Commerce Department Implements Export Restrictions on Black Mass in Electrical and Electronic Waste and Tungsten Waste and Scrap

The action is intended to reduce foreign dependencies on critical minerals by incentivizing recovery from finished goods and scrap and providing feedstock for domestic processors. The Directive impacts, among others, tungsten recyclers and scrap processors, scrap dealers and machine-tool recyclers, battery recyclers, black mass processors and e-waste collection companies. Requests for adjustments and exceptions are due on a rolling basis beginning August 6, 2026, through August 27, 2027, and comments on the TFR are due by November 4, 2026.

Below we discuss the key components of the rule (including scope of the restrictions; adjustments, exceptions and interim relief; compliance and enforcement), background, and considerations moving forward.

BIS’s TFR: Components of New Framework
The TFR provides that, effective August 27, 2026, U.S. persons engaged in the sale of the following must allocate 100% of monthly sales to U.S. persons unless an adjustment or exception is obtained from BIS:

• Electrical and electronic waste and scrap: waste and scrap of primary cells, primary batteries and electric accumulators; spent primary cells, spent primary batteries and spent electric accumulators classified under HTS 8549.13.00.00, 8549.14.00.00; and 8549.19.00.00 if the waste and scrap contains “black mass” defined as “any shredded lithium-ion battery scrap that contains cathode material, anode material, or other residual battery cell materials.” Generally, black mass is produced using end-of-life electric vehicle batteries, consumer electronics (i.e. batteries from smartphones, laptops and tablets), battery energy storage systems, defective lithium-ion batteries and manufacturing scrap from lithium-ion battery production.
• Tungsten waste and scrap classified under HTS 8101.97.00.00.

The Directive expires one year from its effective date or by August 27, 2027, unless adjusted or extended.

This Directive applies to both rated orders and unrated orders. Generally, DPA Title I authorizes various government agencies, recipients of rated orders (such as contractors) and other persons specifically authorized by an appropriate government agency, to issue rated orders to private industry for production of items or performance of services. The applicable regulations require that “a person shall accept every rated order received and must fill such orders regardless of any other rated or unrated orders that have been accepted.”

Adjustments, exceptions and interim relief
BIS has established a process for authorizing company-specific and generally applicable adjustments or exceptions from the sale requirement. Per the process, companies must submit to BIS via email a request for an adjustment or exception. The request should include facts, circumstances and reasons relevant to seeking relief from the domestic sales requirement and related supporting information. BIS advised that it will consider adjustments, exceptions and interim relief under the following scenarios:

- The domestic sales requirement results in an undue or exceptional hardship on that person not suffered generally by others in similar situations and circumstances;

- The consequence of complying with the domestic sales requirement is contrary to the underlying intent of the action, i.e., because it would reduce the supply of CMMs;

- A U.S. person plans to sell black mass and tungsten waste and scrap to a person located outside the United States for processing or refining, and then the processed/refined material will be returned to the United States;

- Compliance with the domestic sales requirement will result in irreparable harm to a U.S. person subject to the order; and

- Additional time is needed to comply with the domestic sales requirements.

BIS intends to respond to requests for adjustments or exceptions within 14 days of receipt. Requests may be appealed to the Assistant Secretary for Export Administration. BIS may also authorize interim relief through a DPAS temporary license while a request is pending. An approval for an adjustment, exception or interim relief does not impact compliance with U.S. export control regulations.

Compliance and Enforcement
If a U.S. person is unable to comply with the required action, the U.S. person must notify BIS immediately via email (or alternatively, verbally followed by a written or electronic confirmation within one working day) with an explanation regarding the extent to which it can comply and the reasons for which it cannot fully comply. BIS advises that the U.S. person must comply to the fullest extent possible following such notification until otherwise notified by BIS.

BIS will implement the TFR in cooperation with other agencies including U.S. Customs and Border Protection (CBP). CBP may detain materials covered by the Directive intended for export while BIS conducts its review of the shipment. BIS will review and provide notification regarding the disposition of materials covered by the Directive.

BIS may conduct investigations and issue requests for information to enforce compliance with the Directive and applicable laws. BIS may also issue an injunction and failure to comply could result in fines or imprisonment.

Background and Context
DPA Title I, Priorities and Allocation, authorizes the President or a delegated agency head to allocate materials, services and facilities to promote the national defense. Types of allocation orders include:

• directives (official actions requiring a person to take certain actions, which BIS issued in this case),
• set-asides (official actions requiring a person to reserve materials, services or facilities capacity in anticipation of the receipt of rated orders), and
• allotments (official actions that specify the maximum quantity of a material, service or facility authorized for a specific use).

Allocation orders that “control the general distribution of any material in the civilian market” require the President to find or approve a finding by an agency head that the:

• material subject to the allocation action “is a scarce and critical material essential to the national defense,” and
• “ … requirements of the national defense for such material cannot otherwise be met without creating a significant dislocation of the normal distribution of such material in the civilian market to such a degree as to create appreciable hardship.”

On July 30, President Trump issued a Presidential Determination under which it made such a finding as required by the DPA with respect to recoverable CMMs. “Recoverable CMMs” are broadly defined as 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. It does not include copper scrap, which is covered under the Proclamation related to the Section 232 investigation on copper (which we discuss here). “Critical minerals and materials” is broadly defined to include minerals defined in the March 20, 2025, Executive Order, minerals or materials in various U.S. Government lists (including the Department of Defense/War, U.S. Geological Survey and Department of Energy), and any other mineral or material designated by Commerce. (We discuss the lists here and here.) The accompanying Fact Sheet highlights that the United States holds substantial CMMs in finished goods such as lithium-ion batteries and permanent magnets, which could be a source of supply to reduce our foreign dependencies on CMMs once the finished goods reach end-of-life.

Key Considerations Moving Forward
As indicated above, there are several opportunities for stakeholders to engage with BIS with respect to this action, including providing feedback with respect to feasibility of compliance with the Directive; requesting adjustments, exceptions or interim relief; and comments on the overall framework of the rule, as well as whether additional recoverable CMMs should be subject to domestic sales requirements.

To inform engagement on the Directive, companies should consider, among other things:

• the extent to which compliance is currently possible and timelines for full compliance, and the impact of compliance;
• whether there is availability of recycling capabilities to separate black mass and of processing black mass and tungsten scrap timelines for new availability coming online;
• whether scenarios for exceptions apply, including for material that is processed overseas and then shipped to the United States; and
• the positive or negative impact of additional recoverable CMMs being included in subsequent directives.

Key timelines are provided in the table below.

^{[1] In 2020, in response to the COVID pandemic, the Department of Homeland Security issued an export restriction under DPA Title I covering certain personal protective equipment.}