Merck & Co., Inc.

Letter from Tedd H. Jett to Robin Moran

Merck & Co. Inc.
P.O. Box 7
Elkton VA 22827
Tel 540298 1211

May 14, 1997

Ms. Robin Moran
U.S. Environmental Protection Agency
Region III
Air, Radiation & Toxics Division
841 Chestnut Street (3AT23)
Philadelphia, PA 19107-4431

MERCK
Manufacturing Division

Subject: Project XL Site-specific Rulemaking For Merck & Co., Inc. Stonewall Plant March 31, 1997 Federal Register Proposed Rule (62 FR 15304)

Ms. Moran:

Merck & Co., Inc. is pleased to provide the following comments on the subject proposed rule. We have appreciated the diligence and creative approach that EPA, DEQ and all the stakeholders have taken to the Merck XL project; its success to this point can be directly credited to the team's hard work, vision and willingness to think "out of the box." Our common goal of achieving superior environmental performance while providing operational flexibility was a uniting force that brought us from good concepts to the innovative project described by the March 31 Federal Register notice.

Our comments focus on thee areas:

stakeholder involvement
other issues raised by various parties, and
timing for implementation.

Stakeholder Involvement

EPA specifically solicited comments on the approach to stakeholder involvement in the implementation of the project. The proposed permit provides an innovative and ground-breaking approach to community involvement in a facility's ongoing operation: the community is fully represented in the ongoing review of the Merck PSD permit by up to four community representatives, with Rockingham County expressing the community opinion with one "vote." As stated in EPA's preamble to the subject proposed rule:

Stakeholders will have an unprecedented opportunity to participate in the ongoing evaluation of the project and to recommend any necessary changes to the project. 62 FR 15307

This 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. It is appropriate that individuals who may be particularly concerned with the facility's operation, or who have specific expertise or input on a relevant issue, be provided with a full opportunity to void their opinion. Merck and the other stakeholders demonstrated their commitment to this approach through the XL project team meetings.

However, meaningful community involvement must provide some assurance that the interests of the community as a whole are represented. The Rockingham County Board of Supervisors is an elected board of representatives charge width that mandate -- to represent the interests of the county community for issues that could affect them. This is in fact the genesis of representative government -- that elected officials would be granted the privilege and duty of carrying their constituent's best interests in all issues under this jurisdiction. It is an unusual suggestion that the Rockingham County Board of Supervisors does not represent the interests and well-being of Rockingham County residents. If this is the case, the voting member so the County have a responsibility to remove those individuals, and elect representatives that do.

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. 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. It is unclear why this approach is now not acceptable.

In fact, it has been suggested that the proposed permit violates the XL principles for stakeholder involvement, although no specific guidelines are cited. The April 23, 1997 notice on XL projects (62 FR 19872) expounds on the subject of stakeholder involvement in considerable detail. The guidelines identify three classes of stakeholders with progressively increasing influence on a project: the General Public, Commentors, and Direct Participants.

Although members of the local community could have been considered the "General Public," with limited input and participation on the basis, Merck has considered its Project XL community representatives to be among the highest level of project stakeholders, "Direct Participants," since project inception. EPA, Merck and the entire stakeholder team have more than upheld the recommendations in the XL guidelines regarding the role of our community representatives as "Direct Participants."

The April 23rd notice discusses the role of "Direct Participants" in pre-proposed activities, proposal development, project development, project closure, and implementation and evaluation of the project. To our knowledge, the role afforded to the community representatives in Merck's project through project closure has not been questioned; only the community stakeholders' role during implementation and future evaluation of the project is at issue. Regarding that role, EPA states:

EPA wishes to emphasize points that were made on this topic in the Federal Register notice that originally announced project XL. As stated in the May 23, 1995, Federal Register notice, "project proponents should identify [in the FPA] how to make information about the project, including performance data, available to stakeholders in a form that is easily understandable. project should have clear objectives and requirements that will be measurable in order to allow EPA and the public to evaluate the success of the project and enforce it's terms." EPA recommends that the FPA delineate the intended role of stakeholders during the implementation and evaluation of the project. The FPA may, for example, provide re-examination or periodic evaluation of the project by direct participant stakeholders. (62 FR 19880)

As a part of its project, Merck has committed to sharing performance data with all stakeholders, other interested parties and the public in the form of an easily understood annual report. In addition, Merck has committed to including all direct participant stakeholders in periodic evaluations, even though the guidelines indicate that this would not be required. Beyond that, Merck has given each signatory group the ability to cast one consensus vote in favor of or in opposition to any future permit changes. No changes to the permit can be made without full consent, except for certain circumstances specified in the permit. To our knowledge, this is far beyond the level of stakeholder involvement suggested in any EPA guidance on Project XL, and certainly beyond what is currently provided to the public in any other environmental permitting forum.

We believe that the heart of the issue is not whether the entire community is represented, but whether one or two vocal individuals will be able to prevail with their opinion on the stakeholder group. It is understandable that some would be concerned with the potential dilution of their strong opinions in the process of reaching agreement among their members. However, this melding of views is critical to ensure that a minority opinion does not prevail over a majority one. Granting two community "votes" on the stakeholder group would not be providing a more open process -- on the contrary, it would be a more closed one -- a process that could allow the opinion of a few vocal individuals to prevail over the vital interests of the community at large.

It has been suggested that Merck's vote on the stakeholder group will give it unlimited control over its PSD permit. Base do the design of the permit and the experience with the stakeholder group, we believe that exactly the opposite is true. Neither Merck not any other party had control over the formation of the project, simply because the permit needed to be acceptable to all parties. The result of this stipulation was similar to classical negotiations: each party sought to understand the interests of others, the group searched for areas of commonality, and the ultimate approach was reached representing both a compromise and a significant benefit for all. The stakeholder meetings for the formation of the project were in essence the test bed for the approach prescribed in the permit. We expect that future permit discussions will be conducted in the same manner, and with the same general result -- a position that requires each party to compromise, but that is acceptable to all. There is no evidence to suggest any other outcome from these ongoing permit reviews.

Despite contrary suggestions, the permit protects against foreseeable environmental problems; a number of weeks during the negotiations was spent discussing potential negative outcomes. The permit recognizes EPA's and DEQ's authority to terminate the permit for certain negative circumstances, including for imminent and substantial endangerment to public health or welfare, or the environment. The proposed permit provides more protection against potential negative circumstances than most other environmental permits, and certainly more than other PSD permits. Perhaps commenters overlooked these important permit provisions when suggesting that in the future Merck would be given carte blanche; however, Merck agrees that these safeguards are appropriate and protective of the environment.

It is confusing to hear the objections being raised to the proposed stakeholder approach. Merck and other stakeholders have made significant efforts to notify and educate the public bout the project. A community meeting was held in December, two public hearings were held in February and April, a Merck retiree dinner was held, the Stonewall site's employees and the Community Advisory Panel were briefed several times, and numerous newsletters, newspaper articles and other documents were prepared and distributed to neighbors, retirees, employees, the media, and local state and federal government officials specifically to inform the public about the project throughout the entire negotiation process. The proposed permit and DEQ variance is undergoing a 120 days public comment period -- twice that which EPA believed was warranted for the proposed National Emission Standard for Hazardous Air Pollutants for the entire pharmaceutical industry. It is difficult to see any shortcomings in the public notice aspects of this project.

In addition, the ongoing permit reviews represent a process that is unprecedented in air permitting in this country. The community would be provided with significant oversight of Merck's permit, far more than was ever provided in any other permit action at a Merck facility. It is difficult to understand the objection to the comprehensive provisions for community involvement in the operation of the Stonewall site.

In more typical permitting situations, the regulatory agency is charged with representing the interests of the public. The conduct of EPA and DEQ during the negotiations indicated that the public interest was paramount in their minds. Nothing in traditional permitting situations or in this unique stakeholder process would suggest that EPA or DEQ was failing to represent the public; in this light, the role of Rockingham County in an ongoing permit review could be seen as insurance for protection of the public interest. The participation of the National Park Service, acting as an advocate for the local air quality and therefore the health and welfare of the local citizens, provided even more public interest protection. Clearly the public, and especially the local community, will be fully represented in the implementation of the proposed permit.

Unfortunately, the petition submitted to EPA during the public hearing on April 14th does not provide EPA with 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. The County has already demonstrated the seriousness with which it accepts this charge to represent the community in the project negotiations. Despite an accelerated schedule and encouragement from the other stakeholders to finish its review, in December 1996 the County insisted that it needed additional time for its independent technical consultant to analyzes the draft permit and agreement before providing its consent. EPA should have every expectation that Rockingham County will continue to take its duty to represent the community's interests seriously.

It is important for EPA to understand the significance of the issue to Merck. The Stonewall plant represents a cornerstone in the company's manufacturing capacity; production of key drugs such as Crixivan7, for the treatment of human immunodeficiency virus, is entrusted to this facility. Merck could not accept a permit that would threaten the future viability of the plant. 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. Providing another community vote for future permit changes is not merely expanding public involvement. Granting such overreaching power to a party without bona fide accountability to the public would represent an unacceptable challenge to the future of the Stonewall plant.

In conclusion, we urge EPA to maintain the stakeholder provisions of the permit as proposed. To include a second "vote" for the three community representatives would:

endorse the accusation that the Rockingham County Board of Supervisors, despite being elected by the community, does not represent the community's interests;
question the ability of EPA, DEQ and NPS to act on legitimate environmental concerns for the protection of the public interest at large;
indicate that the stakeholder process for the formation of the project is inadequate for project implementation;
shatter the important balance that the County would bring as the lead representative of the entire community;
contradict the Project XL guidance provided in the April 23rd Federal Register notice by setting a standard for public involvement far above what could be required for future XL projects;
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;
narrow rather than broaden the representation of community interests on the project;
suggest that the project stakeholders would not continue acting in good faith for future permit reviews;
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 interest; and
threaten the future of a project that would otherwise provide the community with unprecedented oversight for 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, DEQ, NPS, and the community have acknowledge, would provide superior environmental benefit.

Other Issues Raised about the Project

A number of issues were raised during the public hearing and submitted by commenters to which Merck would like to respond. Many if not all of these issues were discussed during the project negotiations; in many cases, adjustments were made to the project to address the issue. To require additional changes to the project at this stage would violate the nature of a negotiated agreement.

For example, several commenters objected to the lack of a permit expiration date. As you recall, this issue was the subject of lengthy debate, and 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. Changes to the permit to further address this issue would undercut the negotiated agreement; absent new, compelling information from commenters on this issue, which we have not seen thus far, we believe that EPA must act in good faith and decline any changes with regard to permit expiration. We believe that this approach also applies to other issues raised by commenters that were subject to negotiation and stakeholder agreement.

Without new and compelling information, an EPA reversal on an issue would cast serious doubt over the value of negotiated agreements with the agency.

Request for Lower NOx Cap -- David Carr of the Southern Environmental Law Center testified at the EPA public hearing that the NOx cap should be reduced by more than 10% from recent actuals, in order to better assure environmental benefit. Setting of the individual emission caps was the subject of extensive debate during the stakeholder meetings. the levels prescribed in the proposed permit is the result of full agreement from the stakeholder group. We are not aware of any new and compelling information provided by Mr. Carr or others to substantiate the need for any changes to the emission caps.

Extension of Termination Clause 8.1.7 to EPA -- It was also suggested that the termination clause in Section 8.1.7 of the proposed permit be extended to EPA. This provision was included solely to address a concern raised by the DEQ regarding their statutory authority to terminate permits. Unlike EPA's, their authority has never been defined in case law, and consequently they indicated that this provision was necessary to preserve any statutory rights to determination. During the negotiations, EPA stated that its statutory rights with regard to permit termination were appropriately characterized in Section 8.1.1 through 8.1.6 and Section 10, reservation of rights.

Public Interest Group as Signatory -- It was requested that a public interest group be added to the Final Project Agreement as a project 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. This is a unique opportunity for such groups which far exceeds that which is available to them under existing environmental regulations. Granting this representative with the same oversight as other signatories would be inappropriate and a serious compromise to the future viability of the Stonewall site. A public interest group representative is not held accountable in any meaningful way to the public for his/her views. We believe 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.

PM-10 Increases -- A commenter raised a concern about possible increases of PM-10 over current actual emissions. For the record, the conversion of the powerhouse from coal to natural gas is estimated to result in a PM-10 emissions decrease of 74,000 pounds per year, which is a 98% reduction from baseline actual emissions. The PM-10 cap was set at the level specified in the proposed permit by the stakeholder team to reflect the lack of accurate PM-10 emission factors and already very low PM-10 emissions rates at the plant. As discussed previously, the setting of the emission caps were subject to lengthy negotiations and eventual agreement by the stakeholders. No new and compelling information has been presented to indicate a change to the PM-10 cap is warranted.

Impact on nearby facilities -- There appears to be some confusion about possibility of more stringent future control requirements for other nearby facilities under a regional RACT plan as the result of this project. We believe that this occurrence would be an extremely rare event. The following events would have to take place in order for this to occur:

The area would have to be designated as non-attainment for ozone. Because our project would result in a significant, up-front NOx decrease, we believe that we are making an important regional contribution to avoiding such an occurrence well before it might be required.
If, despite these decreases, the area became ozone non-attainment, the DEQ would have to determine that decreasing VOCs is an appropriate technique for achieving ozone reductions. All parties, including the NPS, agreed that the area is NOx-limited for ozone formation, due to the amount of VOCs generated by biogenic sources. In order for the area to cease being NOx-limited, the area NOx emissions would have to increase dramatically. It is difficult to imagine such a scenario in the Shenandoah Valley.
If, however, these events did occur, DEQ would then have to decide to implement a regional RACT plan. This is not an automatic decision, and there are many areas in the country that are non-attainment for ozone where stage agencies have elected not to implement RACT requirements, including the Hampton Roads area in Virginia which has recently been proposed to be redesignated attainment without the imposition of RACT.
If the DEQ did decide to implement RACT in the area, the requirements would be based on the Control Techniques Guidelines (CTG) prepared by EPA for different industries. The requirements would not be more stringent based on an individual facility's contribution to the regional VOC load -- they would merely reflect the controls recommended by the relevant CTG. In fact, until significant advances are made in environmental control technology, the GACTG controls that would be required for the installation of new and modified sources would very likely meet any RACT requirement.
If regional ozone concentrations did not improve from implementation of RACT, the DEQ could look to take additional measures to obtain ozone reductions. It is very unlikely that they wold look again to the industries that already implemented controls on their sources. It would be even more rare that they would impose additional requirements on existing industrial sources that were installed with BACT controls. Instead, they might look to sources not subject to RACT, including mobile or agricultural sources. They also might appear to state agencies in areas upwind from the region, from which ozone and its precursors are transported, for help in controlling local ozone concentrations.
Only after these other VOC sources were controlled would the DEQ evaluate placing additional controls on industrial sources. It is at this point that more stringent controls might be contemplated based on the area's VOC loading. The probability of these events occurring is barely conceivable.

Additional Technical Information -- Commenters raised other issues with respect to the technical justification of the project. We asked Mr. John Calcagni of ICF Kaiser to prepare a written discussion related to these issues; his response is enclosed.

Timing for Implementation

Merck would like to strongly encourage EPA to proceed with the final rulemaking as soon as possible. Merck applied for this XL project with the understanding that action on the project would be completed within six months of acceptance. The close of the comment period will mark 18 months after EPA accepted Merck's proposal. Of even greater concern are the delays experienced after the project negotiations were completed. The stakeholders voted to accept nearly all of the project provisions on September 4, 1996, and all remaining issues with the permit were resolved in December. Yet, EPA waited until March 31st to propose the site-specific rule. Besides their impact on related permitting and facility operational issues for Merck and DEQ, these delays have put off the significant environmental benefit of the project. We urge EPA to publish the final rule so that the DEQ variance can be approved at the July 1997 Virginia State Air Pollution Control Board meeting, with issuance of the PSD permit as soon as possible thereafter.

Thank you for the opportunity to provide these comments.

Sincerely,

Tedd H. Jett, P.E.
Manager, Environmental Engineering

Merck & Co., Inc.

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