generally applicable PSD regulations do not require that 
permits be reopened to incorporate future knowledge about emissions 
information. So long as a permittee complies with the emission 
limitations and other permit terms, and does not make changes at the 
facility that require further permitting review, the permit would not 
be required to be reopened to incorporate future information about the 
permitted emissions levels.
    EPA does not agree that it is necessary under Project XL for Merck 
to contribute to an EPA-approved study of the contribution of VOCs to 
air pollution. There are already a number of efforts under way to 
assess the various public health and environmental effects of VOC 
emissions. For years, the Ozone Transport Assessment Group (OTAG) has 
undertaken region-wide studies of the effects of VOCs on ozone 
formation. Under Section 112(b)(2) of the Clean Air Act, EPA is 
required to periodically review the list of HAPs to add pollutants 
which may present a threat of adverse human health effects. As for all 
HAPs, if any new VOCs are added to the list of HAPs, Merck will be 
required to control them in accordance with the applicable HAP 
requirements.
4. PM-10 Emissions
    A citizen commented that there is no PM10 environmental 
benefit in this project, and that even a little benefit would be 
appreciated. Merck commented that the powerhouse conversion from coal 
to natural gas is estimated to result in a PM10 emissions 
decrease of 74,000 pounds per year (37 TPY), which is a 98% reduction 
from baseline actual PM10 emissions. Merck stated that the 
PM10 cap was set at a level that reflects the lack of 
accurate PM10 emission factors and already very low 
PM10 emission rates at the plant. Merck commented that no 
new and compelling information has been presented to indicate a change 
to the PM10 cap is warranted.
    The permit establishes a PM10 subcap at the baseline 
emissions level of 42 TPY. The PM10 subcap will not be 
reduced after the powerhouse conversion. However, as Merck's comment 
indicates, the project will result in an upfront reduction of a 
substantial amount of PM10, from the burning of natural gas 
instead of coal. During the stakeholder discussions in developing this 
project, Merck had repeatedly expressed concern about setting a 
PM10 subcap at a level that would unnecessarily restrict 
future growth of operations, when there might be plenty of room for 
expansion of total emissions under the site-wide cap. In other words, 
because the baseline PM10 emissions were already relatively 
low (42 TPY), a ``reduced'' PM10 cap, similar to that for 
SO2 and NOX, could be the limiting factor in 
whether Merck would be able to expand operations in the future. That 
scenario would be counter to this XL's project's goal of providing 
increased operational flexibility. The ambient air quality modeling for 
PM10 conducted in support of the proposed permit 
demonstrated that the site's current worst-case emission rates do not 
cause or contribute to a violation of the NAAQS. See 61 FR 15310 (March 
31, 1997). The permit further provides for Merck's ambient impact, 
which will include impacts of the PM10 emissions, to be 
reevaluated at each five-year review period. Thus, EPA believes that 
the level of the PM10 emissions cap established in the 
permit is appropriate.

C. National Ambient Air Quality Standards (NAAQS)

1. Future Nonattainment Situation
    Two companies located in the Rockingham County, Virginia, area 
submitted comments regarding the potential for the area to become 
nonattainment for ozone or other pollutants in the future, and 
expressed

[[Page 52629]]

concern for the impact of possible additional nonattainment control 
strategies on other sources in the area. Under the new PSD permit, 
Merck would be required to comply with any new criteria pollutant 
regulations, including those that might be promulgated if the area 
becomes a nonattainment area in the future; however, Merck generally 
would have the option to comply with the new regulations via a cap 
reduction. See Section 1.2.2 of the proposed PSD permit. In the 
preamble to the proposed rulemaking, EPA explained that the 
Commonwealth of Virginia could not take emissions reduction credit in 
an attainment plan if Merck chooses the option of reducing its 
emissions caps, rather than complying directly with a criteria 
pollutant regulation. See 62 FR 15313 (March 31, 1997). These companies 
are concerned that they would be required to implement stricter 
controls, at greater cost, because Merck's cap reduction would not be 
credited for attainment planning purposes. The commenters do not 
believe that sources should have to make up for the actual emission 
reductions because of the insulation provided to Merck. One company 
suggested that EPA should allow it to have the same insulation since 
its actual emissions are considerably lower than its permitted 
emissions.
    Merck commented that it believes there is confusion about the 
possibility of more stringent future control requirements for other 
nearby facilities under a regional RACT plan as a result of this 
project. Merck described its view of the events which would have to 
occur before other nearby facilities would be impacted by more 
stringent controls, which it believes is an unlikely situation. Merck 
also submitted additional technical information prepared by a 
consultant relating to Merck's impact on local air quality and the 
implications of the new proposed ozone NAAQS.
    The area in which the Merck facility is located has been well 
documented to be NOX limited for ozone formation. Therefore, 
it is most likely that, if the area became nonattainment for the ozone 
NAAQS in the future, a control strategy would predominantly target 
reductions in NOX emissions, rather than VOC emissions. In 
the preamble to the proposed rule, EPA described an analysis which 
documented that the worst-case potential VOC emissions under Merck's 
cap would continue to provide protection of the ozone NAAQS. See 62 FR 
15310 (March 31, 1997).
    The planning involved in designing a control strategy to bring an 
area into attainment is based on an inventory of actual emissions. 
Since Merck will achieve significant actual emission reductions of 
NOX from the powerhouse conversion, these low actual 
NOX emissions will help to reduce ozone formation and will 
benefit any future control strategy efforts. In a sense, it could be 
viewed that Merck is complying ``early'' with any future actual 
NOX emission reductions that might be required for 
nonattainment planning. Similarly, other sources in the area which have 
very low actual emissions (e.g., as a result of BACT or comparable 
technology) likely would not be targeted for additional controls for 
those well-controlled and low-emitting units. Rather, nonattainment 
control strategies typically target those sources (both stationary and 
mobile sources) which are capable of achieving substantial decreases in 
actual emissions.
2. Ozone NAAQS--General
    An environmental group commented that the forests of Virginia are 
already suffering as a result of both ozone and acid ion deposition, 
and suggested that this information should be documented. The commenter 
provided information about the rate of decline of oak forests in the 
northern mountains of Virginia.
    EPA agrees with the commenter that ozone is a cause of degradation 
to forests and other vegetation in the Shenandoah area. The proposed 
Final Project Agreement describes the adverse effects of ozone and 
other pollutants on resources in the Park. The rulemaking docket 
includes a copy of the U.S. Department of Interior's Preliminary Notice 
of Adverse Impact on Shenandoah National Park (55 FR 38403, September 
18, 1990) and the accompanying Technical Support Document. These 
documents explain the potential impacts of ozone, NOX, and 
SO2 on forests and vegetation, as well as potential impacts 
of pollutants on aquatic streams and visibility.
    A commenter from a company in Rockingham County commented that 
there is no scientific evidence presented in the preamble to the site-
specific rulemaking or background documents that Rockingham County is a 
NOX-limited area for ozone. The commenter also suggested 
that EPA require baseline air quality monitoring in Rockingham County 
to specifically address the importance of VOCs in relation to ozone 
transport.
    It has been well documented that the area in which the Merck 
Stonewall Plant is located is NOX-limited for ozone 
formation.8 The Permit Support Document (contained in the 
docket) includes additional information and references that the area is 
NOX-limited. The OTAG modeling effort of ozone in the 
eastern U.S. is one of the largest public-private air quality projects 
ever conducted. As part of its key modeling findings related to future 
attainment strategies, OTAG found that NOX emission 
reductions are more effective than VOC emission reductions in lowering 
regional ozone concentrations; NOX reductions decrease ozone 
domain wide, while VOC reductions decrease ozone only in urban areas. A 
copy of this modeling report is contained in the docket. In its public 
comments, Merck submitted additional technical papers for the docket 
that document that the area is NOX-limited for ozone 
formation.
---------------------------------------------------------------------------

    \8\ Ozone Transport Assessment Group, Modeling Report (Draft), 
Regional and Urban Scale Modeling Workgroup, Version 1.1., February 
12, 1997 (contained in docket).
---------------------------------------------------------------------------

    The PSD requirement for pre-construction ambient air quality 
monitoring has been satisfied. The docket contains the ambient ozone 
monitoring data that satisfies this requirement. EPA disagrees that 
additional monitoring should be required within the context of the 
Merck XL project to address the importance of VOCs in ozone transport. 
These efforts are being undertaken in a much broader context by the 
OTAG modeling studies. Further, ozone transport is a regional issue and 
it is currently not feasible to study the effects of VOC from a single 
source on ozone transport.
3. New Ozone and Particulate Matter NAAQS
    Several environmental groups and citizens requested EPA to address 
how Merck would comply with the new proposed NAAQS for ozone and fine 
particulates. Some commenters expressed concern that they believe the 
permit does not account for EPA's proposed new air quality standards, 
and allows a long term escape from higher standards, especially 
particulates. Some commenters also believe the permit should be 
reconsidered to account for PM2.5.
    On July 18, 1997, EPA promulgated final rules which revise the 
NAAQS for ozone (62 FR 38855-38896) and particulate matter (62 FR 
38651-38752). Under EPA's final rule, the NAAQS for particulate matter 
is revised in several respects, including the addition of two new 
standards for PM2.5 (particulates with an aerodynamic 
diameter less than or equal to a nominal 2.5 micrometers). Because 
PM2.5 (fine particulates) is a

[[Page 52630]]

new indicator for particulate matter, PM2.5 is not one of 
the pollutants specifically included in Merck's site-wide emissions 
cap.9 Rather, Merck would be required to comply directly 
with any future requirements for the control of PM2.5. At 
the present time, EPA believes this is the more environmentally 
protective and scientifically sound approach, since no baseline data 
are available about Merck's PM2.5 emissions, methods to 
measure and monitor PM2.5 are not yet widely available, and 
it would be speculative to attempt to regulate PM2.5 as part 
of the site-wide emissions cap. Moreover, it will likely be several 
years before states have enough monitoring information available to 
know whether areas are not attaining the PM2.5 standard, 
and, consequently, whether and what type of PM2.5 control 
strategies are needed in a given area to bring an area into attainment. 
It should be noted that sulfates and nitrates are major components of 
secondary fine particles, formed in the atmosphere through chemical 
reactions. Therefore, the SO2 and NOX reductions 
from Merck's powerhouse conversion will help to reduce fine 
particulates.
---------------------------------------------------------------------------

    \9\ However, Merck will be required to include emissions of 
PM2.5 (as a subset of PM10) in its calculation 
of PM10 emissions.
---------------------------------------------------------------------------

    The proposed site-specific rule (40 CFR 52.2454(a)(2)), stated that 
the rule applies in lieu of 40 CFR 52.21 for the pollutants included in 
the site-wide emissions cap, as well as particulate matter. In the 
final site-specific rule, EPA is adding language to ensure that it is 
clear that the rule does not apply in lieu of 40 CFR 52.21 for 
particulate matter specifically regulated as PM2.5.
    This change makes clear that the site-specific rule replaces 40 CFR 
52.21 for particulate matter and PM10, but not for 
particulate matter that is specifically regulated as PM2.5. 
Similar changes also will be made in the final PSD permit to ensure 
that it is clear that the project does not provide alternate compliance 
for particulate matter specifically regulated as PM2.5. If 
in the future EPA were to promulgate standards for other forms of fine 
particulates (e.g., PM1.0), Merck also would be required to 
comply directly with any associated applicable requirements.
    Under EPA's revision of the ozone NAAQS, ozone is not considered a 
new criteria pollutant. Rather, EPA revised the existing NAAQS for 
ozone to a lower and more protective standard. The regulated precursors 
for ozone formation, VOC and NOX, are included in Merck's 
site-wide emissions cap. Therefore, Merck must comply with any new 
regulations for the control of VOC or NOX (ozone precursors) 
as prescribed by Section 1.2.2 of the permit. Under these provisions, 
Merck generally will have the option to reduce the site-wide total 
emissions cap (for VOC regulations) or NOX subcap (for 
NOX regulations), in lieu of implementing the regulation as 
written. This approach was described in detail in the preamble to the 
proposed rulemaking for the Merck XL project (61 FR 15313, March 31, 
1997).

D. Public Participation Issues

1. Summary
    Some commenters expressed concern about continuing community 
involvement in the permit. Related concerns include the unlimited term 
of the PSD permit, the composition of the decision-making group, and 
community input into decisions involving potential increases to the 
emissions levels of the permit. These issues are addressed 
substantively and thoroughly in this preamble and the Response to 
Comments Document.
    EPA strongly supports ongoing community involvement in permit 
issues associated with this XL project. Many commenters remarked on the 
unprecedented level of participation this project has afforded the 
community thus far. The participation of Rockingham County as a 
signatory will assist in maintaining the level of community involvement 
during implementation. EPA also pledges to seek out and strongly weigh 
community and public interest group input and involvement where permit 
modifications or reviews are being considered. Stakeholders will be 
expressly included in the five-year reviews scheduled as a result of 
this project, affording public input opportunities on issues outside 
the scope of existing permit programs.
    PSD permits are analogous to building permits, which are not 
normally revocable or subject to end dates. Thus, while this project 
offers Merck flexibility in the scope of the PSD permit, it does not 
offer Merck flexibility in terms of duration that it would not 
otherwise receive. EPA believes that the level of accountability 
contained in the proposed permit and the five-year reviews offer 
adequate oversight opportunity to both regulators and the community. 
These five-year reviews themselves are an additional step to ensure the 
protection of public health and the environment, and offer the 
stakeholders a role in the implementation of the permit. EPA commits to 
making any necessary technical assistance or facilitation available to 
the stakeholders during the five-year review to ensure their informed 
participation.
    The signatories to the Final Project Agreement (EPA, U.S. 
Department of the Interior/Federal Land Manager, Virginia Department of 
Environmental Quality, the Rockingham County Board of Supervisors, and 
Merck) generally must agree to any permit modifications that might be 
considered. During negotiations, the County was put forward as a 
signatory as a way of incorporating a representative vote for the 
community. The County, State, U.S. Department of the Interior, and EPA, 
as governmental entities, will ensure public support for any changes 
that go forward. If increases in the emissions caps are contemplated, 
EPA generally must amend the site-specific rule to propose changes to 
the permit. Although EPA fully expects that such increases in the 
emissions caps will not be necessary and therefore will not be 
proposed, EPA commits that, in any such instance, it will seek out and 
strongly consider the input of the community.
    EPA would also like to note that, as described in Sections III.A.2, 
III.A.3, and IV.C above, this rule and the PSD permit require Merck to 
comply with future relevant regulatory changes or new standards that 
would otherwise apply to the facility.
    Community involvement is and will continue to be critical to the 
success of Project XL. The Merck project was, in many ways, shaped by 
the input of the stakeholder group associated with the project. For 
example, Merck's original project proposal was greatly improved during 
the stakeholder process by addressing many stakeholder concerns, 
including a 20% decrease of the total emissions cap after the 
powerhouse conversions, emissions subcaps for PM-10, SO2 and 
NOX, strict compliance with all hazardous air pollutant 
(HAP) requirements, modeling of non-HAP VOC emissions to ensure 
protection of public health, assessment of VOC impacts in Shenandoah 
National Park, and several other provisions. EPA believes that the 
project as it is now reflected in the proposed PSD permit, the Final 
Project Agreement and the site-specific rule will enhance the 
community's opportunity for meaningful involvement in the 
implementation of the Merck XL project.
2. Permit Term
    EPA received numerous comments from citizens and environmental 
groups supporting a limit on the term of the

[[Page 52631]]

PSD permit. Some commenters suggested that a limited permit term be 
established, after which the permit could be ``affirmatively renewed'' 
or renegotiated within some set of preestablished guidelines. Most of 
these commenters supported an initial permit term of 10-15 years, and 
one environmental group suggested a five year term. Another 
environmental group suggested an initial permit term reasonably 
sufficient to allow Merck to recover its investment in the boiler 
conversion, after which the permit could be affirmatively renewed on a 
five-year basis. One environmental group maintained that the unlimited 
permit term is unwise because the permit allows substantial VOC 
increases and there is currently inadequate information regarding the 
impacts of the VOC emission increases on human health and the 
Shenandoah National Park. One commenter believes that no other XL 
project has a permit with unlimited duration and a provision for veto 
of any changes by the applicant, and believes that this permit would 
establish an inappropriate precedent for these conditions.
    Merck commented that the decision to craft the permit under PSD and 
include extensive review and termination procedures (Sections 6 and 8) 
was the compromise worked out among the stakeholders. Merck expressed 
that, absent new, compelling information from commenters on this issue 
they believe that EPA must act in good faith and decline any changes 
with regard to permit expiration.
    In response, EPA notes that the ``unlimited term'' of the permit is 
consistent with the normal practice for PSD permits. They are permits 
to construct or modify a source, and are analogous to building permits 
which would not normally be revocable or have an end date. Once a 
source is permitted to construct the emission units authorized by the 
permit, so long as it complies with the permit's emission limitations 
and operational conditions, a source generally is not required to renew 
the PSD permit for those units. Under the particular circumstances 
presented in the Merck project, including the innovative emissions cap-
based permit and Merck's substantial voluntary investments to achieve 
significant emission reductions, EPA believes it is appropriate to 
treat the entire set of changes authorized at the facility by this rule 
and the PSD permit as a single major modification. Because Merck's 
permit will be issued as a PSD permit, under a new site-specific PSD 
rule which applies only to the Stonewall Plant, EPA believes it is 
consistent with the PSD program not to establish a term limit for 
Merck's permit. As a related issue, there currently are no specific 
Federal regulations for modifying PSD permits. If EPA in the future 
should promulgate permit modification rules that generally apply to PSD 
permits, Merck's permit would be subject to those permit modification 
procedures as well (Section 6 of the permit). In addition, the Merck 
permit goes beyond typical PSD permits by requiring a five-year 
periodic review and setting forth provisions for revising the permit. 
(See Section IV.D.3.b of this preamble for a more detailed discussion 
of the five-year review process). Therefore, EPA believes an unlimited 
term is warranted to allow the permitted modifications to occur as 
intended, subject to the safeguards in the permit.
    In comparison to the opportunities for public involvement in the 
typical PSD permitting process, the Merck XL project offers the public 
an opportunity to be more fully informed about the environmental 
activities and changes at the facility. Absent Project XL, if Merck 
were to make a change at the facility that triggered a PSD permit 
review, the public would only have opportunity to comment on the 
specific project being permitted at that time. Further, it is difficult 
to speculate if and when the Merck Stonewall Plant would trigger a 
future PSD review, since it has never done so in its history. All of 
Merck's existing air permits are minor NSR permits. It is possible that 
Merck would have been required to undergo PSD review in the future 
(e.g., for a new pharmaceutical product line); however, the existing 
regulations would allow Merck to avoid PSD review if the emissions 
increase was less than the significance level, if it ``netted out'' of 
PSD review, or if it took a synthetic minor emissions limit. In any of 
these cases, the Commonwealth of Virginia would issue a minor NSR 
permit. Under the Commonwealth's minor NSR program, many types of 
permit changes can be made with little or no public participation. Even 
in cases where public participation is available under the minor NSR 
permitting process, public comment would be open only to the particular 
process being permitted. As explained above, for PSD permits as well as 
minor NSR permits, there is no term limit on the permit, and the public 
would not have an opportunity to comment on the facility's performance 
under the permit after the permit was issued.
    Without this XL project, there would be no opportunity for 
stakeholders to participate in a regular five-year review of the 
facility's operations, no opportunity for stakeholders to request 
permit changes to be considered, and no opportunity for the community 
to give consent to permit changes. By participating in the five-year 
permit review, the community will be much more fully informed about, 
and involved with, the facility's operations than they would under the 
traditional permitting system. During development of the initial XL 
project, all stakeholders learned a great deal of information about 
Merck's air emissions, emission units, monitoring methods, and facility 
operations. This level of information will continue to be shared during 
the stakeholder discussions for the five-year permit reviews. Under the 
traditional permitting process, the public would not have access to 
this level of facility-wide information, because the emissions 
information would be limited to the particular process undergoing 
permit review. Therefore, considering the full set of public 
participation opportunities under this XL project as compared to the 
traditional permitting system, EPA believes that Merck's XL project 
offers the public more comprehensive involvement in overseeing and 
reviewing facility operations.
    In response to the comment regarding the term of permits in other 
XL projects, there is at least one other XL project in which a PSD 
permit is expected to be issued. In the Weyerhauser XL project, the 
State of Georgia plans to issue Weyerhauser a PSD permit as the 
mechanism to make enforceable the emissions caps described in the XL 
agreement. At this time, EPA understands that Weyerhauser's PSD permit 
will not have a limited duration. With regard to a commenter's concern 
about the permit term in the Merck XL project establishing precedent, 
EPA does not view any XL project as setting a precedent for future 
projects. Each project must be evaluated by the Agency and by 
stakeholders on an independent basis, considering the unique nature of 
the project and the company's full set of obligations under the 
proposed XL agreement.
3. Stakeholder and Public Involvement
    a. General. Several citizens and environmental groups commented 
about the public participation involved in developing this proposed 
project. Merck commented that the stakeholders have made significant 
efforts to notify and educate the public about the project. A community 
meeting was held in December 1996, two public hearings were held in 
February 1997 and April 1997 (one by VADEQ and one by EPA),

[[Page 52632]]

a Merck retiree dinner was held, the Stonewall site's employees and 
Community Advisory Panel were briefed several times, several newspaper 
articles were published, and numerous newsletters and other documents 
were prepared and distributed to neighbors, retirees, employees, the 
media, and local state and federal government officials. In addition, 
Merck believes that the permit reviews represent a process that is 
unprecedented in air permitting in this country, and that the community 
will be provided with significant oversight of Merck's permit.
    From Project XL's inception, EPA has stressed that stakeholder 
involvement and opportunities for public participation are critical to 
a project's success. During development of the Merck XL project, the 
public was given numerous opportunities for participation--far more 
than under the normal permitting process. Merck initiated a number of 
efforts to inform the local community about the project. EPA believes 
that Merck's comment provides a good summary of the communications 
outreach efforts undertaken during the development of this XL project. 
At the outset of the project, Merck developed and shared with the 
stakeholders a public involvement plan that included many of the 
activities described in Merck's comment above. This set of public 
involvement activities is fully consistent with the XL guidelines in 
place at the time of Merck's project development.
    An environmental group commented that the stakeholder process for 
five-year permit review should follow EPA's April 23, 1997 XL 
guidelines in identifying and selecting direct participants and 
commenters. The commenter believes that ``direct stakeholders'' are 
those who sign off on the project and have a vote in the five-year 
review and potential permit changes. The commenter believes that the 
direct stakeholder group is not broad enough, because the commenter 
believes that EPA's XL guidance provides that additional stakeholders 
should be involved in the XL project development stage. Given that the 
Merck XL proposal has unlimited duration and a number of key issues 
were left to the five-year review process, the commenter recommends 
that the stakeholder process for periodic review should be equally as 
broad as the stakeholder process recommended by EPA for project 
development. The commenter requests EPA to ensure that the five-year 
review process meets the following [excerpt from 62 FR 19878-19879, 
April 23, 1997]: ``The project sponsor should make special efforts to 
recruit potential direct participants and commentors from among 
economically disadvantaged stakeholders and among stakeholders most 
directly affected by the environmental and health impacts of the 
project; * * * who have specific interest or expertise in the issues 
addressed in the project from among the national environmental justice 
communities and the industry segment of which the facility is a part; 
and * * * from among participating facilities' non-managerial 
employees.'' The commenter believes that the proposed make-up of the 
stakeholder group for permit review does not adequately reflect 
interest from these groups. In addition, a company located in 
Rockingham County, Virginia commented that it and other industries in 
the area should be considered significant stakeholders to the outcome 
and implementation of the project.
    Merck commented that it sought to involve parties with a direct and 
specific stake in the project from the beginning. Merck maintained that 
a wide variety of interests was represented and all contributed to the 
innovative proposed permit. Based on the success of this process, Merck 
asserts that the proposed permit provides for these stakeholders to 
have a continuing opportunity for direct and valued input during 
operation under the permit as well. Merck believes that, particularly 
for the local community and regional public interest groups, these 
opportunities far exceed anything which they would be afforded under 
the current regulatory system. With regard to the April 23, 1997 XL 
notice's guidelines of three classes of stakeholders (general public, 
commentors, direct participants), Merck stated that it has considered 
its community representatives as ``direct participants'' since the 
project's inception, although it states that under this guidance they 
could have been considered ``general public'' with limited input. Merck 
points out that the XL guidance also states that the FPA should 
identify how to make information about the project, including 
performance data, available to stakeholders in an easily understandable 
form. Merck stated that it has committed to share with stakeholders and 
other interested parties an annual report. Merck further stated that it 
has committed to including all direct participant stakeholders in 
periodic evaluations, even though the guidelines indicate this would 
not be required. Merck believes that the permit's stakeholder process 
for five-year permit reviews is far beyond the level of stakeholder 
involvement suggested in EPA guidance, and certainly beyond what is 
currently provided to the public in any other environmental permitting 
forum.
    EPA agrees that the stakeholder group as defined in the Merck 
project meets the Agency's guidance regarding direct participant 
stakeholders. EPA believes that the stakeholder group, comprised of 
Merck, EPA, VADEQ, U.S. Department of the Interior, community 
representatives and a public interest group, represents a fair balance 
of interests. The excerpt from the April 23, 1997 XL notice submitted 
by one commenter pertains to the types of interests that should be 
represented by both direct participant stakeholders and ``commenters''. 
In the April 23, 1997 notice, ``commenters'' are described as those 
individuals or groups that have an interest in the project, but not the 
desire to participate as intensively in its development. EPA believes 
that the Merck project is consistent with the guidance by including 
direct participants in the makeup of the stakeholder group for five-
year permit reviews. However, EPA does not agree that it is required 
that the stakeholder group must include ``commenters'' as described in 
the April 23, 1997 notice. EPA encourages the stakeholder group to 
establish a mechanism for communicating information about issues being 
discussed in the five-year reviews at appropriate points during the 
process, and to consider the input from ``commenters'', such as area 
industries or other environmental organizations.
    A number of citizens and environmental groups commented that there 
should be more public involvement in the permit review process. A few 
citizens believe the proposed permit minimizes public participation in 
the permit review process, and that full public participation is 
supposed to be a major component of the XL program. Other citizens 
commented favorably about the opportunity for direct involvement of the 
local community in the oversight of the project.
    A commenter maintained that the community representatives selected 
by the Rockingham County Board of Supervisors will not really have an 
effective voice in reviews and other decisions because their concerns 
can be vetoed by Merck or other signatories. A citizen commented that 
permit revisions should be decided by the majority, but not all of the 
project signatories, which might ensure that corrective adjustments to 
the permit are made. The commenter also suggested that a public hearing 
be held by VADEQ midway through each five-year review.

[[Page 52633]]

    EPA disagrees that this project minimizes public participation in 
the permitting process. On the contrary, the permit provides for much 
greater public involvement than other permits of its type. This permit 
provides unique opportunities for public involvement through the 
stakeholder process and periodic permit reviews. In the PSD program, 
once a PSD permit is issued, normally there is no opportunity for 
future public involvement in the permit's implementation. The Merck PSD 
permit will provide a unique opportunity for strong public involvement 
in reviewing the facility's operations under the permit. Further, since 
there currently are no specific Federal regulations governing PSD 
permit revisions, typically EPA does not initiate PSD permit changes 
without consent of the permittee. PSD permit revisions usually are made 
at the request of the source, with consent of the source and the 
permitting authority. Accordingly, the EPA believes that providing an 
explicit veto for Merck, in conjunction with the extraordinary level of 
stakeholder involvement in the project, provides an appropriate level 
of assurance to Merck that the agreements on which this rule and permit 
are based upon will generally continue in their current form, subject 
to specific terms of the rule and permit, and to consensus-based permit 
changes.
    Under Merck's PSD permit, Rockingham County and every other 
signatory will have an effective voice in the permit review process 
because changes to the permit generally must be made upon full consent 
of all the signatories. This means that there may be issues that 
Rockingham County, or any other one signatory, does not support and can 
thus ``block'' a change to the permit by not giving consent to the 
change. Rather than being viewed as a ``veto'', this process should be 
viewed as ensuring that a permit change is proposed only when there has 
been full discussion and consideration of the impacts of the change. 
Allowing permit changes to be decided by a majority of the signatories 
not only would erode Merck's ability to prevent changes that may be 
unworkable for its facility, but also would compromise the ability of 
any other signatory to prevent permit changes that it does not support. 
All stakeholders have an opportunity to be fully involved in these 
discussions and to raise issues, bring forth technical information, and 
offer proposed resolutions for consideration. This process is more 
likely to result in proposed permit changes that are the outcome of 
consensus among the signatories. It is also important to note that 
Merck has no ability to ``veto'' any future enforcement actions or 
regulations which may impose additional requirements on the facility 
outside of the PSD permit.
    The permit modification procedures in Merck's site-specific PSD 
rule (40 CFR 52.2454(n)) require the permitting authority to provide an 
opportunity for a public hearing for all permit modifications except 
those that meet the criteria for an administrative permit amendment (40 
CFR 52.2454(n)(2)). Thus, if the signatories agree to any permit 
changes, the VADEQ must provide for public participation, including an 
opportunity for a public hearing, for those permit changes that do not 
qualify as administrative modifications. Any permit modification could 
also be appealed by residents or others with legal standing. EPA does 
not agree that it is necessary to provide for a public hearing during 
the five-year review process itself, since an opportunity for a public 
hearing will be provided if non-administrative permit modifications are 
proposed. EPA believes that public views can be effectively represented 
by the designated stakeholders during the process of developing any 
permit modifications. EPA encourages the stakeholder group to consider 
holding public meetings, similar to the one held during the initial 
project development, to inform the broader public of anticipated 
changes under consideration by signatories during the five-year review 
process. Other forms of communication (e.g., newsletters) to the public 
may be useful in communicating the issues under discussion and 
anticipated permit changes. EPA intends to continue to suggest 
effective forms of communication with the public during each five-year 
review and to participate in these activities along with the 
stakeholder group.
    A citizen commented that the list of permit changes which the 
stakeholders can consider in the five-year reviews should be broadened 
to include, for example, permit termination, modification of caps, 
change in signatories, change in permit modification procedures, 
changes in significance levels, and others.
    Section 6.1.1. lists the most fundamental types of permit changes 
anticipated by the stakeholders during the development of the project. 
In addition, these periodic review criteria will be reviewed by the 
stakeholders at each five-year review. EPA does not agree that it is 
necessary to add additional review criteria at this time, since it will 
be more effective to consider new criteria, if necessary, at the time 
of each five-year review. The permit also provides that any stakeholder 
may raise issues about the PSD permit at any time, as needed.
    b. Project signatory consent to permit changes during five-year 
reviews. In the notice of proposed rulemaking, EPA solicited comment on 
the approach to stakeholder involvement during the implementation of 
the Merck XL project. See 62 FR 15307 (March 31, 1997). EPA received a 
number of comments regarding the stakeholder process for reviewing the 
permit every five-years. Particularly, numerous comments were received 
on the issue of whether the consent of all stakeholders, or only the 
project signatories, should be required to make proposed permit changes 
(i.e., to recommend that the permitting authority process a permit 
modification). The permit generally requires consent of all project 
signatories prior to making a proposed permit change. Project 
signatories are defined as EPA, VADEQ, Merck, U.S. Department of the 
Interior Federal Land Manager, and the County of Rockingham. The permit 
also provides that additional stakeholders have an opportunity to 
directly participate in the permit review process, but their individual 
consent is not required for permit changes. These additional 
stakeholders include up to three community representatives and a 
regional public interest group. If the project signatories agree to 
permit changes, then the permitting authority may process a permit 
modification according to the requisite procedures (40 CFR 52.2454 (m) 
and (n)). These permit modification procedures require public 
participation, including a 30-day public comment period and opportunity 
for a public hearing, for any permit change not defined as an 
administrative modification.
    EPA received a number of comments from citizens and environmental 
groups that the consent of the three community representatives, in 
addition to Rockingham County's consent, and the public interest group 
should also be required prior to making a permit change. Alternatively, 
Merck, citizens, industry representatives, and a state environmental 
agency supported the process established in the proposed permit, and 
that the County's consent is the appropriate representation of concerns 
of the community as a whole. The comments on this issue are summarized 
below.
    One of the community representatives on the Merck XL stakeholder 
group supported that the three community representatives who are 
appointed to

[[Page 52634]]

the five-year periodic review should be allowed to come to consensus 
and then cast one single vote along with the signatories regarding 
proposed changes to the PSD permit. This commenter believes that the 
community at large should be directly involved in any permit changes, 
and that the interests of the County government and the local community 
at large are not necessarily the same and could differ vastly on 
proposed changes to the PSD permit. The commenter maintains that 
disallowing the three community representatives one single vote in this 
process reduces their input to a mere advisory role. This commenter 
believes that the local community at large looks to their community 
representatives and EPA for representation and protection. This 
community representative submitted a petition signed by about 240 
people, which read ``We the following residents of Rockingham County 
and Harrisonburg, do request with regard to the Merck XL Air Quality 
Project, Elkton, VA, that the three community representatives appointed 
to the project's five-year reviews be allowed to cast one vote along 
with the voting signatories to the project on proposed changes to the 
Prevention of Significant Deterioration (PSD) permit which replaces all 
other air quality permits.''
    An environmental group commented that the permit should provide for 
``stakeholder'' consensus on permit changes, not just ``signatory'' 
consensus, because of the concern that the state, federal agencies, and 
Rockingham County could agree with Merck to raise the emissions cap, 
and the community representatives or public interest group would have 
no real say in that decision. The community and public interest group 
want to be assured that they are getting permanent reductions in 
emissions, and are concerned that the emissions caps could be increased 
in the future. This commenter believes that most of the permit was 
negotiated with the understanding that the community representatives, 
including, potentially, a regional public interest group, would have to 
agree to any permit changes. The commenter objects to the permit 
language being changed to provide community representatives and public 
interest group as ``stakeholders'' only. The commenter fully supports 
Rockingham County as a signatory, but believes the community 
representatives living downwind of the plant and the public interest 
group provide a perspective different from, and independent of, County 
concerns such as jobs and tax base.
    A community representative on the Merck XL stakeholder group 
commented that there should be ground rules set up for the five-year 
reviews, and perhaps a neutral facilitator. This commenter and an 
environmental group also recommended that there should be funds set 
aside to provide technical assistance for the community at the five-
year reviews, so that the community has a fuller understanding of the 
impacts of any permit changes under consideration.
    A number of citizens and environmental groups commented that Merck 
should not have a ``veto'' over suggested permit changes. Some 
commenters expressed concern that, because full consent of the project 
signatories is needed for proposed permit changes, Merck can ``veto'' 
changes and ignore evidence of air quality and resource degradation in 
Shenandoah National Park. One commenter suggested that the stakeholder 
agencies should be responsible for determining the need for, and extent 
of, permit revisions. Absent that, the commenter believes that a 
funded, organized, strong public interest presence be included among 
the signatories.
    EPA also received a number of comments supporting the roles of 
signatories and stakeholders in the five-year review process as 
proposed in the permit. Two citizens commented that they support having 
an elected member from the Rockingham County Board of Supervisors 
designated to represent the community. One of these commenters believes 
it is wrong for an individual citizen of the community to have a vote 
for approval of permit changes. The commenter states, ``I could ask why 
I do not get the vote?'' The commenter believes the elected officials 
will adequately represent him, and if not he has a recourse at the 
polls. With a community representative on the stakeholder group, he 
does not.
    Several commenters, including a state environmental agency, 
industry association, a company that participated in another XL 
project, and Merck, commented that the local community interests, in 
particular, are afforded an unprecedented opportunity to participate in 
and influence the project. Many of these commenters expressed that the 
Merck XL project goes well beyond the role provided for community 
interests in the current regulatory system. These commenters strongly 
endorse having the community's voice on the stakeholder team through 
the local government, because it ensures representation of the 
interests of the whole community. Merck commented that the permit's 
approach establishes an extremely important balance in community 
representation: it ensures that vocal and interested community members 
have a voice, and that the interests of the entire community are 
considered. Merck believes that it is appropriate that individuals who 
may be particularly concerned with the facility's operations, or who 
have specific expertise or input on a relevant issue, be provided with 
a full opportunity to voice their opinion. However, Merck maintains 
that meaningful community involvement must provide some assurance that 
the interests of the community as a whole are represented.
    Two commenters maintained that it is an unusual suggestion that the 
Rockingham County Board of Supervisors does not represent the interests 
and well-being of County residents. These commenters assert that the 
local government is directly accountable to the residents that they 
represent; if the County officials fail to represent the community, the 
voters have a responsibility to remove those individuals and elect 
representatives that do. The commenters believe that a County 
appointee, in consultation with the three other community stakeholders, 
will be well equipped to voice the authentic views of the community. 
Merck believes that granting two community ``votes'' on the stakeholder 
group would not be providing a more open process, but rather, a more 
closed process that could allow the opinion of a few vocal individuals 
to prevail over the vital interests of the community at large.
    Several commenters raised the concern that individuals representing 
only their own interests may adopt extreme positions which are not 
truly representative of community sentiment. Commenters stated that 
having a team of community representatives led by a local government 
official provides an appropriate measure of accountability and 
stability in the process.
    Commenters believe that this approach will help assure that 
individuals who do not truly reflect the interests of the community as 
a whole are not granted a veto over a permit change that all other 
stakeholders otherwise find to be beneficial. Several commenters 
maintain that this system embodies the basic principles of our 
governmental system--accountable, elected representatives are charged 
with representing the peoples views on matters of public policy. A 
company that participated in Project XL contends that the function of 
community advisory groups must not be misinterpreted to

[[Page 52635]]

duplicate those of government. This commenter believes that stakeholder 
panels are an excellent means of getting early and meaningful input 
into environmental decisions, but, as both a practical and legal 
matter, they cannot assume the decisional role of government.
    Merck and another company commented that the stakeholder process 
infuses a certain amount of risk for Merck, and that this additional 
risk is an important factor to consider when evaluating the adequacy of 
community involvement in future permit discussions. Merck stated that 
it could not accept a permit that would threaten the future viability 
of the plant. Merck believes that the permit was carefully crafted to 
ensure that it would provide enhanced community oversight, but not 
subject the plant to unacceptable control by outside parties. Merck 
commented that the proposed permit is crafted to reflect the process 
that was used in the formation of the project--each represented group 
is granted one ``vote'' in future permit reviews. Merck stated that 
none of the parties objected to this approach; all agreed that it was 
sensible that each party would reach a single position and bring that 
position to the stakeholder group. Merck believes it is unclear why 
this approach is now not acceptable.
    Merck commented that the petition (referenced in a previous comment 
above) submitted to EPA does not provide any insights to what those who 
signed would be willing to accept as an alternative to two community 
votes, nor does it elucidate why they question their representation by 
Rockingham County and their ability to influence the County's views in 
future permit discussions. Merck believes that the County has already 
demonstrated the seriousness with which it accepts this charge to 
represent the community in the project negotiations. Merck stated that, 
despite an accelerated schedule to finish its review, in December 1996 
the County insisted that it needed additional time for its independent 
technical consultant to analyze the draft permit and agreement before 
providing its consent. Merck believes that EPA should have every 
expectation that the County will continue to take its duty to represent 
community interests seriously.
    Merck commented that a public interest group representative should 
not be added as a signatory. The permit specifies that a representative 
from a regional public interest group be included as a stakeholder, 
although not with the ability to vote on permit changes. Merck believes 
that this is a unique opportunity for such groups which far exceeds 
that available to them under existing environmental regulations. Merck 
claimed that granting this representative with the same oversight as 
other signatories would be inappropriate and a serious compromise to 
the future viability of the Stonewall plant. Merck believes that a 
public interest group representative is not held accountable in any 
meaningful way to the public for his/her views. Merck maintains that 
the permit as crafted provides very significant input for public 
interest groups while assuring that only parties that have public 
accountability are granted oversight for permit changes.
    Finally, Merck urged EPA to maintain the stakeholder provisions of 
the permit as proposed, because to include a second ``vote'' for the 
three community representatives would:
    1. Endorse the accusation that the Rockingham County Board of 
Supervisors, despite being elected by the community, does not represent 
the community's interests.
    2. Question the ability of EPA, DEQ, and NPS to act on legitimate 
environmental concerns for the protection of the public interest at 
large.
    3. Indicate that the stakeholder process for the formation of the 
project is inadequate for project implementation.
    4. Shatter the important balance that the County would bring as the 
lead representative of the entire community.
    5. Contradict the XL guidance (April 23, 1997 Federal Register 
notice) by setting a standard for public involvement far above what 
could be required for future XL projects.
    6. Agree that it is reasonable to have a process that would allow 
the opinion of a few vocal individuals to prevail over the interests of 
the community at large.
    7. Narrow rather than broaden the representation of community 
interests on the project.
    8. Suggest that the project stakeholders would not continue acting 
in good faith for future permit reviews.
    9. Imply that Rockingham County's efforts to obtain independent 
review and advice on the agreement fell short of what is necessary to 
properly protect the community's interests; and
    10. Threaten the future of a project that would otherwise provide 
the community with unprecedented oversight of Merck's air permit, that 
would significantly reduce actual emissions of pollutants of particular 
concern to the region, that would provide an ongoing incentive for the 
facility to minimize emissions, and that, as EPA, VADEQ, National Park 
Service and the community have acknowledged, would provide superior 
environmental benefit.
    In response, EPA believes that the permit represents a fair balance 
of interests. The permit significantly enhances the involvement of the 
community and other stakeholders in overseeing the environmental 
impacts of the Merck Stonewall Plant. 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 
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, 
U.S. Department of the Interior 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 40 CFR 
52.2454(n)). The permit identifies numerous issues that may be 
considered by the project stakeholders during each five-year review. 
Stakeholders also have the opportunity to raise issues of concern at 
any time for discussion by the stakeholder group.
    The permit defines ``project stakeholders'' as the project 
signatories to the FPA 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 necessary. As discussed above, the 
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 County of Rockingham 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

[[Page 52636]]

Merck Stonewall Plant and the Town Manager 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.10 This model of stakeholder involvement provided 
all stakeholders with full information and ability to shape the 
development of the project.
---------------------------------------------------------------------------

    \10\ 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).
---------------------------------------------------------------------------

    EPA supports the provisions set forth in the proposed permit that 
require the consent of signatories only, and not the full stakeholder 
group, for proposed permit changes during the five-year review process. 
EPA agrees with several commenters that it is most appropriate that the 
representative of the Rockingham County Board of Supervisors will 
represent the views of the whole community, taking into account the 
interests and well-being of the County constituents. The role of the 
three community representative stakeholders also is important for 
identifying specific concerns, questions, and information that can 
influence the stakeholder discussions. EPA expects that Rockingham 
County's decisions about permit changes will substantially reflect the 
input and views of the three community representatives, as well as the 
interests of the community at large. Further, EPA believes that the 
five-year review process offers a role for a public interest group that 
is greatly enhanced as compared to the normal permitting process. The 
permit is designed such that all 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 does not believe that the permit's process for stakeholder 
involvement in any way diminishes the role of the non-governmental 
representatives. Throughout Project XL, EPA has made clear that it 
places a high degree of importance on public support and will give the 
views of the public significant weight in deciding whether to proceed 
with a project. EPA will take the same approach on making decisions 
during project implementation. EPA will make every effort to ensure 
that the concerns of the community and the public interest group 
representatives are fully explored and addressed by the signatories. 
Prior to making a decision about whether to give consent to proposed 
permit changes, EPA intends to fully consider any outstanding concerns 
raised by the community representatives or the public interest group, 
and encourage other signatories to do the same.
    This XL project is composed of an experimental, innovative 
emissions cap-based PSD rule and permit, which fully authorize 
modifications at the facility to occur without changes to the permit, 
so long as the emissions caps and other permit terms are met. Most 
future ``modifications'' thus will not require any permit changes and, 
therefore, will not need any agreement among the signatories; in these 
instances, any right of the stakeholders to vote on or veto changes 
will not be relevant. The signatory consensus process is relevant only 
for other types of changes at the facility necessitating changes to the 
permit. Regarding these latter kinds of permit changes (i.e., those not 
associated with a ``modification'') the EPA notes that the permit will 
continue to be governed by the site-specific rule (e.g., the caps must 
be consistent, or lower than, recent actual emissions, as discussed 
elsewhere in this document), and any resulting permit modification will 
occur only after stakeholder input during the five-year review process 
and will be judicially reviewable. As explained above, the EPA believes 
the level of stakeholder involvement in the Merck project is 
unprecedented in its scope and detail.
    It is important to realize that any permit changes agreed to by the 
signatories must be processed by the permitting authority according to 
the required permit modification procedures. For the vast majority of 
changes (i.e., except those changes defined as administrative), the 
permitting authority is required to provide 30 days of public comment 
and an opportunity for public hearing. See 40 CFR 52.2454 (m) and (n). 
Thus, any member of the public will have a full opportunity to comment 
on any non-administrative changes agreed to by the signatories. It is 
the permitting authority's responsibility to fully evaluate and respond 
to any public comments received on proposed permit changes. If the 
permitting authority determines that there is an inadequate basis for a 
proposed permit change, based on additional information received 
through public comments, the permitting authority may decide not to go 
forward with a particular permit change. This would be the permitting 
authority's decision to make, independent of the signatories. In this 
circumstance, the signatories could decide to reevaluate the proposed 
permit change and attempt to address the public comments and could 
request the permitting authority to re-propose the permit change. In 
addition, nothing in this rulemaking or the permit would limit a 
citizen's rights to judicial review of any final action taken by the 
permitting authority.
    EPA believes that stakeholders, and other members of the public, 
are assured substantial rights in the event a permit modification is 
considered. Any significant modification would have to undergo public 
notice and comment, and would be subject to judicial review. Moreover, 
any decision to approve a modification would have to be supported by an 
administrative record, and stakeholders will have the opportunity, even 
prior to the formal notice and comment process, to submit information 
that might indicate that a modification was unwarranted. EPA has 
consistently made clear that in Project XL it is highly unlikely to 
take an action that does not have broad stakeholder support. In light 
of these protections, EPA does not believe it is necessary for the non-
signatory stakeholders to have a formal veto. EPA believes that what is 
more important than vetoing changes proposed by others is the ability 
of the stakeholders and the public to propose changes when they believe 
the existing permit is not satisfactory. EPA believes the five-year 
review process will provide such an opportunity. Outside Project XL, no 
such opportunity would typically exist under a PSD permit.
    Based on the public comments, EPA understands that one of the 
significant concerns of environmental groups and citizens is the 
possibility that the emissions caps will be raised in the future. The 
site-specific rule requires emissions caps to be established based on 
the site's actual emissions during a time period, within five years of 
permit issuance, which represents normal source operation, or a 
different time period if it is more representative of normal source 
operation. Reductions to the initial caps are required after the 
powerhouse conversion. Thus, the emissions caps generally could not be 
raised above these levels under this rule. The site-specific rule would 
need

[[Page 52637]]

to be revised in the future to authorize any increase in the emissions 
caps that is not already provided for in the rule or permit. For 
example, the permit provides that the emission caps may be increased in 
the following circumstances, which are primarily technical corrections: 
(1) The emissions caps may be adjusted to account for changes in 
emission factors which require a recalculation of the emissions 
baseline (i.e., to ensure an ``apples to apples'' comparison of current 
actual emissions to the emissions cap); and (2) the PM10 
emissions cap may be increased to account for the quantity of 
condensable PM10 from the new powerhouse. These changes in 
emissions caps would not require a revision to the site-specific rule, 
since they are already authorized by the rule and proposed permit. 
However, if the signatories contemplate increases to the emissions caps 
for other reasons in the future, the site-specific rule would first 
have to be revised to authorize the cap increase. As part of the docket 
for such a rulemaking change, EPA would intend to ensure that an 
appropriate technical demonstration is conducted which justifies both 
the need for and the environmental impacts of the proposed emissions 
increases. EPA notes that any further decreases to the emissions caps 
(other than those already provided for in the permit) would require a 
revision of the permit, but not a revision of the site-specific rule.
    EPA recognizes its responsibility to ensure meaningful 
participation in the stakeholder process, and will make every effort to 
accommodate the needs of stakeholders during the five-year permit 
reviews. EPA will make available its own technical expertise to respond 
to questions and concerns raised by the stakeholders. EPA also expects 
Merck to continue to provide assistance in understanding and evaluating 
technical issues. During the development of the Merck XL project, Merck 
made several technical presentations to the stakeholder group about 
various aspects of the project, including emissions calculation 
methodologies and how certain regulatory requirements affect the 
facility. Merck also hired a technical consultant to answer the 
stakeholders' questions about the impacts of potential VOC emissions on 
ozone formation. EPA expects that, as needed, Merck will continue to 
provide pertinent technical information to the stakeholders during the 
five-year review periods. Further, EPA hopes that Rockingham County 
will continue to seek technical advice and assistance during the five-
year reviews, as it did during the initial project development. 
Rockingham County employed a consultant from James Madison University 
to review the proposed XL project and make recommendations to the 
County. A County official commented that the consultant had a very good 
understanding of the process and the documentation provided. The County 
stated that the consultant recommended that the County support the 
project. The County's consultation with technical advisors can be a 
very effective way of addressing the technical assistance needs 
identified by the community.
    EPA offered guidance on its ability to support technical assistance 
in a Federal Register Notice on Modifications to Project XL. See 62 FR 
19872 (April 23, 1997). EPA recognizes that, in some cases, there will 
be a need for the Agency to offer some additional support for technical 
assistance to the ``direct participant'' stakeholder 
group.11 The Agency has committed to provide up to $25,000 
per project over the next few years in order to assure that necessary 
technical assistance is available to support meaningful stakeholder 
involvement. As EPA explained in the April 23, 1997 Federal Register 
notice, EPA plans to make these funds available on a task-specific 
basis and funds will not be in the form of grants to stakeholder 
groups. EPA has issued a solicitation for proposals from not-for-profit 
and academic institutions to manage and operate a technical assistance 
program for Project XL stakeholders. The April 23, 1997 Federal 
Register notice explains additional qualifications on the use of this 
technical assistance. For example, technical assistance funds are not 
available to address strictly individual needs, but rather, needs for 
technical assistance must be identified and requested by the direct 
participant stakeholder group as a whole. For the Merck XL project, EPA 
fully intends to pursue making available similar resources at the time 
of the five-year periodic reviews to provide the technical assistance 
necessary to ensure a meaningful stakeholder process.
---------------------------------------------------------------------------

    \11\ In the April 23, 1997 Federal Register notice, ``direct 
participants'' are described as those stakeholder participants who 
work intensively with project sponsors during project development to 
build a project from the ground up.
---------------------------------------------------------------------------

    EPA agrees that the stakeholder process for five-year permit 
reviews could be enhanced by the use of a neutral facilitator and 
establishment of ground rules. However, EPA believes that these process 
decisions should be made by the entire stakeholder group at the outset 
of each five-year review. At the outset of the permit review process, 
EPA encourages the Merck XL stakeholder group to discuss the need for a 
neutral facilitator, and to establish a set of ground rules designed to 
guide the process and help ensure common expectations.

V. Administrative Requirements

A. Effective Date

    Pursuant to 5 U.S.C. 553(d)(3) and 42 U.S.C. 6930(b)(3), EPA finds 
that good cause exists to make this rule effective immediately. The 
Merck & Co., Inc. Stonewall Plant is the only regulated entity affected 
by this rule. Merck has full notice of this site-specific rule, and is 
prepared to comply immediately with the permit to be issued 
expeditiously under the rule. Although EPA expects that the permit will 
not be issued for at least 30 days, an immediate effective date will 
allow the permitting process to proceed without delay.

B. Executive Order 12866

    Because this rule only affects one facility, it is not a rule of 
general applicability and therefore not subject to OMB review under 
Executive Order 12866. In addition, OMB has agreed that reviews of 
site-specific rules under Project XL are not necessary.

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 52638]]

E. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 
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 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.
    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: September 30, 1997.
Carol M. Browner,
Administrator.

    For the reasons set forth in the preamble of this rule, parts 52, 
60, 264 and 265 of chapter I of title 40 of the Code of Federal 
Regulations are 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.

    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, VA.

    (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 (PM10), 
and sulfur dioxide. This section applies in lieu of Sec. 52.21 for the 
pollutants identified in this paragraph as well as particulate matter, 
but not for particulate matter with an aerodynamic diameter less than 
or equal to a nominal 2.5 microns (PM2.5) regulated as 
PM2.5; 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 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

[[Page 52639]]

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 
PM10.
    (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 PM10 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 PM10.
    (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 PM10.
    (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.
    (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 section 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

[[Page 52640]]

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) of this section;
    (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 parts 210 and 211) in force at the site.
    (1) 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: 
the Administrator, 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, 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

[[Page 52641]]

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 Secs. 60.40b through 60.49b(t) 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 paragraphs (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 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, 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.

Subpart BB--[Amended]

    3. Section 264.1050 is amended by adding paragraph (g) 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.

[[Page 52642]]

Subpart CC--[Amended]

    4. Section 264.1080 is amended by adding paragraph (e) 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.

Subpart AA--[Amended]

    2. Section 265.1030 is amended by adding paragraph (c) 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.

Subpart BB--[Amended]

    3. Section 265.1050 is amended by adding paragraph (f) 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.

Subpart CC--[Amended]

    4. Section 265.1080 is amended by adding paragraph (e) 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. 97-26442 Filed 10-7-97; 8:45 am]
BILLING CODE 6560-50-P