Altair Nanotechnologies, Inc. — Hazardous Materials Safety Interpretation

Page 1U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration 1200 New Jersey Ave., S.E. Washington. DC 20590 Mr. Jeffiey A. McKinney Vice President and Chief Patent Counsel Altair Nanotechnologies, Inc. 204 Edison Way Reno, NV 89502 Ref. No. 08-01 86 Dear Mr. McKinney: This responds to your July 1 1,2008 letter requesting clarification of the requirements for shipment of lithium batteries under the Hazardous Materials Regulations (HMR; 49 CFR Parts 171 - 180). Specifically, you ask whether § 173.1 85(e), Shipments for testing (prototypes), applies to shipments of prototype lithium cells or batteries transported for purposes of product performance and field demonstration testing. The answer is yes. Section 173.185(e) is not limited to transportation of prototype lithium cells or batteries for the purpose of UN testing in accordance with § 173.185(a). Prototype lithium cells or batteries may also be transported under the provisions of 173.185(e) for product performance testing or field demonstration testing in connection with product development programs. I hope this information is helpful. Please contact us if you require additional assistance. Sincerely, Regulations 0ff;cer Office of Hazardous Materials Standards#

Page 2Altairnanb i n n o v a t i o n a t w o r k July 1 1,2008 Edward Mazzullo Director Office of Hazardous Materials Standards Pipeline and Hazardous Materials Safety Administration (PHMSA) PHH- 1 0 U.S. Department of Transportation, East Building 1200 New Jersey Avenue, SE Washington, DC 20590400 1 Dear Mr. Mazzullo: Altair Nanotechnologies, Inc. ("Altaimano") is a nanotechnology company based in Reno, Nevada, that specializes in the production of lithium ion cells and batteries. As such, Altairnano is subject to the federal laws regulating the shipment of hazardous materials, specifically 49 C.F.R. 8 173.185, Lithium cells and batteries. We have received what appear to be different explanations from PHMSA officials as to the circumstances under which a manufacturer can ship prototype cells or batteries via motor vehicle without prior PHMSA approval. Accordingly, we are requesting PHMSA's views on the proper interpretation of the term "testing", as that term is used in 49 C.F.R. 5 173.185(e). Section 173.185(e) states in relevant part: "Shipments for Testing @rototypes). A lithium cell or battery is excepted from the requirements of [§ 173.1851 (a)(l) of this section when transported by motor vehicle for purposes of testingm(Emphasis added) This section is important because it governs the circumstances in which prototype cells or batteries can be shipped via motor vehicle without prior approval from PHMSA. One possible interpretation of this section is that the only circumstances in which the cell or battery can be shipped by motor vehicle without prior approval from PHMSA is if the shipment is to a location where some or all of the UN tests referenced in section (a)(l) will be performed. Under this construction, the purpose of section (e) would be to permit a manufacturer to ship its product by motor vehicle to a testing facility for the purpose of performing UN testing and, in this circumstance, the manufacturer would not be required to apply for a Competent Authority Approval ("CAW) under 49 C.F.R. 5173.185 (f). The Competent Authority in this instance would be PHMSA. Altairnano, Inc. 2 0 4 Edison Way. Reno, NV 8 9 5 0 2 - 2 3 0 6 altairnano.com phone 775.856.2500 1 fax 775.856.161 9#

Page 3An equally plausible interpretation of section (e) is that it covers not only shipments made for the purpose of LTN testing, but also prototype shipments made by motor vehicle exclusivelv for the purpose of conducting non-UN performance and field demonstration tests of the product. Under this interpretation, PHMSA's prior approval would not be required for prototype shipments made only for the purpose of product performance and demonstration testing (i.e. non-UN testing). We want to make certain that we are in full compliance with the Department of Transportation's lithium battery shipping requirements. In light of the ostensibly differing explanations we have received about the scope of the testing regulation, your prompt response to this inquiry would be appreciated. Please feel free to contact me at (775) 856-2500 or Kenneth Mead, our outside counsel with Baker Botts, LLP, at 202-639-7744, if you have any questions. Thank you in advance for your consideration. Sincerely, Vice President and chief ~ a t e x o u n s e l Altair Nanotechnologies, Inc. 204 Edison Way Reno, Nevada 89502 (775) 856-2500 Alta~rnano, Inc. 204 Edison Way, Reno, NV 89502-2306 alta~rnano.coni phone 775 856,2500 1 fax 775.856.161 9#