Merck & Co., Inc.

Letter from Nancy Summers to Robin Moran

Nancy Summers
311 Sandalwood Drive
Richmond, Virginia 23229

May 15, 1997

Ms. Robin Moran
Air, Radiation, and Toxics Division
USEPA Region III
841 Chestnut Street (3A123)
Philadelphia, PA 19107-4431

re: comments on the draft Merck XL permit

Dear Ms. Moran:

Thank you for this opportunity to comment on the draft XL permit for Merck's Stonewall plant. Although I commend EPA and the Merck project stakeholders for their hard work on this permit, I would like to reiterate certain concerns raised in my oral comments on April 4, 1997, for they are critical to the success of the Merck project. In addition, certain aspects of the permit are inconsistent or incomplete and require correction before the final permit is approved.

Inadequate stakeholder involvement during periodic review of the permit
The goals of Project XL are to (1) achieve superior environmental performance, beyond the environmental achievements to be gained under current regulations, (ii) to give regulatory flexibility in exchange for that superior performance, and (iii) to increase stakeholder involvement and accountability to stakeholders. Remarks by Lydia Wegman, USEPA, during hte national broadcast on april 10, 1997, of 1997 Update: Implementing the clean Air Act, an American Bar Association Satellite Seminar co-sponsored by the American Bar ASsociation, Air & Waste Management Association, and US Environmental Protection AGency. The adequacy of the Merck XL permit, as a whole, is to be measured by whether it realizes these goals.

In its current form, the Merck permit achieves only two of the three goals of Project XL, by advancing the tune of a conversion by Merck from coal- to natural gas-fired boilers, it realizes significant early reductions in emissions: by placing a site-wide cap on emissions, under which emissions can rise and fall without regulatory (or public) scrutiny, it conveys substantial new operational flexibility for Merck's stonewall plant. However, the permit currently fails to meet the third goal of increased stakeholder involvement and accountability to stakeholders; not only does it give the permittee unprecedented veto power over any future changes in the permit, Giving the permittee the power to veto any change in the permit is a vast new power for the permittee. Conveyance of this power is highlighted by this XL permit's substitution for the numerous federal and state regulatory programs lisated in secs. 3.2, 3.3, and 3.4. Programs for which this permit constitutes a full or partial substitute include, among others, major and minor New Source Review (NSR), New Source Performance Standards (NSPS), emergency emissions relaease reporting under federal community-right-to-know statutes (CERCLA and EPCRA); and organic air emissions standards for tanks and containers under RCRA. and even over what changes may be considered, it also removes the opportunity for meaningful review by any non-governmental stakeholder except the permittee. (Sec. 6) The distinction between "stakeholders" (who have an acknowledged vital interest in action under the permit) and "signatories") (who now hold sole power over whether and how the permit may be altered in the future) is, on its face, contrary to the third goal of Project XL. Any stakeholder without power to affect the permit is not co-equal with other stakeholders, and will not be able to effectively assert its interest in future evaluation of the permit and Merck's actions under it.

I urge you to revoke the permittee's veto power over changes in the permit, leaving stakeholder agencies responsible for determining the need for, and extent of, permit revisions. Absent that, it is essential that a funded, organized, strong public interest presence be included among the signatories, with all the rights and powers of the other signatories. I reiterate my suggestion, made on April 4, that this public interest presence be either the Natural Resources Defense Council or the southern environmental Law Center, both of whom have staff and funding sufficient to assure the continuous, well-informed, active public interest presence necessary to assure continuing environmental benefit under the Merck XL permit.

Lack of a permit expiration date, despite the experimental nature of the permit
The Merck XL permit is a unique trial run of an experimental program, Project XL. No other XL permit will be just like it. The Project XL program itself is a radical departure from the type of air protection programs which have given us improvement in air quality over the past twenty-fife years. Because the program is entirely new, there is no experience which might guide us in constructing the permit. Indeed, for much of its drafting, the Merck XL permit was called an "agreement" and looked very mucyh like a contract between Merck and the other stoakeholders. Depsite its formal redeisngation as an XL permit, the Merck document cotninues to bear striking resemblance to a contracutal agreement. The legal effectsd flowing from a contract are very different than those flowing from a permit. The precise nature of the Merck XL, permit is only one of many fundamental questions concerning Project XL products. To set up an indefinite run of a trial permit under an experimental program seems, at best, unwise. To set up a trial permit to extend indefinitely and, at the same time, assure ineffective public interest representation in evaluating and altering the permit seems downright foolhardy.

I urge you to insert a provision in the permit which establishes both an expiration date for the permit and a requirement that any renewal be affirmatively agreed upon by all the stakeholders. the provision should be required to be part of any future renewal, as well, so that expiration and affirmative renewal are part of all future generations of this XL permit.

The following comments and questions relate to specific sections of the permit, as noted. They are made sequentially by section, not in order of importance.

High carbon monoxide significance level
Under sec. 1.3.2, installation of emission controls is required for plant modifications or new installations that result in emissions greater than certain threshold levels called "significance levels." The section establishes threshold levels for five of the six criteria air pollutants. Three significance thresholds are set at 40 tons per year, and one at 15 tons per year; the threshold for carbon monoxide is more than twice the higher levels, or 100 tons per year. Carbon monoxide emissions pose serious health risks. Whey is the allowable amount of carbon monoxide so much higher?

Direct-venting fixed-roof tanks
Section 1.3.6 establishes pollution control requirements for certain types of equipment, including storage/accumulation tanks, many of which will presumably hold volatile organic compounds and other volatile materials. Paragraph d currently authorized existing and future fixed-roof tanks to vent directly into the atmosphere. Since direct-venting equipment is as substantial source of pollution, I suggest alteration of t he language of Paragraph d to read: "... Existing fixed-roof tanks may be equipped with one or more conservation vents that vent directly to the atmosphere. Subsequent installations, including replacement tanks shall either be equipped with a floating roof or be vented to a pollution capturing device or system."

Also with respect to sec. 1.3.6.d are the direct-vent emissions mentioned therein subject to the site-wide caps established in sec. 1.2.

Inadequate procedure for resolving disputes over changes in emission calculation technique
Section 4.3.3 sets forth the procedure to be followed if, in updating emission calculation factors, the project signatories fail to agree on appropriate changes. According to the procedure, the Virginia Department of Environmental Equality (VADEQ) "may at its discretion" tell the project stakeholders why an updated emission factor is needed, and obtain from Merck agreement on how the permit caps and actual emissions should be adjusted to reflect the updated factor. Provided Merck agrees on the adjustments, VADEQ may initiate the permit modification procedure to incorporate the change into the permit.

Under a site-wide cap, calculation of emissions will be the primary way of determining that Merck's emissions comply with the permit. What happens if the signatories fail to agree on changes in the calculation factor, and VADEQ fails to undertake this dispute-resolution procedure? What happens if Merck does not agree to the requisite adjustments, during the procedure? What happens if VADQ chooses not to incorporate agreed-upon changes into the permit? What recourse is available to the community, the public at large, or the signatory agencies i n the event that any of these, or other, actions result in failure to update the emission calculation factors?

In view of the significance of emissions calculation factors under a site-wide cap, I urge you to give both VADEQ and EPA the authority to initiate the procedures leading to resolution of any dispute about appropriate changes to the calculation factor. I also urge you to revisit the procedure and provide alternatives in the event the outlined process fails to work.

Inadequate availability of monitoring data on pollution control devices
Section 4.10.2 requires Merck's monitoring system to collect data on operation of individual pollution control services at least 75% of the time the control device is operating. Merck is a major source of emissions, and such sources are normally required to collect data of this nature 90% of the time. Why is this requirement being relaxed?

In view of the sheer tonnage of allowable emissions under the XL permit (more than 1,500 tons per year prior to conversion to natural gas-fired boilers, and more than 1,200 tons per year after the conversions, it is important to know that pollution control devices are operating properly. If the data verifying proper operation is collected only 75% of the time that the control devices are running, they could operate improperly a full quarter of the time they are operating at all. This should be unacceptable in a source of Merck's size.

When is a cap not a cap?"
In sec. 4.12, Merck is required to notify VADEQ when any new pollution control device is installed during a significant plant modification or new construction, if total emissions "resulting from such event" are expected to exceed 5% of the permit cap. If the cap is really a cap, Merck should notify VADEQ, as well as the other signatories and stakeholders, when it expects its normal operations to meet (not exceed) the cap. All stakeholders should be notified whenever Merck exceeds the cap.

In a related comment, I would expect that Merck anticipate growth of product or plant sufficient to someday produce emissions that meet the cap. The permit does not appear to anticipate this eventuality, however, in that it does not address cap violations except through extreme responses: termination of the permit, determination that continuation constitutes an imminent and substantial endangerment to public health or the environment. The terms of the permit should clearly specify what measures will be taken, and by whom, in the event the site-wide cap or subcaps are exceeded, or the permittee fails to abide by the other conditions contained in the permit.

Caps which, under current language, will never take effect
Section 5.1 specifies that all sections of the permit are effective upon the effective date of the permit except certain specified sections, including sec. 1. Site-wide Emissions Caps. Section 5.2 specifies that sec. 1 will take effect upon completion of the powerhouse conversion form coal to natural gas (or when "written notification [of what?] is provided by Merck," if that occurs sooner than the conversion). However, sec. 1 includes pre-conversion caps, as well as post-conversion caps. What sections 5.1 and 5.2 are saying is that the pre-conversion caps in sec. 1 will never take effect, because sec. 1 will take effect only after the conversion. This is nonsensical. There is no point in having pre-conversion caps if they do not take effect. Section 5 should be re-written to make clear that sec. 1 takes effect immediately, with the exception of subsection 1.2, which will take effect upon completion of the conversion to natural gas. In the alternative, sec. 1 should be re-written to establish only post-conversion caps, which (along with other sec. 1 provisions) will govern Merck in lieu of the facility's existing pre-construction permits upon completion of the conversion (see sec. 3.1).

Inadequate stakeholder review authority under Section 6.1
Section 6.1 lists the changes which stakeholders (as opposed to signatories) may convene to consider during the five-year periodic review of this XL permit. While the list contains elements which are essential for stakeholders to review, it omits many other significant permit terms which also ought to undergo the scrutiny of all project stakeholders. These include, for example: permit termination, modification of caps, a change in the signatories, a change in permit modification procedures, changes in significance levels, etc. Since one of the premier goals of Project XL is to increase accountability to stakeholders, all identified stakeholders should be part of the team reviewing all critical aspects of this permit.

Inadequate permit revision requirements in the event the emissions-impact area is shown to be VOC limited for ozone formation
The last clause of sec. 6.1.8, currently says that alteration in the permit may be considered if stakeholders present technical data indicating that the emissions-impact area is VOC limited for ozone, rather than NOx limited. The language should be altered to require that "changes to terms of the PSD permit shall be considered" if any one stakeholder present technical papers or studies which change the determination that the area near the site is NOx limited for ozone formation. If such data is available and is presented by any stakeholder, all stakeholders should convene to examine the data and consider altering the permit. This section would be strengthened if it also contained the following language: "If any two stakeholder agencies determine that any area near the site if VOC limited for ozone, the terms of the PSD permit shall be changed to ensure protection of the affected area."

Inadequate mitigation measures to protect AQRVs
Section 6.2.1 requires assessment of emission impacts on the Air Quality Related Values (AQRVs) for the Shenandoah National park in certain instances. Paragraph c of the section requires mitigation of impacts in certain other instances which have the effect of assuring that no mitigation will occur. paragraph c does this by requiring all of the following conditions to be met: (1) that the Merck emissions are the sole cause of adverse impacts on AQRVs, rather than "causing or contributing to" the adverse impacts, which is the usual language i n such instances; (2) that the permittee agree its emissions are the cause of the adverse impacts; and (3) that all signatories, including the permittee, must agree on the mitigation measures before any mitigation will be implemented. No facility is going to admit its emissions are the sole cause of acknowledge damage to the Shenandoah National Park, absent a unique catastrophic pollution event: the potential for both legal liability and public relations disaster is too great. Requiring unanimous agreement of the signatories on mitigation measures also reduces the likelihood that adequate mitigation will occur.

Section 6.2.1.c. should be rewritten to require the permittee to implement any mitigation measures agreed upon by the National Park Service and any other single stakeholder agency, in the event the majority of project stakeholders agree that Merck's VOC emissions are causing, or are significantly contributing to adverse impacts on any AQRV at the Shenandoah National Park.

Flawed permit termination authority
Section 8.1 lists the sole circumstances justifying termination of the XL permit, which otherwise continues to infinity. Two of the current subsections are flawed, and an additional subsection is needed, as follows:

Subsection 8.1.4 currently authorizes termination of the permit if the permittee "receives four consent orders or two judgments adverse to Merck arising from non-compliance with this permit in a five year period that are deemed material." The language indicates it is the four consent orders or the two judgments which are to be deemed material, although this makes little sense. I presume that what is intended is that the non-compliance must be deemed material. yet this makes little more sense than the current language, for if a party which negotiates an agrees to a good-faith document (such as this XL permit) fails to comply with it in a manner leading to four consent orders or two adverse judgments in five years, that non-compliance is ipso facto material. I urge EPA to strike the phrase that are deemed material in subsection 8.1.4.
Subsection 8.1.6 currently authorizes termination of the permit "upon full consent of all project signatories," which includes the permittee. This permit provision empowers the permittee to hold all the other stakeholders hostage to the permit, which is unacceptable. I ask EPA to amend subsection 8.1.6 as follows: "Upon full consent of all project signatories or upon consent of a majority of the project stakeholders."
in addition to the listed authorizations for terminating the permit, another is needed. Upon a determination by EPA that the environmental benefits afforded under the permit are no longer superior to the environmental benefits available under prevailing regulatory programs." The additional subsection is necessitated by the fact that the permit is structured to provide an initial environmental benefit of some 900 tons per year reduction in emissions (from 1,500 to approximately 600 tpy), followed thereafter by rising emissions (to 1,200 tpy). Although a cap is in place, there is no prohibition against raising it. In effect, this permit is a "buy now, pay later" permit with respect to local emissions. At some point in time, as regulatory programs continue to require reduced emissions, the permit's caps will no longer afford superior environmental protection (It remains possible that flaws surfacing in Project XL's untested products during their operating lifetime may have the same effect.) When that happens, EPA should have the ability to terminate the permit and impose applicable regulatory provisions to assure that environmental benefit continues.

Inappropriately fungible permit upon transfer of ownership or control of the Stonewall site
Section 11 requires affirmative renewal of the XL permit by the project signatories upon transfer of ownership or control of the Merck Stonewall facility to a new (potential) permittee. The XL permit is not a normal regulatory permit: it is a unique entity, devised under an experimental program and based upon Merck's personal good record of compliance with existing regulatory programs. The permit represents the good-faith expectation of all the parties (the stakeholders) which crated it. Because the permit, and Merck's participation in Project XL, are based upon characteristics peculiar to Merck, the permit should not be fungible. Any new owner of the Stonewall site may or may not have a good environmental compliance records, and may or may not have the intention of abiding by a tailored agreement such as the XL permit represents. Any new owner should be required to undergo public scrutiny before receiving authorization to operate under the XL permit. Affirmative renewal of the permit is a good first step, but it should be required of all the stakeholders (not just the signatories) and it should follow public notice and opportunity for public review and comment.

Regulations and permits are legal documents imposing obligations and responsibilities which persist beyond changes in personnel and policy. The Merck XL project is unquestionably a venture worth pursuing, but the permit which incorporates the thinking of project stakeholders should contain sufficient detail and procedural requirements to assure that Project XL's goals continue to be met through time. I look forward to a strengthening of the Merck XL permit, to bring it into better alignment with the Project XL goals of assuring superior environmental performance and accountability to stakeholders.

Sincerely,

Nancy Summers

1/ Remarks by Lydia Wegman, USEPA, during hte national broadcast on april 10, 1997, of 1997 Update: Implementing the Clean Air Act, an American Bar Association Satellite Seminar co-sponsored by the American Bar ASsociation, Air & Waste Management Association, and US Environmental Protection AGency.

2/ Giving the permittee the power to veto any change in the permit is a vast new power for the permittee. Conveyance of this power is highlighted by this XL permit's substitution for the numerous federal and state regulatory programs lisated in secs. 3.2, 3.3, and 3.4. Programs for which this permit constitutes a full or partial substitute include, among others, major and minor New Source Review (NSR), New Source Performance Standards (NSPS), emergency emissions relaease reporting under federal community-right-to-know statutes (CERCLA and EPCRA); and organic air emissions standards for tanks and containers under RCRA.

3/ Indeed, for much of its drafting, the Merck XL permit was called an "agreement" and looked very mucyh like a contract between Merck and the other stoakeholders. Depsite its formal redeisngation as an XL permit, the Merck document cotninues to bear striking resemblance to a contracutal agreement. The legal effectsd flowing from a contract are very different than those flowing from a permit. The precise nature of the Merck XL, permit is only one of many fundamental questions concerning Project XL products.

Merck & Co., Inc.

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