Aero Vironment Inc. — Hazardous Materials Safety Interpretation

Page 1Of transportione Washington, D.G. 20590 400 Seventh St., S.W. JUN 2 O*2003 Ms. Erica Jenkins Ref. No.: 02-0314 Logistics Coordinator Aero Vironment Inc. 4685-3H Industrial Street Simi Valley, California 93063 Dear Ms. Jenkins: This is in response to your letter regarding the use of the material of trade exception as it applies to highway shipments of lithium cells and batteries under the Hazardous Materials Regulations (HMR; 49 CFR parts 171-180). Your questions are paraphrased and answered as follows: Q1: Would the lithium batteries qualify for the MOTs exception, while being transported to various locations for testing in solar powered aircraft and small-unmanned air vehicles? Al: The answer is yes. The materials of trade definition in § 171.8 includes a private motor carrier transporting hazardous materials in direct support of a principal business that is other than transportation by motor vehicle. Q2: Would the lithium batteries qualify for the MOTs exception, while they are transported between Aero Vironment facilities for testing and modifications? A2: The answer is yes. One criteria for a MOT is that a hazardous material is transported by a private carrier in direct support of its principal business which is not transportation by motor vehicle. Therefore, a hazardous material transported between a company's facilities for purposes of quality control testing meets the definition of MOT. In addition, prototype lithium cells and batteries may be transported for performance testing (i.e., product evaluation) in connection with development programs when transported in conformance with § 173.185(). Q3: You asked at what point does your hazardous material compliance liability terminate, after your customers accept delivery of lithium batteries at one your facilities? 173.6 020314#

Page 2A3: Each person who performs a function governed by the HMR is responsible for complying with the appropriate requirements of the HMR. The degree of regulatory liability is usually determined on a case-by-case basis, an determined by the facts of the issue. I hope this information is helpful. Please contact us if you require additional assistance. Sincerely, Delmer F. Billings Chief, Standards Development Office of Hazardous Materials Standards#

Page 3Reterford AeroVironment Inc. §173-6 AeroVironment Inc. 4685-3H Industrial Street Simi Valley, CA 93063 MOT Lithium Batteries December 6, 2002 02-0314 Mr. Edward Mazzullo Director, Office of Hazardous Materials Safety U.S. DOT/ RSPA (DHM-10) 400 7th Street S.W. Washington, DC 20590-0001 Dear Mr. Mazzullo, Subject: Need confirmation on 49 CFR (173.6 and 173.7) The purpose of this letter is to obtain clarification on a few issues that we have some immediate concerns about. The primary material in question is UN3090 (Lithium Batteries), class 9, PGII, P.I. 903. I have contacted the DOT Office of Hazardous Materials Safety and was advised to direct this letter to your attention. In an effort to eliminate confusion on the interpretation of the two regulations I am requesting written confirmation on the three issues that are listed below. Issue One: Would the Lithium batteries UN3090 be considered "Materials of Trade" as stated in CFR49 173.6 while we are transporting them to various sites for testing? We are a design and development company that specializes in solar powered aircraft and small-unmanned air vehicles. Our primary business relies on government contracts with both NASA and the Department of Defense (DOD). Our clients require us to go to various sites to conduct flight testing which is essential to the continuing growth and success of our business. Issue Two: Would these lithium batteries be considered "Materials of Trade" as stated in CFR49- 173.6, while we are transporting them between AeroVironment facilities for testing and modifications? The logistical location of our facilities requires us to transport these batteries between facilities during different phases of research, development, and production. There are three buildings that are close in proximity to one another with an estimated 6 miles between them and two with approximately seventy miles separating them. Again, this is another vital function of our business and is essential for the time restraints that NASA and the DOD place upon us. 4685-3H Industrial Street • Simi Valley, California 93063 • U.S.A. Telephone 805/581-2187 • FAX 805/581-4512 Corporate Office: 825 S, Myrtle Ave. • Monrovia, Caifornia 91016 • U.S.A. • 626/357-9983#

Page 4• Page 2 December 6, 2002 Issue Three: At what point is our Hazardous Material Compliance liability which includes hazardous material UN3090 at one of our facilities? expunged when our customers from the DOD accept delivery of equipment, Occasionally our customers will accept delivery of the equipment we build for them, then transport it to destinations of which we do not know, nor do we know what mode of transportation they are utilizing. Are we liable for that hazardous material until it arrives at its final destination or is the DOD? If the DOD is responsible for these shipments are we required to furnish any hazardous material shipping declarations or any other pertinent hazardous material documents to them? In closing, I would like to request the paperwork requirements needed for each of these issues. Depending on the answers that you provide, there may or may not be additional shipping documents required. We want to insure that we are in full compliance with all federal and state regulations that pertain to the shipping of hazardous materials. Thank you for taking the time to review this letter. I can be contacted at (805) 581-2198 ext.218 or by e-mail/ jenkins@aerovironment.com Please send your response to: AeroVironment Inc. Attn: Erica Jenkins 4685-3H Industrial Street Simi Valley, CA 93063 Sincerely, Safet Erica Jenkin Logistics Coordinator AeroVironment Inc.#