Gretchen Busterud

Acting Regional Counsel

David H. Kim
Assistant Regional Counsel (ORC-3) 17
-F
United States Environmental Protection Agency, Region IX eb
-2
75 Hawthorne Street 02
2
San Francisco, CA 94105
(415) 972-3882

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION IX
SAN FRANCISCO, CALIFORNIA

)
In the Matter of: ) Docket No. CAA-09-2022-0024
)
Tesla, Inc. )
) CONSENT AGREEMENT AND FINAL
) ORDER PURSUANT TO
) 40 C.F.R. §§ 22.13 AND 22.18
Respondent. )
)

I. CONSENT AGREEMENT

The United States Environmental Protection Agency, Region IX (“EPA”), and Tesla, Inc.

(“Respondent”) agree to settle this matter and consent to the entry of this Consent Agreement

and Final Order (“CAFO”), which simultaneously commences and concludes this matter in

accordance with 40 C.F.R. §§ 22.13 and 22.18.

A. AUTHORITY AND PARTIES

1. This is a civil administrative action instituted pursuant to Section 113(a)(3)(A) and (d) of

the Clean Air Act (“CAA” or the “Act”), 42 U.S.C. § 7413(a)(3)(A) and (d), for the

assessment of a civil administrative penalty against Respondent for violations of Section

112 of the CAA.

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2. Complainant is the Director of the Enforcement and Compliance Assurance Division,

EPA Region IX, who has been duly delegated the authority to bring this action and to

sign a consent agreement settling this action.

3. Respondent is a company incorporated in Delaware whose principal offices are located at

13101 Tesla Road in Austin, Texas.

B. APPLICABLE STATUTORY AND REGULATORY SECTIONS

4. Section 112 of CAA, 42 U.S.C. § 7412, creates a comprehensive regulatory program for

limiting emissions of hazardous air pollutants (“HAPs”) from stationary sources by

listing 189 HAPs and directing EPA to list all categories of major and area sources of

HAPs and establish emission standards for such source categories that reflect maximum

achievable control technology under the National Emissions Standards for Hazardous Air

Pollutants (“NESHAPS”).

5. EPA promulgated NESHAPS for surface coating of automobiles and light-duty trucks at

40 C.F.R. Part 63, Subpart IIII (40 C.F.R. §§ 63.3080 to 63.3176) (“the Subpart IIII

Standards”) in 2004 to implement section 112(d) of the Act by requiring automobile and

light-duty truck surface coating operations located at major sources of HAPs to meet

emission standards reflecting the application of the maximum achievable control

technology.

6. The Subpart IIII Standards apply to “each new, reconstructed, or existing affected

source,” as defined in 40 C.F.R. § 63.3082, that is located at a facility which applies

topcoat to new automobile or new light-duty truck bodies or body parts for new

automobiles or new light-duty trucks, and that is a major source of HAP emissions.

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7. Under 40 C.F.R. § 63.3083, compliance with the Subpart IIII Standards was required by

June 25, 2004 for new or reconstructed affected sources that started operations before that

date; on the date of initial startup for new or reconstructed affected sources that started

operations after June 25, 2004; and on April 26, 2007 for existing affected sources.

8. Under 40 C.F.R. § 63.3082, the term “new, reconstructed, or existing affected source” is

defined to include all coating operations; all storage containers and mixing vessels in

which coatings, thinners, and cleaning materials are stored or mixed; all equipment and

containers used for conveying coatings, thinners, and cleaning materials.

9. Under 40 C.F.R. § 63.3081(b), a major source of HAP emissions is any stationary source

or group of stationary sources located within a contiguous area and under common

control that emits or has the potential to emit any single HAP at a rate of 10 tons or more

per year or any combination of HAPs at a rate of 25 tons or more per year.

10. Under 40 C.F.R. § 63.3091, existing affected sources must limit combined organic HAP

emissions to the atmosphere from various coating operations to no more than 0.60

pound/gallon of coating solids deposited during each month, determined according to the

requirements set forth at 40 C.F.R. § 63.3161.

11. Under 40 C.F.R. § 63.3094, all affected sources must develop and implement a work

practice plan to minimize organic HAP emissions from the storage, mixing, and

conveying of coatings, thinners, and cleaning materials used in, and waste materials

generated by, all coating operations subject to emissions limits set forth at 40 C.F.R.

§§ 63.3090 and 63.3091.

12. Under 40 C.F.R. § 63.3130(c), all affected sources must verify compliance with limits on

organic HAP emissions by collecting and keeping records of: (1) the volume used in each

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 month, the mass fraction organic HAP content, the density, and the volume fraction of

solids of each coating used for various coating operations; (2) the volume used in each

month, the mass fraction organic HAP content, and the density of each thinner used in

various coating operations; (3) a record of the calculation of the organic HAP emission

rate for various coating operations, including all raw data, algorithms, and intermediate

calculations.

13. Under 40 C.F.R. § 63.3130(n), all affected sources must collect and keep the work

practice plans required by 40 C.F.R. § 63.3094 and documentation demonstrating

implementation of the plans on a continuous basis, including operational and

maintenance records, records of documented inspections, and records of internal audits.

14. Under 40 C.F.R. § 63.3131(b), all affected sources subject to recordkeeping requirements

of 40 C.F.R. § 63.3130 must keep each record for five years following the date of its

generation.

15. Under 40 C.F.R. § 63.3163(a), all affected sources must demonstrate continuous

compliance with the applicable emission limit in 40 C.F.R. § 63.3091 by calculating the

organic HAP emission rate on a monthly basis according to the procedures set forth in 40

C.F.R. § 63.3161.

16. Under 40 C.F.R. § 63.3161(d), all affected sources must demonstrate initial compliance

with the applicable emission limit in 40 C.F.R. § 63.3091 by complying with the

procedures set forth in 40 C.F.R. § 63.3161(e) through (o).

17. Under 40 C.F.R. § 63.3161(h), all affected sources must demonstrate initial compliance

with the applicable emission limit in 40 C.F.R. § 63.3091 by calculating the total mass of

organic HAP emissions before consideration of add-on controls from all coatings and

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 thinners used during each month in the combined electrodeposition primer, primer-

surfacer, topcoat, final repair, glass bonding primer, and glass bonding adhesive

operations used in coating operations.

18. Sections 111(a)(3) and 112(a)(3) of the CAA, 42 U.S.C. §§ 7411(a)(3) and 7412(a)(3),

define “stationary source” as “any building, structure, facility, or installation which emits

or may emit any air pollutant.”

19. Section 302(g) of the CAA, 42 U.S.C. § 7602(g), defines “air pollutant” as “any air

pollution agent or combination of such agents, including any physical, chemical,

biological, radioactive (including source material, special nuclear material, and byproduct

material) substance or matter which is emitted into or otherwise enters the ambient air.”

20. Section 302(e) of the CAA, 42 U.S.C. § 7602(e), defines “person” as “an individual,

corporation, partnership, association, State, municipality, political subdivision of a State,

and any agency, department, or instrumentality of the United States and any officer, agent

or employee thereof.”

21. EPA and the United States Department of Justice jointly determined that this matter,

although it involves alleged violations that occurred more than one year before the

initiation of this proceeding, is appropriate for a civil administrative penalty assessment.

See 42 U.S.C. § 7413(d); 40 C.F.R. § 19.4.

C. GENERAL ALLEGATIONS

22. At all times relevant to this CAFO, Respondent was a corporation and therefore a

"person" as defined in Section 302(e) of CAA, 42 U.S.C. § 7602(e).

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23. At all times relevant to this CAFO, Respondent owned and operated an automobile

manufacturing facility located at 45500 Fremont Boulevard, Fremont, California (the

“Facility”).

24. The Facility is a “major source” of HAP emissions within the meaning of the Act.

25. The Facility contains one or more “new, reconstructed, or existing affected sources”

within the meaning of 40 C.F.R. § 63.3082 and the Subpart IIII Standards.

26. Respondent is subject to the requirements of the Subpart IIII Standards.

27. On September 6, 2019, EPA, Region 9, issued an information request (the “First

Information Request”) to Tesla pursuant to Section 114 of the Act, 42 U.S.C. § 7414.

The primary purpose of the First Information Request was to determine Tesla’s

compliance with CAA new source performance standards and Subpart IIII Standards.

28. On October 28 and December 11, 2019 and February 14 and March 6, 2020, Tesla

submitted its response (the “First Response”) to the First Information Request to EPA,

Region 9. Tesla also submitted a supplemental response to the First Information Request

on March 5, 2021.

29. On December 11, 2020, EPA, Region 9, issued a second information request (the

“Second Information Request”) to Tesla pursuant to Section 114 of the Act, 42 U.S.C.

§ 7414. The primary purpose of the Second Information Request was to obtain additional

information regarding Tesla’s compliance with the Subpart IIII Standards.

30. On January 29, February 16, and March 1, 2021, Tesla submitted its response (the

“Second Response”) to the Second Information Request to EPA, Region 9; hereinafter

the First Response and Second Response will be referred to collectively as the

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 “Responses”. Tesla also submitted a response to EPA’s follow-up questions on April 5,

2021.

31. On April 23, 2021, EPA issued a Finding and Notice of Violation (“NOV”), Docket No.

R9-CAA-21-1007, notifying Tesla of alleged violations of the Subpart IIII Standards.

32. On June 9, 2021, Tesla submitted its initial response to the NOV.

33. On June 11, 2021, and June 24, 2021, representatives of EPA and Tesla met to discuss

Tesla’s response to the NOV.

34. On July 18, 2021, Tesla submitted follow-up responses to technical issues discussed with

EPA at the June 24, 2021 meeting.

35. On September 28, 2021, EPA informed Tesla that it would pursue enforcement of the

violations alleged in paragraphs 57 and 59 of the NOV, specifically 40 C.F.R. §§ 63.3094

and 63.3130(c), and an alleged violation of 40 C.F.R. § 63.3163.

36. On October 1, 2021, the parties executed a tolling agreement in which the parties agreed

to toll claims for alleged violations of 40 C.F.R. §§ 63.3094, 63.3130, and 63.3163 at the

Facility.

D. VIOLATIONS ALLEGED BY EPA

Count 1

Failure to Develop and Implement Work Practice Plan; 40 C.F.R. § 63.3094

37. Paragraphs 1 through 36 above are incorporated herein by reference as if they were set

forth here in their entirety.

38. In or about October 2016 through September 2019, Respondent failed to develop and/or

implement a work practice plan to minimize organic HAP emissions from the storage,

mixing, and conveying of coatings, thinners, and cleaning materials used in, and waste

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 materials generated by, all coating operations subject to emission limits of the Subpart

IIII Standards at the Facility.

39. Respondent’s failure to develop and/or implement a work practice plan to minimize

organic HAP emissions from all coating operations subject to emission limits of the

Subpart IIII Standards at the Facility in or about October 2016 through September 2019

constitutes violations of 40 C.F.R. § 63.3094 and the Subpart IIII Standards.

Count 2

Failure to Demonstrate Continuous Compliance with the Emission Limitations of

the Subpart IIII Standards; 40 C.F.R. § 63.3163(a)

40. Paragraphs 1 through 39 above are incorporated herein by reference as if they were set

forth here in their entirety.

41. In or about October 2016 through September 2019, Respondent failed to perform

calculations of the total mass of organic HAP emissions before consideration of add-on

controls from all coatings and thinners used during each month in coating operations at

the Facility.

42. Respondent’s failure to perform calculations of the total mass of organic HAP emissions

before consideration of add-on controls from all coatings and thinners used during each

month in coating operations at the Facility in or about October 2016 through September

2019 constitute violations of 40 C.F.R. §§ 63.3161(h) and 63.3163(a) and the Subpart IIII

Standards.

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 Count 3

Failure to Collect and Keep Records; 40 C.F.R. § 63.3130

43. Paragraphs 1 through 42 above are incorporated herein by reference as if they were set

forth here in their entirety.

44. In or about October 2016 through September 2019, Respondent failed to collect and

keep: (1) records of the calculation of the organic HAP emission rate for various coating

operations, including all raw data, algorithms, and intermediate calculations; and (2)

records demonstrating implementation of the work practice plan required under 40 C.F.R.

§ 63.3094 on a continuous basis.

45. Respondent’s failure to collect and keep: (1) records of the calculation of the organic

HAP emission rate for various coating operations, including all raw data, algorithms, and

intermediate calculations; and (2) records demonstrating implementation of the work

practice plan required under 40 C.F.R. § 63.3094 on a continuous basis in or about

October 2016 through September 2019, constitutes a violation of 40 C.F.R. § 63.3130

and the Subpart IIII Standards.

E. CIVIL ADMINISTRATIVE PENALTY

46. Respondent agrees to the assessment of a civil penalty of TWO HUNDRED SEVENTY-

FIVE THOUSAND DOLLARS ($275,000) for the claims set forth herein as final

settlement of the civil claims against Respondent as alleged in Section I.D of the CAFO.

47. Respondent shall pay the assessed penalty according to the terms of this CAFO within

thirty (30) days of the Effective Date of the CAFO. Payment shall be made by cashier’s

or certified check payable to the “Treasurer, United States of America,” or be paid by one

of the other methods listed below:

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a. Regular or Certified Mail:

U.S. Environmental Protection Agency

Fines and Penalties
Cincinnati Finance Center
P.O. Box 979077
St. Louis, MO 63197-9000

b. Wire Transfers:

Wire transfers must be sent directly to the Federal Reserve Bank in New York

City with the following information:

Federal Reserve Bank of New York

ABA = 021030004
Account = 68010727
SWIFT address = FRNYUS33
33 Liberty Street
New York, NY 10045

Field Tag 4200 of the Fedwire message should read “D 68010727

Environmental Protection Agency."

c. Overnight Mail:

U.S. Environmental Protection Agency

Government Lockbox 979077
1005 Convention Plaza
Mail Station SL-MO-C2GL
St. Louis, MO 63101
Contact: Craig Steffen (513) 487-2091

d. ACH (also known as REX or remittance express):

US Treasury REX/Cashlink ACH Receiver

ABA: 051036706
Account Number: 310006, Environmental Protection Agency
CTX Format Transaction Code 22 – checking
Physical location of US Treasury Facility:
5700 Rivertech Court
Riverdale, MD 20737
Remittance Express (REX): 1-866-234-5681

e. Online Payment:

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 This payment option can be accessed from the information below:

www.pay.gov
Enter "sfo1.1" in the search field
Open form and complete required fields

If any clarification regarding a particular method of payment remittance is needed,

please contact the EPA Cincinnati Finance Center at 513-487-2091. The payment shall

be accompanied by a transmittal letter identifying the case name, the case docket number,

and this CAFO. Concurrent with delivery of the payment of the penalty, Respondent

shall send by e-mail a copy of the check or notification that the payment has been made

by one of the other methods listed above, including proof of the date payment was made,

and transmittal letter to the following addresses:

Regional Hearing Clerk

Office of Regional Counsel (ORC-1)
U.S. Environmental Protection Agency, Region IX
75 Hawthorne Street
San Francisco, CA 94105
[email protected]

Scott Connolly
Enforcement and Compliance Assurance Division (ENF-4-1)
U.S. Environmental Protection Agency, Region IX
75 Hawthorne Street
San Francisco, CA 94105
[email protected]

48. Payment of the above civil administrative penalty shall not be used by Respondent or any

other person as a tax deduction from Respondent’s federal, state, or local taxes.

49. In the event Respondent fails to pay the assessed penalty to EPA by the time required in

Paragraph 47 of this CAFO, Respondent shall pay stipulated penalties as follows: FIVE

HUNDRED DOLLARS ($500) per day for the first to fifteenth day of delay, ONE

THOUSAND DOLLARS ($1,000) per day for the sixteenth to thirtieth day of delay, and

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 FIVE THOUSAND DOLLARS ($5,000) per day for each day of delay thereafter.

Compliance by Respondent shall include completion of any activity under this CAFO in

a manner acceptable to EPA and within the specified time schedules in and approved

under this CAFO.

50. Stipulated penalties shall begin to accrue on the day after performance is due and shall

continue to accrue through the final day until performance is complete. Respondent shall

pay stipulated penalties within fifteen (15) days of receipt of a written demand by

Complainant for such penalties. Payment of stipulated penalties shall be made in

accordance with the procedure set forth for payment of penalties in Section I.E of this

CAFO.

51. If a stipulated penalty is not paid in full, interest shall begin to accrue on the unpaid

balance at the end of the fifteen-day period at the current rate published by the United

States Treasury, as described at 40 C.F.R. § 13.11. Complainant reserves the right to take

any additional action, including but not limited to, the imposition of civil penalties, to

enforce compliance with this CAFO or with the CAA and the implementing regulations.

52. Notwithstanding any other provision of this Section, EPA may, in its unreviewable

discretion, waive any portion of stipulated penalties that have accrued pursuant to this

CAFO.

F. ADDITIONAL TERMS OF CONSENT AGREEMENT

53. In accordance with 40 C.F.R. § 22.18(b)(2) and for the purpose of this proceeding,

Respondent: (i) admits that EPA has jurisdiction over the subject matter of this CAFO

and over Respondent; (ii) neither admits nor denies the specific factual allegations

contained in the CAFO; (iii) consents to any and all conditions specified in this CAFO

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 and to the assessment of the civil administrative penalty under Section I.E of this CAFO;

(iv) waives, for the purpose of this proceeding in Docket No. CAA-09-2022-0024, any

right to contest the allegations contained in Section I.D of the CAFO; and (v) waives the

right to appeal the proposed final order contained in this CAFO.

G. CERTIFICATION OF COMPLIANCE

54. In executing this CAFO, Respondent certifies that, based on information and belief,

formed after reasonable inquiry, it is currently in compliance with any requirements of

the Subpart IIII Standards that may apply to its ongoing operations.

H. RETENTION OF RIGHTS

55. In accordance with 40 C.F.R. § 22.18(c), Respondent’s full compliance with this Consent

Agreement shall only resolve Respondent's liability for federal civil penalties. Nothing in

this CAFO is intended to or shall be construed to resolve (i) any civil liability for

violations of any provision of any federal, state, or local law, statute, regulation, rule,

ordinance, or permit not specifically alleged in Section I.D of the CAFO; or (ii) any

criminal liability. EPA specifically reserves any and all authorities, rights, and remedies

available to it (including, but not limited to, injunctive or other equitable relief or

criminal sanctions) to address any violation of this CAFO or any violation not

specifically alleged in Section I.D of the CAFO.

56. This CAFO does not exempt, relieve, modify, or affect in any way Respondent’s duty to

comply with all applicable federal, state, and local laws, regulations, rules, ordinances,

and permits.

I. MISCELLANEOUS

57. This CAFO may be amended or modified only by written agreement executed by both

EPA and Respondent.

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58. The headings in this CAFO are for convenience of reference only and shall not affect

interpretation of this CAFO.

59. Each party to this action shall bear its own costs and attorneys’ fees.

60. Respondent consents to entry of this CAFO without further notice.

J. EFFECTIVE DATE

61. In accordance with 40 C.F.R. §§ 22.18(b)(3) and 22.31(b), this CAFO shall be effective

on the date that the final order contained in this CAFO, having been approved and issued

by either the Regional Judicial Officer or Regional Administrator, is filed with the

Regional Hearing Clerk.

K. BINDING EFFECT

62. The undersigned representative of Complainant and the undersigned representative of

Respondent each certifies that he or she is fully authorized to enter into the terms and

conditions of this CAFO and to bind the party he or she represents to this CAFO.

63. The provisions of this CAFO shall apply to and be binding upon Respondent and its

officers, directors, employees, agents, trustees, servants, authorized representatives,

successors, and assigns.

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FOR RESPONDENT, TESLA, INC.

_________________
02.02.2022 ______________________________________
___
_ _________ _____
___________
__ ________
_ _____
DATE NAME:E: _______________________________
Laurie
La
L aurie Shelbyy
TITLE: Vice
_______________________________
President of Environmental, Health and Safety

FOR COMPLAINANT, EPA REGION IX:

AMY MILLER- Digitally signed by AMY

MILLER-BOWEN

BOWEN Date: 2022.02.14 10:44:37

-08'00'
_________________ _______________________________________
DATE Amy C. Miller-Bowen
Director
Enforcement and Compliance Assurance Division
U.S. Environmental Protection Agency, Region IX

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 II. FINAL ORDER

Complainant and Respondent, Tesla, Inc., having entered into the foregoing Consent

Agreement,

IT IS HEREBY ORDERED that this CAFO (Docket No. CAA-09-2022-0024) be

entered, and that Respondent shall pay a civil administrative penalty in the amount of TWO

HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($275,000), and comply with the terms

and conditions set forth in the Consent Agreement.

STEVEN Digitally signed by STEVEN

JAWGIEL

________________
JAWGIEL Date: 2022.02.16 15:30:08
-08'00'
________________________________

DATE Steven Jawgiel

Regional Judicial Officer
U.S. Environmental Protection Agency, Region IX

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 CERTIFICATE OF SERVICE

I certify that the fully executed Consent Agreement and Final Order, (Docket No CAA-
09-2022-0024) was filed with the Regional Hearing Clerk, U.S. EPA, Region IX, and that a true
and correct copy of the same was sent to the following parties:

Via E-Mail

Laurie Shelby
Vice President of Environmental, Health and Safety
Tesla, Inc.
13101 Tesla Road
Austin, TX 78725
[email protected]

Yesenia Villaseñor
Associate General Counsel
Environmental Health & Safety
[email protected]

Via E-Mail

David Kim
Assistant Regional Counsel
U.S. EPA, Region IX
75 Hawthorne Street
San Francisco, CA 94105
[email protected]

Digitally signed by

PONLY TU PONLY TU
Date: 2022.02.17
10:45:01 -08'00' ___________________________
_______________________________
Ponly Tu
Regional Hearing Clerk Date
U.S. EPA, Region IX