BIS Restricts Exports of Black Mass From Lithium-Ion Battery Recycling and Tungsten Waste

On August 6, 2026, the Bureau of Industry and Security (BIS) within the U.S. Department of Commerce published a Temporary Final Rule (Rule) effectively prohibiting the export of black mass derived from lithium-ion battery (LIB) recycling and tungsten waste and scrap without prior BIS authorization.[1]

The Rule represents a significant convergence of trade controls, critical minerals policy, and environmental regulation. For the first time, materials that the battery recycling industry has long treated primarily as waste management streams potentially subject to Resource Conservation and Recovery Act (RCRA) and Toxic Substances Control Act (TSCA) are now also subject to defense production allocation requirements. Companies that have relied on exporting black mass must immediately reassess their operations and compliance posture.

The Rule took effect on August 27, 2026, and remains in force for one year. BIS is soliciting public comment on the Rule through November 4, 2026. BIS has specifically requested input on whether additional "sales" (as defined in the Rule and summarized below) requirements are necessary or appropriate to promote national defense and on the broader regulatory framework for critical minerals allocation. Given the significant impact of this Rule, affected companies should strongly consider participating in the comment process—both to help shape any revisions to the Rule and preserve their rights in any subsequent challenges.

Background: Presidential Determination and Defense Production Act Authority

The Rule implements the July 30, 2026, Presidential Determination Pursuant to Section 101 of the Defense Production Act of 1950 (DPA) on Recoverable Minerals and Materials (Determination). In the Determination, the president found that recoverable critical minerals and materials (CMMs)—which includes materials derived from LIB recycling—are scarce and critical materials essential to the national defense, and that available supplies are insufficient to meet both defense and essential civilian needs.

The president's Determination authorized the secretary of commerce to use the secretary's delegated authority under Section 101 of the DPA, its authority to administer the Defense Priorities and Allocations System (DPAS) implementing regulations (15 C.F.R. Part 700), and its authority under Executive Order 13603 of March 16, 2012 (National Defense Resources Preparedness), to implement all appropriate actions to carry out the Determination and ensure domestic allocation of these materials. BIS, as the administering agency for DPAS, then acted under the DPA's "urgent and compelling circumstances" provision (Section 709(b)(2)) to bypass the usual notice-and-comment rulemaking process and publish the Rule with immediate effect.

Broader Policy Context

The Rule does not exist in isolation. It reflects the Administration's aggressive posture toward securing domestic battery supply chains under the umbrella of national defense and security. Notably, less than a month after the Rule's publication, on August 26, 2026, the president issued Executive Order 14420 banning foreign battery energy storage system (BESS) imports—signaling that additional executive actions targeting battery materials and associated systems are likely forthcoming. Together, these actions indicate a strategic intent to ensure that domestically generated battery materials remain within U.S. borders for processing and reuse, rather than flowing abroad to potential strategic competitors.

What the Rule Requires

U.S. persons engaged in the sale of covered materials (black mass and tungsten waste and scrap, identified by Schedule B export codes 8549.13.00.00, 8549.14.00.00, 8549.19.00.00, and 8101.97.00.00) must allocate 100% of monthly sales to U.S. persons. The Rule defines "black mass" as any shredded lithium-ion battery scrap that contains cathode material (which may include lithium, cobalt, nickel, and manganese), anode material (graphite, silicon) or other residual battery cell materials. The Rule defines "sale" as encompassing transactions in any U.S. state, territory, or possession, and includes deliveries to affiliates, subsidiaries, and internal transfers between branches or divisions of the same organization. Covered materials must remain physically located within the United States unless BIS authorizes otherwise.

Adjustments and Exceptions

The Rule provides a mechanism for affected parties to seek three types of relief:

• Company-specific adjustments or exceptions;
• Generally applicable adjustments or exceptions; and
• Interim relief while substantive requests are pending.

BIS may grant adjustments or exceptions where:

• Compliance would cause undue or exceptional hardship to the applicant;
• Compliance would be contrary to the intent of the DPA (e.g., would reduce the total domestic supply of CMMs);
• Round-trip processing arrangements exist (export for processing or refining abroad with contractual obligation to return processed material to the United States);
• Non-compliance is necessary to avoid irreparable harm; or
• Additional time is needed to come into compliance.

Implications at the Intersection of Export Controls, RCRA, and TSCA

Perhaps the most consequential practical impact of the Rule lies at the intersection of trade controls and environmental compliance. Until now, black mass has been managed primarily as a waste stream potentially subject to the RCRA and, in certain contexts, the TSCA. The Rule superimposes a new layer of defense production controls on top of this existing environmental framework—creating a dual compliance challenge that is largely unprecedented for the battery recycling sector.

RCRA Considerations

Many U.S. battery recyclers have built their business models around exporting black mass to established processing facilities overseas, where commercial-scale refining capacity exists for recovering battery-grade minerals. The export ban fundamentally disrupts those supply chains. Specifically, companies that previously exported black mass as waste-for-processing now face the prospect of having to retain that material domestically. This raises several environmental compliance considerations:

• Hazardous Waste Classification: Depending on its composition (heavy metals, residual electrolyte solvents, fluorinated compounds), black mass may be classified as hazardous waste under RCRA. Companies must evaluate whether their specific black mass streams exhibit characteristics of hazardous waste (ignitability, corrosivity, reactivity, or toxicity) or are listed wastes.
• Storage Limitations: RCRA imposes strict time limits on hazardous waste accumulation (generally no more than 90 days for large quantity generators without needing a formal storage permit). Companies that cannot export and cannot domestically process black mass within those timeframes may need to obtain RCRA storage permits—a process that can take years.
• Treatment and Disposal Requirements: If black mass cannot be exported for processing, companies may need to arrange for domestic treatment or disposal, which requires compliance with RCRA treatment, storage, and disposal facility (TSDF) requirements and associated permitting.
• Recycling Exemptions: RCRA provides certain exclusions for materials being legitimately recycled. Companies should carefully evaluate whether their handling of retained black mass qualifies for these exemptions, as the regulatory landscape for LIB recycling under RCRA is still evolving.

TSCA Considerations

Under TSCA, chemicals recovered during battery recycling may trigger reporting and evaluation requirements, particularly where new chemical substances are generated or where existing chemicals are used in novel applications. Companies scaling up domestic processing in response to the export ban should assess TSCA compliance obligations, including:

• Significant New Use Rules (SNURs) that may apply to recovered battery chemicals; and
• Pre-Manufacture Notification (PMN) obligations for novel processing byproducts if those byproducts constitute new chemical substances not currently listed on the TSCA Chemical Substances Inventory.

The Dual Compliance Reality

The practical result of the Rule is that companies managing black mass now face simultaneous obligations under two distinct regulatory frameworks:

• BIS/DPAS: 100% domestic allocation, physical retention in the U.S., Customs and Border Protection enforcement at the border; and
• EPA/RCRA/TSCA: Hazardous waste management, storage time limits, treatment requirements, chemical reporting obligations.

This dual compliance creates a strategic opportunity: Companies that invest in domestic hydrometallurgical or pyrometallurgical processing capacity may gain a significant competitive advantage, as the domestic market for black mass processing services is poised to expand dramatically by regulatory compulsion.

Who Should Pay Attention

The following industries and market participants are most likely to be affected:

• Battery and e-waste recyclers and processors: Most directly affected; must restructure operations away from export-dependent models.
• Data center operators and hyperscalers: Among the largest users of lithium-ion batteries for uninterrupted power supply and backup power systems; will face new end-of-life disposal constraints and costs.
• EV manufacturers and automotive original equipment manufacturers: Battery take-back programs and extended producer responsibility (known as "EPR") obligations may be complicated.
• Energy storage developers and operators: Utility-scale BESS operators facing similar end-of-life management considerations.
• Mining and minerals companies: Particularly those involved in secondary recovery from recycled materials.
• Electronics manufacturers: To the extent their waste streams include lithium-ion battery scrap meeting the black mass definition.
• Trading companies and commodities brokers: Those dealing in battery scrap or tungsten waste face immediate disruption to established trade flows.
• Companies with existing export contracts: For black mass or tungsten scrap; performance may now be impossible absent BIS authorization.

Key Takeaways and Recommended Action Items

Affected companies should consider the following immediate steps:

• Audit current and planned export activities for black mass and tungsten waste/scrap against the Schedule B codes identified in the Rule.
• Assess existing export contracts to determine whether performance is possible under the new restrictions and whether force majeure or impossibility provisions may apply.
• Evaluate whether to seek BIS relief: Consider whether an adjustment, exception, or interim relief request is warranted, particularly for companies with round-trip processing arrangements or contracts that pre-date the Rule. These requests can be made on a rolling basis between August 6, 2026, and August 27, 2027.
• Review domestic storage and processing capacity for black mass in light of RCRA storage limitations, permitting requirements, and treatment standards.
• Coordinate across compliance functions: This Rule requires simultaneous engagement of trade compliance, environmental/EHS, supply chain, and legal teams. Siloed approaches will create gaps.
• Consider submitting public comments by November 4, 2026, to help shape any changes to the Rule and preserve legal rights.
• Monitor for additional covered materials: BIS has expressly reserved authority to add materials to the Rule via Federal Register notice.
• Track related executive actions: This includes Executive Order 14420 on BESS imports and any further presidential Determinations under the DPA.

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Molly Barker is counsel in DWT's Seattle office. For any questions, please reach out to Molly or another member of our energy, natural resources & environmental team. To stay informed, sign up for our alerts.