Commerce Is Keeping Shredded Batteries in the Country. The Order Behind It Reaches Further Than Black Mass.

In the first half of 2026, U.S. exporters shipped 46,693 tonnes of black mass, according to Argus Media’s read of trade data. All of 2025 was 100,667 tonnes [3]. Starting August 27, none of it can leave the country without BIS saying yes.

Black mass is what a lithium-ion battery becomes after a shredder: cathode and anode material in one powder, ready for a refinery [1]. Most of the world’s refining capacity for it isn’t here [4]. If you make anything with a battery in it, or you run the recycling program for a product that does, this rule is about where your end-of-life packs end up.

The order, in plain terms

The Bureau of Industry and Security published a temporary final rule on August 6 that issues a Directive Allocation Order under the Defense Priorities and Allocations System, 15 CFR part 700 [1]. From August 27, 2026 through August 27, 2027, U.S. persons selling black mass or tungsten waste and scrap must allocate 100 percent of monthly sales to U.S. persons [1]. The rule says the covered material “must remain physically located within the United States, unless otherwise authorized by BIS” [1].

The covered goods are listed by Schedule B code: 8549.13.00.00, 8549.14.00.00 and 8549.19.00.00 for battery scrap, and 8101.97.00.00 for tungsten [1]. The battery codes apply only to material that meets the black mass definition, which means shredded lithium-ion scrap with cathode material, anode material such as graphite or silicon, or other residual cell materials [1]. Other battery scrap under those codes is outside the order [1]. Shanghai Metals Market’s analysts read that as leaving intact batteries and modules uncovered [4].

The legal hook is a presidential determination signed July 30 and published August 4. It finds that recoverable critical minerals and materials are “scarce and critical materials essential to the national defense” and that defense needs for them can’t be met “without creating a significant dislocation of the normal distribution of such material in the civilian market” [2]. It directs Commerce to act under section 101 of the Defense Production Act [2].

A few mechanics matter more than the headline:

• “Sale” includes moving it to yourself. The definition reaches “deliveries to affiliates and subsidiaries of a person” and transfers between branches under common control [1]. Shipping your own scrap to a foreign affiliate counts.
• “U.S. person” means located in the United States [1]. It’s a test of where you are, so a foreign subsidiary isn’t one.
• CBP can hold the shipment. “Any covered materials intended for export may be detained by CBP while BIS conducts its review of the shipment,” and detained goods that become subject to a rated order are consigned to BIS [1].
• It sits next to the EAR, not inside it. A DPAS authorization “is neither equivalent to nor replaces” an EAR license [1].

How to get out of it

Relief runs through an email inbox at BIS’s Office of Strategic Industries and Economic Security [1]. The listed grounds include undue hardship not shared by others, outcomes that would reduce domestic supply, irreparable harm, needing more time, and sending material abroad for processing as long as the refined product comes back [1]. BIS can grant company-specific or general exceptions, and interim relief through a “DPAS temporary license” while a request is pending [1].

The agency says it “intends to respond” within 14 days [1]. Crowell & Moring’s trade lawyers flag the catch: a pending request does not pause the domestic sales requirement unless BIS grants interim relief in writing [5]. A company that can’t comply must notify BIS immediately and explain why [1].

Why it skipped the comment period

BIS issued the rule without notice and comment, citing section 709(b)(2) of the Defense Production Act and a finding that “urgent and compelling circumstances make compliance” with those requirements “impracticable” [1]. It also says the Regulatory Flexibility Act analysis doesn’t apply, and none was prepared [1]. Comments run 90 days, to November 4, on whether more sales requirements are needed and on the framework itself [1].

Each side’s case

The administration’s case is in the determination: “America’s inadequate supply of CMMs poses an increasing risk to our national defense and security,” U.S. reliance on imports “threatens serious, sustained supply chain disruptions,” and “it is imperative that the United States takes immediate action” [2]. BIS adds that delay would mean more exports and “increased scarcity” [1].

The cost lands on recyclers that have been selling abroad. SMM estimates North America holds about 7 percent of global battery shredding and pretreatment capacity, against roughly 70 percent for China, with China above 80 percent of hydrometallurgical refining [4]. Its analysts expect U.S. recyclers that rely on black mass exports for cash flow to face inventory backlogs, contract default risk and possible cuts, and over the medium term expect more North American refining capacity and long-term offtake deals [4]. That’s a forecast from a metals price agency, not a filing by anyone who’d be bound by the order.

What it means if you build hardware

My read, and it’s opinion.

Your take-back program now has a regulator. If you sell battery-powered devices, your recycler’s ability to sell black mass overseas was part of what your recycling contract cost. That outlet closes on August 27 unless BIS says otherwise [1]. Ask your recycler now whether it has a domestic buyer, has filed for an exception, or is about to change your price. If you shred in-house and sell the output, the order applies to you directly.

The definition is tight. The authority isn’t. I give BIS credit for drawing the black mass line by Schedule B code plus a definition. Though the preamble lists lithium, cobalt, nickel and manganese as cathode examples while the regulatory text adds aluminum, copper and iron, so the two versions already differ [1]. The bigger issue is the determination underneath. It defines recoverable materials to include “black mass, end-of-life, rare-earth permanent magnets or other goods that have fully completed the manufacturing process; swarf; and other waste and scrap containing critical minerals and materials” [2]. Parse that comma however you like; it reads broadly enough to cover retired servers, motors and drives. BIS says it can add materials by Federal Register notice [1]. As I read it, the next one won’t need a new determination.

A one-year rule written by email. I’d rather see this through notice and comment, and the statute did give BIS an emergency path. But a 14-day target that isn’t binding, plus no stay while a request is pending, is the kind of process large firms absorb and small ones can’t [1, 5]. A recycler with one export customer has no internal team to wait out a CBP hold.

Tungsten is the quiet half. Argus reports U.S. tungsten scrap exports hit 2,183 tonnes through June, nearly matching the 2,202 tonnes shipped in all of 2025 [3]. If you machine carbide tooling or buy reclaimed tungsten, expect the domestic price for that scrap to be set by a smaller pool of buyers.

What I’m watching

• August 27. The order takes effect [1]. Watch for BIS general exceptions, especially for the process-abroad-and-return route, which is the only realistic path while U.S. refining is scarce.
• The next materials. Rare-earth magnets and swarf are named in the determination [2]. Any Federal Register notice adding them would reach motor, drive and electronics recyclers [1].
• November 4. Comments close [1]. Whether recyclers and battery makers show up in the docket will say a lot about how this order is working.