On August 6, 2026, the US Department of Commerce’s Bureau of Industry and Security (“BIS”) published a temporary final rule (the “Rule“) that restricts exports of black mass and tungsten waste and scrap without a license. Beginning August 27, 2026, US persons that sell black mass and tungsten waste and scrap must allocate 100 percent of their monthly sales to US persons, unless they first obtain an adjustment or exception from BIS. This Rule implements a July 30, 2026 Presidential Determination issued pursuant to Section 101 of the Defense Production Act of 1950, which found that certain recoverable critical minerals and materials are scarce and essential to the national defense of the United States, and which directed BIS to take immediate action to secure their supply.
Below we summarize the key takeaways of the Rule:
- Directive Allocation Order: The Rule is issued as a Directive Allocation Order (“Order“) under the Defense Priorities and Allocations System (“DPAS“) regulation and is scheduled to expire one year after its effective date. Because this is a DPAS Order rather than a traditional Export Administration Regulations (“EAR“) control, parties granted a license under the Order must still comply separately with the EAR. This means that any adjustment, exception, or interim relief BIS grants under the Order does not replace any licensing requirements that may exist under the EAR.
- Domestic sales requirement: Effective August 27, 2026, US persons that sell covered black mass and tungsten waste and scrap must allocate 100 percent of monthly sales to US persons, unless an adjustment or exception is obtained in advance from BIS. “US person” is defined under this Rule as any individual or entity located in the United States, which is much narrower than in other export controls and sanctions contexts where US persons can be located outside the United States. This means the covered materials must physically remain in the United States unless BIS authorizes an exception to that requirement.
- Covered materials: The Rule applies to black mass (Schedule B codes 8549.13.00.00, 8549.14.00.00, and 8549.19.00.00) and tungsten waste and scrap (Schedule B code 8101.97.00.00). BIS defines “black mass” as any shredded lithium-ion battery scrap containing cathode material (which may include lithium, cobalt, nickel, and manganese), anode material (graphite, silicon), or other residual battery cell materials. Materials under Schedule B codes 8549.13.00.00, 8549.14.00.00, and 8549.19.00.00 that fall outside the definition of “black mass” are not subject to the Rule.
- Requesting an Adjustment or Exception: US persons subject to the Rule may submit a request for an adjustment or exception prohibiting exports of black mass and tungsten waste and scrap. BIS may grant company-specific or generally applicable adjustments or exceptions, and may issue interim relief while a request is pending. Requests may be submitted on a rolling basis and BIS intends to respond to such requests within 14 days of receipt.
- Request for Comments: Although the Rule will become effective on August 27, 2026, BIS is instituting a parallel comment process on the Rule and is therefore accepting comments for 90 days concerning (1) the framework of the temporary regulatory provisions added to the DPAS and (2) whether any additional sales requirements are necessary or appropriate top promote US national defense.
US companies involved in the sale of recoverable critical minerals and materials should assess their exposure under the Rule and consider whether to submit an adjustment or exception request. BIS has signaled that additional materials may become subject to the Rule through further Federal Register notices, so companies should anticipate that the scope could expand.
Baker McKenzie’s Global Sanctions and Export Controls team can assist with exposure assessments, adjustment/exception requests, and comment submissions.
