When must a pilot turn on the operating mode C transponder?

The operation of a mode C transponder is required in specific airspace and altitude conditions to ensure proper air traffic control and safety. In class E airspace (which includes section E to the surface in certain areas), pilots must have an operating mode C transponder when flying within that airspace, as it helps air traffic controllers identify the aircraft's altitude and location.

Additionally, the requirement also extends to operations above 10,000 feet mean sea level (MSL), except when flying within 2,500 feet of the ground. At higher altitudes, the transponder provides crucial information that enhances situational awareness for both the pilot and air traffic control.

Since both of these requirements (operating in class E airspace and flying above 10,000 feet) are conditions that mandate the transponder's operation, the correct answer includes both scenarios, leading to the conclusion that option D is the most comprehensive answer.