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From NEC 500.5(D):

(D) Class III Locations. Class III locations are those that are hazardous because of the presence of easily ignitible fibers or because materials producing combustible flyings are handled, manufactured or used, but in which such fibers/flyings are not likely to be in suspension in the air in quantities sufficient to produce ignitible mixtures. Class III locations shall include those specified in 500.5(D)(1) and (D)(2).

(1) Class III, Division 1. A Class III, Division 1 location is a location in which easily ignitible fibers or materials producing combustible flyings are handled, manufactured, or used.

FPN No. 1:Such locations usually include some parts of rayon, cotton, and other textile mills; combustible fiber manufacturing and processing plants; cotton gins and cotton-seed mills; flax-processing plants; clothing manufacturing plants; woodworking plants; and establishments and industries involving similar hazardous processes or conditions.
FPN No. 2:Easily ignitible fibers and flyings include rayon, cotton (including cotton linters and cotton waste), sisal or henequen, istle, jute, hemp, tow, cocoa fiber, oakum, baled waste kapok, Spanish moss, excelsior, and other materials of similar nature.

(2) Class III, Division 2. A Class III, Division 2 location is a location in which easily ignitible fibers are stored or handled other than in the process of manufacture.

For Class III, Division 2, "handled" means handled in bulk , not handled "in the process of manufacture" where materials are more likely to be loose.

NOTE: This is an unformatted excerpt from our online fire protection training library.