Wiley Rein LLP — Hazardous Materials Safety Interpretation

Page 11200 New Jersey Ave., SE U.S. Department Washington, DC 20590 of Transportation NOV 5 2009 Pipeline and Hazardous Materials Safety Administration Mr. George Kerchner Wiley Rein LLP 1776 K Street NW Washington, DC 20006 Ref. No.: 09-0188 Dear Mr. Kerchner: This responds to your August 18, 2009 email requesting clarification of our August 7, 2009 letter (Ref. No. 09-0143) in which we discussed the applicability ofthe Hazardous Materials Regulations (HMR; 49 CFR parts 171-180) to lithium batteries. Specifically, you ask for a clarification ofour response concerning the applicability ofthe United Nations design type testing requirements to lithium batteries transported under the materials oftrade exception. You reference a letter written to Ms. Erica Jenkins, Aero Vironment, Inc. (Reference No. 02-0314; June 20,2003) that stated lithium batteries qualify for the materials oftrade exception. That is correct. However, as we stated in our August 18, 2009 letter, in order to meet the provisions ofthe materials oftrade exception, lithium batteries must be of a type proven to meet the criteria ofClass 9 by testing in accordance with the UN Manual ofTests and Criteria. The June 2003 letter does not mention the size ofthe batteries transported, nor does it mention UN design type testing. The letter merely confirms the applicability ofthe materials oftrade exception to the transport of lithium batteries. At that time, depending on the size ofthe cell or battery the HMR waived many requirements including UN design type testing. Effective October 1,2009, all lithium batteries must be of a type proven to meet the criteria ofClass 9 by testing in accordance with the UN Manual ofTests and Criteria. I trust this satisfies your inquiry. If we can be offurther assistance, please contact us. harles E. Betts . ef, Standards Development Office ofHazardous Materials Standards#

Page 2From: Betts, Charles (PHMSA) Sent: Tuesday, August 18, 2009 8:19 AM To: Drakeford, Carolyn (PHMSA) Cc: Gorsky, Susan (PHMSA); Leary, Kevin (PHMSA) Subject: FW: One Problem with Interp Letter Importance: High From: Kerchner, George [mailto:GKerchner@wileyrein.com] Sent: Tuesday, August 181 2009 8:04 AM To: Betts, Charles (PHMSA) Cc: Gorsky, Susan (PHMSA); Leary, Kevin (PHMSA) Subject: RE: One Problem with Interp Letter Charles Thanks for the response. I'm really missing the logic here. Lithium batteries are listed in the hazardous materials table as Class 9. Therefore, when shipping prototype or low production batteries they are of Iered as Class 9 hazardous materials. No UN testing is conducted on these batteries. Attached is a 2002 interpretation letter (Ref. No. 02-0314) from your office that continns lithium batteries do qualify for the MOT exception. The batteries referred to in this letter are being transported for testing and evaluation so it is assumed they are prototype batteries. J can assure you there are many companies that have interpreted this letter to mean untested prototype and low production batteries qualify for the MOT exception. I would like to request that your office take a second look at the question in my letter and reconsider your answer. Thank you. George From: charles.betts@dot.gov [mailto:charles.betts@dot.gov] Sent: Tuesday, August 18,20097:14 AM To: Kerchner, George Cc: susan.gorsky@dot.gov; Kevin.Leary@dot.gov Subject: RE: One Problem with Interp Letter Importance: High Good morning George, Sorry for the delay in getting back to you. Section 173.6(a) states, in part, that "A material trade is limited to the following: A Class 3. 8, 9. Division 4.1. 5.1, 6.2, 6.1 or aRM-D... " Therefore, as previously stated in the interpretation letter [Ref. No. 09-0143] in order to meet the provisions of the materials of trade exceptions, lithium batteries must be of a type proven to meet the criteria of a Class 9 by testing in accordance with the UN Manual of Tests and Criteria. 8118/2009#

Page 3Page 2 of2 Regards, Charles From: Kerchner, George [mailto:GKerchner@wileyrein.com] Sent: Thursday, August 13, 2009 1:11 PM To: Betts, Charles (PHMSA) Cc: Leary, Kevin (PHMSA) Subject: One Problem with Interp Letter Charles Thank you for providing the attached interp letter. All ofthe answers provided by PHMSA are consistent with my understanding ofthe regs except A3. It appears to be PHMSA's position that lithium batteries transported under the Materials of Trade provision are subject to UN testing. That is inconsistent with the Materials of Trade provision in 173.6 that states that "When transported by motor vehicle in conformance with this section, a material oftrade (see § 171.8 ofthis subchapter) is not subject to any other requirements ofthis subchapter besides those set forth or referenced in this section. It If these materials are "not subject to any other requirements of this subchapter" why would UN testing be required? In addition, if Materials of Trade are "not subject to any other requirements ofthis subchapter" why would the requirements in Special Provision 29 apply? Please call me at your earliest convenience (202.719.4109) to discuss this in more detail. Thanks. George George A. Kerchner Wiley Rein LLP 1776 K Street, NW Washington, DC 20006 gkefGhnef@!lli1e.YfeIfLC:;Q!I1 (Office) 202.719.4109 (Cell) 443.223.0604 NOTICE: This message (including any attachments) from Wiley Rein LLP may constitute an attomeyclient communication and may contain information that is PRIVILEGED and CONFIDENTIAL and/or ATTORNEY WORK PRODUCT. If you are not an intended recipient, you are hereby notified that any dissemination of this message is strictly prohibited. If you have received this message in error, please do not read, copy or forward this message. Please permanently delete all copies and any attachments and notifY the sender immediately by sending an e-mail toInformation@wileyrein.com. 8118/2009#

Page 4o U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration AUG '7 2D09 1200 New Jersey Ave.• SE Washington. OC 20590 Mr. George Kerchner Wiley Rein LLP 1776 K Street NW Washington, DC 20006 Ref. No.: 09-0143 Dear Mr. Kerchner: This is in response to your June 18, 2009 letter concerning the applicability of the Hazardous Materials Regulations (HMR; 49 CFI,t Parts 171-180) to shipments ofsmall lithium metal batteries « 2.0 grams lithium content) and small lithium ion batteries « 8 grams equivalent lithium content) sold over the counter at retail locations. Your questions are paraphrased and answered below: QI. Are small lithium batteries assembled at retail locations and sold over the counter to customers for personal use subject to the testing requirements outlined in Section 38.3 of the UN Manual ofTests and Criteria? A1. As specified in § 171.1, the HMR govern the transportation ofhazardous materials in intrastate, interstate and foreign commerce. The term "in commerce" means in furtherance of a commercial enterprise. Therefore, hazardous materials that are sold to customers for personal, non-commercial use and transported by such persons in their personal vehicles are not subject to the HMR. However, if the transportation is in commerce the lithium batteries are subject to the HMR. In that case, each battery must be of a type proven to meet each of the tests in 38.3 of the UN Manual of Tests and Criteria prior to transportation. Q2. Can small lithium batteries transported to customers in personal or company vehicles qualify for the materials of trade exceptions? A2. Yes. The materials of trade defmition in § 171.8 includes a private motor carrier transporting hazardous materials in direct support ofa principal business that is other than transportation by motor vehicle. The materials oftrade exceptions in § 173.6 permit Class 9 materials including lithium batteries. Q3. Do the testing requirements of the UN Manual ofTests and Criteria apply to lithium batteries transported as materials of trade?#

Page 51776 K STREET NW WASHINGTON, DC 20006 PHONE 202.719.7000 fAX 202.719.7049 7925 JONES BRANCH DRive McLEAN, VA 22102 PHONE 703.905.2800 fAX 703.905.2820 George Kerchner June 18,2009 202.719."fiI5-70 iitj gkerchner@wileyreln.com ,~'€i ,,., www.wlleyrein.com DELIVERED VIA EMAIL Mr. Edward Mazzullo Pipeline and Hazardous Materials Safety Administration U.S. Deparbnent of Transportation 1200 New Jersey, Avenue, SE Washington, D,C. 20590 Re: Request for Interpretation on Lithium Batteries Dear Mr. Mazzullo: October 1,2009 is specified as the effective date for mandatory testing of"small" lithium ion and lithium metal cells and batteries pursuant to Special Provision 188 in the U.S. hazardous materials regulations. I have several questions regarding how the UN lithium battery testing requirements apply to "small" batteries assembled and sold at retail locations and carried onboard aircraft. Some retailers may assemble a limited number of small lithium ion and lithium metal batteries for their customers. The retailers never offer these small batteries for transportation to carriers such as UPS or FedEx. Instead, they are sold over the counter or delivered in company or personal vehicles to customers. It is our understanding that these small batteries are not subject to the UN testing requirements because they are never offered for transportation and/or qualify as Materials of Trade pursuant to 49 C ..F.:.R:. 173.6. My questions related to these issues are listed below. (a) Are small lithium batteries assembled at retail locations and sold over the counter subject to the UN testing requirements? (b) Do small lithium batteries transported to customers in personal or company vehicles qualify for the Materials ofTrade exception in 49 C:.F:.R:. 173.6? (c) If the answer to question (b) is yes, which ifany of the UN testing requirements are applicable to these batteries? The exceptions for passengers in 49 C.:.F:.R:. § 175.10(a) states "This subchapter does not apply to the following hazardous materials when carried by aircraft passengers#

Page 6" U.S. Department of Transportation Research and specicd programs 400 Seventh St•• S.W. Washington. D.C. 20590 Admin1strati~11 JUN 2 0''''L003 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 oftrade exception as it applies to highway shipments oflithium cells and batteries under the Hazardous Materials Regulations (HMR; 49 CFR parts 171-180). Your questions are paraphrased and answered as follows: Ql: 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 ofa 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. There:fure, a hazardous material transported between a company's facilities for pwposes ofquality control testing meets the definition of MOT. In addition, prototype lithium cells and batteries may be transported for performance testing (Le .• product evaluation) in connection with development programs when transported in confonnance with § 173.1850). Q3: You asked at what point does your hazardous material compliance liability terminate. after your customers accept delivery oflithium batteries at one your facilities? 1IIIImllllllllili#

Page 7~-e\~({~ot AaroVironmenl Inc. 4685·3H Industrial Sheel AeroVironment Inc. Simi Valley, CA 930BS t-4.0T ~113·Co L.:, %1 LtWl.lktk.rt% December 6, 2002 Oz.-O.3/i Mr. Edward Mazzullo Director, Office of Hazardous Materials Safety U.S. DOTI RSPA (DHM-10) 400 7th Street S.W. Washington, DC 2OS90~0001 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 i,ssues that we have some immediate concerns about. The primary material in"~question is UN3090 (Lithium Batteries), class 9, PGII, P.1. 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 CFR49173.6 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 . . :~l:, ',:.'~ . 4685-3H Industrial Street • Simi Valley, California 93063" U.S.A. Telephone 805/581-2187. FAX 805/581-4512 Corporate Office:J~21$ S. Myrtle Ave. • Monrovia, Caifornia 91016 • U.S.A • • 626/357-9983 " .. )"\ ....;,~~·:;i;·;. ' •#