TOYOTA

TO: TENNESSEE DEALER PRINCIPALS, SERVICE MANAGERS AND PARTS

MANAGERS
DATE: 2012
RE: Information Packet for Corrosion-Resistant Compound (“CRC”) Campaign COD

SEQUOIA CORROSION-RESISTANT COMPOUND CAMPAIGN COD

TENNESSEE/VIRGINIA DEALER INFORMATION PACKET

(FOR TENNESSEE DEALERS SERVICING
VIRGINIA-REGISTERED SEQUOIAS)

Toyota is launching a Corrosion-Resistant Compound (“CRC”) Campaign for 2001-2004 model
year (“MY”) Sequoia vehicles registered in certain cold climate states with high road salt use
(‘Cold Climate States’). For ease of reference, this Campaign will be referred to by its assigned
internal designation -- "COD”.

For the Sequoia COD, your dealership will use the same two Vaupel HSDR 3300 spray guns
already issued to you for the Tundra BOD to apply the same CRC materials now being used for
the BOD — i.e., 712 AM and Noxudol 300 S. You will apply these CRCs in the same spray
space already being used for the BOD.

Applying the CRC materials and using the Vaupel HSDR 3300 spray gun raises compliance
obligations under federal, state and/or local laws related to air emissions, fire code approval
and recordkeeping. The Tundra BOD Dealer Information Packet ("BOD Packet’) contained a
detailed explanation of these compliance obligations. This Sequoia COD Dealer Information
Packet does not repeat that extensive discussion, but instead assumes your familiarity with
these obligations and identifies the steps that Toyota Motor Sales, U.S.A. Inc. (“TMS”)
recommends you undertake to assure your dealership's continued compliance with these
obligations white conducting the Sequoia COD.

Please review this Dealer Information Packet carefully. If, after reviewing this Packet, you have
any questions or concerns, please call the C.L.E.AN. Dealer EH&S Hotline (877-572-4347) to
discuss your particular situation.

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Step One

Step Two

Before You Begin The Sequoia COD, Re-Review the
Tundra BOD Dealer Information Packet.

Due to the substantial similarities between the Sequoia COD and the Tundra BOD,
this Dealer Information Packet does not repeat the extensive discussion of legal
requirements set forth in the BOD Packet.

Instead, it is expected that you will carefully and fully re-review the BOD Packet
prior to starting the Sequoia COD, so that you understand all steps your dealership
must take to comply with the applicable legal requirements while conducting the
Sequoia COD.

You received a copy of the BOD Packet previously, but in the event you need an
additional copy, that Packet is available for download on the C.L.E.A.N. Dealer

Website (http://cleandealer.com).

Before You Begin The Sequoia COD, Confirm That Your
Dealership Satisfies All Of The Criteria Set Forth
Below.

Your dealership should conduct the Sequoia COD in the same spray space
currently being used for the Tundra BOD and in accordance with the
Technical Instructions for the Sequoia COD.

a. The spray space currently being used for the Tundra BOD has already
been approved by your local fire code enforcement official.

b. To operate consistent with this approval, you must conduct the Sequoia
COD in the same spray space currently being used for Tundra BOD and do
so in accordance with the Technical Instructions for the Sequoia COD.

c If your dealership is not participating in the Tundra BOD, or if it will not
conduct the Sequoia COD in the same spray space currently being used for
Tundra BOD, you will need a new approval from your local fire code
enforcement official. Please call the C.L.E.A.N. Dealer EH&S Hotline (877-
572-4347) to discuss your particular situation.

Your dealership will remain exempt from air permitting by continuing to
comply with ail applicable air regulatory requirements as set forth in the
Tundra BOD Packet. These requirements are summarized below. You should
refer to the BOD Packet for details.

a. Your dealership does not currently have an air permit issued by the
Tennessee Air Pollution Control Board.

b. Your dealership continues to keep its potential to emit (PTE) for Volatile
Organic Compounds ("VOCs") and Particulate Matter ("PM") below the
levels that would trigger air permitting, ie, 100 tons per year (tpy) for
VOCs and 100 tpy for PM. Your dealership’s PTE should fall well below
these thresholds as long as you:

i. Do not operate a very large on-site or off-site body shop; and

ii. Do not otherwise engage in substantial spraying, coating, painting
or other activities that involve applying VOC-containing materials
with spray guns.

Your dealership submits to the Tennessee Air Pollution Control Board
(TAPCB) a Notification for Designation of the Sequoia COD and any
future CRC campaigns as an “Insignificant Activity” and receives a
written determination from TAPCB. (Appendix B contains instructions
and a form letter that you can use to make such Notification.)

i. You must submit this Notification at least 30 Days before you
intend to start the Sequoia COD.

ii. You may NOT begin the COD until you receive a written
determination from TAPCB confirming that the COD qualifies
as an “Insignificant Activity”.

Your dealership will continue to restrict vehicle processing in order to
comply with hourly PM emissions limits as follows:

(1) Process no more than one Tundra every 2 hours.
(2) Process no more than one Sequoia every 2 hours.

Please refer to Appendix D of this Packet for guidance on how to follow
these vehicle processing restrictions.

Your dealership should

notify the local fire code enforcement official of your plans to apply
CRCs to additional vehicle models besides Tundra and

continue to comply with all applicable fire, building and zoning code
requirements as set forth in the Tundra BOD Packet.

These requirements are summarized below. You should refer to the Tundra BOD
Packet for details.

a.

As noted above, your dealership should conduct the Sequoia COD in the
spray Space that already has been approved by the local fire code
enforcement official and is now being used to conduct the Tundra BOD.

As a courtesy, TMS recommends that you provide notice to the local fire
code enforcement official in writing that your dealership plans to apply
CRC materials to vehicle models other than Tundra in this previously
approved spray space. Appendix A of this Packet contains a letter that you
can use to provide such notice.

c. {f, when approving your spray space, the local fire code enforcement
official issued you a conditional permit or approval that established special
requirements or restrictions, then you must:

i confirm that the permit or approval is not time-, vehicle- or CRC
material-limited in such a way that it will not apply to the Sequoia
COD’ and

ii. continue to comply with the special requirements or restrictions in
the permit or approval.

d. Your dealership also must continue to comply with any additional
environmental, health, safety and zoning requirements identified for your
local jurisdiction in "Table 1" of the BOD Packet.

e. During application of the CRCs in the spray space approved by the local
fire code enforcement official, your dealership must:

i. Maintain adequate ventilation in the spray space and surrounding
area.

ii. Have no open flames, spark-producing equipment, or drying,
curing, or fusion apparatuses within 20 feet of the spray space.

iii. Have fire extinguishers rated "B", "AB", or "ABC" within 30 feet of
the spray space.

iv. Follow best management practices for handling and storage of the
CRC materials.

Step Three Before You Begin The Sequoia COD, Complete The
Readiness Checklist Process

1. For Tacoma LSC 90D and Tundra BOD, you completed a detailed Readiness
Survey to confirm that your dealership was ready to begin each of the campaigns.
As long as your dealership will conduct the Sequoia COD in the spray space that
already has been approved by the local fire code enforcement official (and is now
being used to conduct the Tundra BOD) and will otherwise satisfy the requirements
in Steps One and Two above, then you may use a more simple Readiness
Checklist process. To complete the Readiness Checklist process and confirm that
your dealership is ready to begin conducting the Sequoia COD, please go to the
C.L.E.A.N. Dealer website (http://cleandealer.com).

2. Only after completing the Readiness Checklist process will your dealership be able
to order kits with the CRC materials for the Sequoia COD.

* If you are facing this situation, or you have any questions on this point, please call the C.L.E.A.N. Dealer EH&S
Hotline (877-572-4347) for assistance.

Step Four

You Can Now Begin Conducting The Sequoia COD, But
Do So In Compliance With The Requirements Set Forth
Below.

1. Adhere to the vehicle processing limits discussed in Step Two above by not
processing more than one Tundra every 2 hours or one Sequoia every 2
hours. As explained further below, please use the new “Sequoia and Tundra
Daily Production Log” in Appendix C of this Packet for both the Tundra BOD and
the Sequoia COD to document that you are following these vehicle processing
restrictions. Also, Appendix D of this Packet includes guidance on how to follow
these vehicle processing restrictions.

2 Comply with the air recordkeeping obligations that apply to both the Tundra
BOD and the Sequoia COD, including by using the new “Sequoia and Tundra
Daily Production Log” provided in Appendix C of this Packet.

a.

The BOD Packet details the air recordkeeping obligations that apply to CRC
Campaigns. Your dealership must comply with these same obligations
when conducting the Sequoia COD.”

Appendix C to this Packet provides a new “Tundra and Sequoia Daily
Production Log”. Such a Log was not included in the Tundra BOD Packet,
but you should start using this Log to track the number of vehicles
processed under the Tundra BOD and the resulting air emissions. You also
should use the Log for the Sequoia COD.

Your dealership should also keep copies of the following with your
completed ‘Tundra and Sequoia Daily Production Log” forms:

i The Notification for Designation of the Sequoia COD as an
“Insignificant Activity” that you submit to TAPCB and its
accompanying attachments;

ii. The written determination that you receive from TAPCB in response
to the Notification that Sequoia COD qualifies as an “Insignificant
Activity’; and

iii. Documents identified in the Tundra BOD Packet.

? Please note that although your dealership must comply with hazardous waste requirements generally, the materials
associated with the Tundra BOD and the Sequoia COD do not constitute “hazardous waste” when discarded. As such,
neither the Tundra BOD nor the Sequoia COD will generate hazardous waste or impact your dealership’s hazardous.

waste generator stalus.

The steps outlined above, in conjunction with the more detailed explanation provided in the
Tundra BOD Packet, should help to assure that your dealership conducts both the BOD and the
Sequoia COD in compliance with the relevant federal, state, and local requirements. This
Sequoia COD Dealer Information Packet is not intended to cover other air, waste management,
hazardous material, water, or other environmental laws and regulations that might apply to
operations at your dealership other than the application of CRC materials as part of the Tundra
BOD or Sequoia COD. We assume that you already comply with other environmental, health, and
safety requirements that apply to your facility.

If you have any questions after reviewing this Dealer Information Packet and the BOD Packet, or
the Technical Instructions, please go to the C.L.E.A.N. Dealer website (http://cleandealer.com) or
call the EH&S Hotline (877-572-4347).

Thank you for your cooperation.

TOYOTA MOTOR SALES, U.S.A., INC.

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TENNESSEE DEALER INFORMATION PACKET

APPENDIX A -FIRE OFFICIAL MODEL OUTREACH LETTER

The BOD Packet directed you to notify your local fire code enforcement official, in writing, of your
intention to use the same space that had been previously approved for conducting the Tacoma
LSC 90D, to spray a less-combustible CRC (Noxudol 300 S) on certain MY Tundra vehicles.
Prior to conducting the Sequoia COD, TMS recommends that you provide one additional notice
informing your local fire code enforcement official that your dealership intends to apply CRCs to
additional vehicle models besides Tundra in this same spray space.

TMS has prepared a model letter that you can customize and use to provide this notice. Contact
information for your local fire code enforcement official can be found in Table 1 of the BOD
Packet. Please remember that you must send this letter before you begin conducting the

Sequoia COD.

Please note that the model letter refers to “CRC program” (instead of the Sequoia COD) to ensure
that the notification to your local fire code enforcement official covers not only the Sequoia COD,
but also any CRC program that may be offered for Toyota vehicles in the future when conducted
in the same space that you are now using for Tundra BOD.

An Electronic Copy of This Letter is Available on the C.L.E.A.N. Dealer website —
http://cleandealer.com

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[DEALER LETTERHEAD]

aa es

Re: NOTIFICATION OF INTENT TO CONDUCT CORROSION-RESISTANT COMPOUND
CAMPAIGN IN THE APPROVED SPRAYING AREA OF

Dear

Our dealership previously obtained your office's approval to conduct a Limited Service
Campaign ("LSC") for Tacoma vehicles at our facility located at [insert address]. As you may
recall, the Tacoma LSC involved the application of a Class IIIB corrosion-resistant compound
("CRC") to the interior of the vehicle's frame rails and a Class Il CRC to the exterior of the
vehicle's frame rails.

We contacted you last year to notify you that we would begin conducting a separate CRC
program for certain Mode! Year (MY) Tundra vehicles and would be applying a less combustible,
Class IIIB CRC material known as Noxudol 300 S to the exterior portion of the frame. As we
noted at the time, Noxudo! 300 S has a much higher flash point (285°F) as compared to the
exterior material used for the Tacoma LSC (Nox-Rust® X128T, which has a flash point of 105°F).
Noxudol 300 S also has the added advantage, from an environmental perspective, of being much
lower in volatile organic compounds (VOCs) than the X128T material.

Toyota has now expanded the CRC program to include certain additional vehicles, and we
intend to offer the expanded CRC program to our eligible customers. As with the Tundra
program, eligible vehicles will be treated with 712AM material and Noxudol 300 $ or similar Class

IIIB liquids. Thus, the CRC program will involve application of only Class IIIB combustible liquids.

We also wanted to take this opportunity to inform you that as a result of the Tacoma LSC
having expired on December 31, 2011, our dealership has discontinued the application of any
Class II combustible liquids to Toyota vehicles and will only be applying Class IIIB combustible
liquids for the CRC program.

If you have any questions or require any additional information, please do not hesitate to
contact [Dealership] or [Number]. Thank you for your time and consideration.

Sincerely,

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SEQUOIA CORROSION-RESISTANT COMPOUND CAMPAIGN COD

TENNESSEE DEALER INFORMATION PACKET

APPENDIX B — NOTIFICATION FOR DESIGNATION OF
SEQUOIA COD AS “INSIGNIFICANT ACTIVITY”

INSTRUCTIONS
1. Your dealership may not begin the Sequoia COD until you:
a Submit the attached “Notification for Designation of the Sequoia COD

as an Insignificant Activity” to the Tennessee Air Pollution Control
Board (“TAPCB”"); and

b. Receive a “Determination of Agreement” from the TAPCB that the
Sequoia COD Is an insignificant activity.

2. Your dealership should submit the Notification for Designation at least 30 days before
the estimated starting date of the Sequoia COD.

3. To prepare the Notification For Designation:

Please go to the C.L.E.A.N Dealer website (http://cleandealer.com) for
electronic copies of the Notification for Designation letter and its attachments.

a. Put the Notification for Designation on your deatership’s letterhead.

b. Insert the proper date.

c. Have the Notification of Designation signed by your dealership's General
Manager.

d. Add Attachments 1 — 3 to the Notification.

4. Send the Notification of Designation and Attachments to:

Technical Secretary

Tennessee Air Pollution Control Board

9th Floor, L&C Annex

401 Church Street

Nashville, TN 37243

Attention: John A. Trimmer, Chief, East Tennessee Permit Program

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_, 2012
Technical Secretary

Tennessee Air Pollution Control Board

Sth Floor, L&C Annex

401 Church Street

Nashville, TN 37243

Attention: John A. Trimmer
Chief, East Tennessee Permit Program

Re: Notification for Designation as “Insignificant Activity” Pursuant to TENN. COMP.
R. & REGS. 1200-03-09.04(4)(a) for Toyota Corrosion-Resistant Compound
Campaign

Dear Technical Secretary:

Toyota of Bristol submits this written notification, pursuant to TENN. Comp. R. & REGS.
1200-03-09.04(4)(a), in connection with the Toyota Motor Sales, U.S.A., Inc. (“Toyota") Corrosion
Resistant Compound (“CRC”) campaign for certain model year Sequoia vehicles (the “Sequoia
Campaign’) along with similar future CRC campaigns that we would like to conduct at our
dealership (the “Future Campaigns’). Notably, the Sequoia Campaign and any Future
Campaigns will have emissions comparable to (or lower than) the "Tundra BOD” and “Tacoma
LSC” Campaigns that the Tennessee Air Pollution Control Board (“TAPCB”) previously
determined to be “insignificant activities” via letters dated October 11, 2011 and August 4, 2009.

Significantly, although the Sequoia and Future Campaigns will involve the same CRCs
and Vaupel HSDR 3300 spray guns used in the Tundra BOD campaign, this submission differs
slightly from our prior submissions. Previously, each campaign's potential to emit (“PTE”) was
based on the total number of vehicles subject to the individual campaign (“units in operation” or
“UIO"). This was appropriate since the limited number of vehicles eligible for each CRC
campaign provided an inherent limitation on emissions from each program. However, the UIO-
based approach did not allow for a more general (non-vehicle specific) determination since the
PTE calculation relied upon information specific to the vehicles and model years included in each
new campaign.

As an alternative, Toyota has now developed a “maximum CRC operating scenario” —~
covering the Sequoia Campaign and any Future Campaign -- that allows us to use a more
traditional 24/7/365 PTE calculation to demonstrate that the Sequoia COD, alone or in
combination with each Future Campaign, is an insignificant activity. We now seek a
determination of agreement from the TAPCB that, based on the “maximum CRC operating
scenario,” the CRC campaigns, including the Sequoia Campaign and any Future Campaign,
qualifies as an “insignificant activity” regardless of the number of vehicles eligible for those
programs.

In support of this request, | am pleased to provide further information in following
documents:

1. Attachment 1: Introduction, Overview and Air Emissions Calculations.

2. Attachment 2: Copies of the TAPCB’s October 11, 2011 and August 4,
2009 insignificant activity determination letters.

3. Attachment 3: MSDS for Parker 712AM and Noxudol 300 S, the two
CRCs to be applied to the vehicle frames. .

In sum, as set forth in detail in Attachment 1 to this letter, this maximum operating
scenario assumes 1) that all Future Campaigns would use no more than 3 liters each of the two
CRCs, and, 2) very conservatively, that the CRC applications for any single vehicle will be
completed within one hour. As reflected in the table below, based on these assumptions and
continuous 24/7/365 operations, the PTE for the Sequoia and any Future Campaign will be well
below the threshold for insignificant activities under Rule 1200-03-09.04(4)(a) -- even if a dealer
conducts the campaigns in two service bays operating simultaneously.

Maximum CRC Maximum CRC

Operating Scenario Operating Scenario
(One Bay) (Two Bays)

La iim Lap) 0.20

[TPE atl es})

[Talia os9)

LTT Ora Los)

Dali hrs)

Accordingly, Toyota of Bristol now seeks a determination of agreement from TAPCB that
the Sequoia COD and all Future CRC Campaigns conducted in accordance with the “maximum

CRC operating scenario” qualifies as an exempt “insignificant activity” under Rule 1200-03-
09.04(4)(a).

We would appreciate your prompt attention to this matter. If you have any questions
about Toyota of Bristol's participation in the Sequoia Campaign, please do not hesitate to contact

me at [phone number]. If you would like more information about Toyota's CRC campaigns
generally or about the information contained in Attachments 1 through 3, you also may contact
Ms. Sandra Waddell, Toyota's Managing Counsel for Environmental, Health and Safety matters
at (310) 468-4830.

Sincerely,

[Contact at Toyota of Bristol}

Attachments

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ATTACHMENT 1
TOYOTA CAMPAIGNS TO ADDRESS FRAME CORROSION
FOR CERTAIN VEHICLES OPERATED IN TENNESSEE

INTRODUCTION, OVERVIEW AND AIR EMISSIONS CALCULATIONS

I BACKGROUND AND SUMMARY OF CAMPAIGNS

Toyota of Bristol has previously participated in two campaigns to address greater than expected
levels of frame corrosion in certain Toyota vehicles known as the “Tacoma LSC 90D" and
“Tundra BOD.” Both the Tundra BOD and Tacoma LSC 90D involved application of corrosion-
resistant compounds (“CRCs”) to the vehicle frame surfaces — one to the interior and one to the
exterior of vehicle frame surfaces — with specialized Vaupel HSDR 3300 (Vaupel”) spray guns.

For both the Tacoma LSC 90D and Tundra BOD, the Tennessee Air Pollution Control Board
(‘TAPCB”) determined that the campaigns constitute insignificant activities or insignificant
emissions units under Tennessee Air Pollution Control Regulations. In support of these
determinations, the participating Tennessee dealers submitted potential to emit (“PTE”)
calculations for each campaign based on the total number of vehicles eligible for the program
(‘units in operation” or “UIO"). TAPCB accepted the UlO-based PTE methodology and, on
August 4, 2009 and October 1, 2011, issued determinations that the Tacoma LSC 90D and
Tundra BOD, respectively, constitute insignificant activities or insignificant emissions units.”

Toyota Motor Sales, Inc. (“TMS”) is now planning a third CRC campaign for model years (“MYs")
2001 - 2004 Sequoia vehicles (the "Sequoia Campaign”) and® also may offer CRC campaigns in
the future to address greater than expected levels of frame corrosion for other types or other
model years of Toyota vehicles (the “Future Campaigns’). Dealers participating in the Sequoia
and Future Campaigns will use the same two Vaupel spray guns used to apply the same two
CRCs used in the Tundra BOD {712 AM and Noxudol 300 S). The only difference between the
Tundra BOD and the Future Campaigns will be that the quantities of each CRC used may vary for
each campaign depending upon the area of the vehicle frame that needs to be treated.* In no
event, however, does TMS anticipate that any Future Campaign would apply more than 3 liters of
Noxudel 300 S and 3 liters of 712 AM.

* These campaigns were limited to vehicles registered in 20 states and the District of Columbia. Although
Tennessee was not among these states, Toyota of Bristol was selected to participate in order to service
vehicles registered in Virginia, which is among the states covered by the campaigns. Toyota of Bristol
participated in both campaigns, but Toyota of Kingsport did not participate in the Tundra BOD.

? Toyota of Bristol is now conducting the Tundra BOD for Tundra model years ("MYs") 2000 - 2003 as part
of a voluntary safety recall under the auspices of the National Highway Traffic Safety Administration.
However, Toyota of Bristol's request for determination included Tundra MYs 2004 — 2008 in its UlO-based
PTE to account for the possibility that these vehicles may become subject to a CRC campaign in the future.

5° The Sequoia Campaign is presently limited to MYs 2001 — 2004. However, additional model years (MYs
2005 — 2008) may become subject to a CRC campaign in the future.

4 The Sequoia Campaign, for example, will use the same amount of Noxudol as the Tundra BOD (3 liters),
but it will use 1 liter more of 712 AM (i.e., 2 liters of 712 AM)

TMS now seeks TAPCB's determination that the Sequoia Campaign and any Future Campaign
which also uses the Vaupel spray gun to apply 712AM and Noxudol 300 S to the frame surfaces
of Toyota vehicles constitute insignificant activities or insignificant emissions units, as defined by
Tennessee Air Pollution Control Regulations, §1200-03-09-.04. Because of a significant design
change in the CRC program that was implemented with the Tundra BOD — i.e., changing the
exterior CRC from X128T (used in the Tacoma LSC 90D) to Noxudol 300 S — TMS significantly
lowered the volatile organic compound ("VOC") emissions associated with these programs.
Therefore, TMS can demonstrate that emissions associated with the Sequoia Campaign or any
Future Campaign will remain below the 5 tpy insignificant activity or insignificant emission unit
threshold usirig a more traditional 24/7/365 PTE methodology instead of the UlO-based PTE
methodology previously approved by TAPCB.

In the future, TMS also may offer Toyota of Bristol the option to establish a second spray space to