Proposed DOT Changes to Lithium Ion Battery Pack Rules Could Increase Costs

March 8, 2010 ( Naperville, IL) - The US Department of Transportation (DOT) is proposing some lithium ion battery pack rule changes. These changes, if promulgated, will make significant modifications to shipping regulations of lithium ion battery packs and the devices containing these packs. These changes could increase shipping costs, make shipping logistics more cumbersome, change labeling and packaging requirements, and could even lengthen time to market. If you wish to influence or comment on these new regulations, we encourage you to provide feedback (see information below).

Earlier this year, the U.S. DOT Pipeline and Hazardous Materials Safety Administration published a Notice of Proposed Rulemaking in the Federal Register. This notice made public an intended change to the Code of Federal Regulations and opened a 60 day comment period on the proposed regulation to the general public. If the proposal passes, it does not become effective until 75 days after 60 day comment period as currently written.

These proposed regulations will require commercial OEMs to treat virtually all air shipments of lithium batteries as Class 9 Hazardous Material. Any battery with more than 0.3 grams of lithium metal or 3.7 Watt-hours will be classified as Hazardous Material. A 3.7 Watt-hour battery is a single li-ion cell with 1 Amp-hour capacity - a relatively small cell phone battery.

Palladium Energy is aware that many of our customers may not be familiar and certified to handle Class 9 Hazardous Material. These DOT regulation changes could have the following impact to our customers:

• Shipment cost and processing time - Shipping costs will increase as carriers charge more to transport Hazardous Material. It is likely that the percentage of ground shipments (vs. air shipments) will increase, and therefore lengthen the duration of battery transportation.
  
  
• Recertification for capacity changes - The proposed regulation requires a recertification of DOT compliance if the battery capacity changes by 5 %. The previous limit was 20 %, which easily facilitated substituting cells within the pack without recertification. This could result in multiple recertification of a pack, increasing costs and time to market.
  
  
• Carrier selection - Many carriers are not certified to or do not carry Hazardous Material; as a result, new carriers may need to be found.
  
  
• Transport packaging - For most modes of transportation (domestic air, international air and ground), the current bulk packaging will change. Batteries will need to be repackaged into PG II shipping boxes for bulk shipment. Product will need to be re-tested in PG II boxes. Labeling on the bulk packaging may change.
  
  
• Product labeling - The proposed regulations may require changes to existing labels or the addition of extra labels.

If you wish to review the current regulations for shipping Class 9 Hazardous Material, please click here.

DOT currently has a public comment period open through March 12, 2010. The DOT is seeking quantifiable data on the impact of these new regulations to your organization. If you wish to influence or comment on these new regulations, we encourage you to provide feedback during the comment period by clicking here to the Regulations.gov Website.