Overview
The United States (“U.S.”) Department of Commerce’s Bureau of Industry and Security (“BIS”) has issued a temporary final rule imposing new export-allocation requirements on black mass and tungsten waste and scrap. The measure requires U.S. persons engaged in sales of covered materials to allocate their monthly sales exclusively to U.S. persons, absent BIS authorization. BIS is also seeking public comment on the rule.
The temporary final rule was published in the Federal Register on August 6, 2026. The allocation requirements are scheduled to take effect on August 27, 2026, and remain in effect for a year.
Key Requirements
Under the temporary final rule, U.S. persons engaged in the sale of black mass (Schedule B codes 8549.13.00.00, 8549.14.00.00, and 8549.19.00.00) or tungsten waste and scrap (Schedule B code 8101.97.00.00) must allocate 100 percent of their monthly sales to U.S. persons. Sales to non-U.S. persons are permitted only where BIS has granted an adjustment or exception in advance.
BIS defines “black mass” for purposes of this provision as “[a]ny shredded lithium-ion battery scrap that contains cathode material—which may include lithium, cobalt, nickel, and manganese—anode material, including graphite and silicon, or other residual battery-cell materials.”
Companies handling battery cathodes, cathode scrap, silicon-containing battery materials, or other lithium-ion battery residues should review their material streams and classifications carefully.
Potential sources of recoverable tungsten include cemented-carbide tooling, such as tungsten-carbide cutting tools; drill bits and related drilling equipment; mining, oil-and-gas, and industrial tools; tungsten alloys; tungsten-containing high-speed steel scrap; electrical contacts, filaments, and heat sinks; manufacturing scrap and production residues; and end-of-life defence and aerospace components containing tungsten.
Requests for Adjustments and Exceptions
Companies may submit requests for adjustments or exceptions on a rolling basis beginning August 6, 2026, through August 27, 2027. Requests should be submitted to BIS at DPASAllocations@bis.doc.gov. According to the temporary final rule, BIS will consider granting an adjustment or an exception, among other circumstances, when:
- The domestic sales requirement results in an undue or exceptional hardship in 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 intent of the Defense Production Act of 1950 (“DPA”) or this, for example, because it would reduce the domestic supply of Critical Minerals and Materials (“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 who is subject to the order.
- Additional time is needed to comply with the domestic sales requirements.
Affected companies should consider promptly assessing their existing and planned sales arrangements, including supply agreements with non-U.S. customers, and determining whether an adjustment or exception request will be necessary. Companies should also review contractual obligations, inventory, supply-chain commitments, and recordkeeping procedures in light of the new allocation requirements.
Opportunity to Submit Comments
BIS will accept public comments on the temporary final rule through November 4, 2026. The comment process provides affected industry participants with an opportunity to address the practical consequences of the rule, including its impact on existing export contracts, domestic processing capacity, supply-chain arrangements, market pricing, and the availability of black mass and tungsten scrap for U.S. purchasers.
Background
The rule follows the President’s July 30, 2026, determination directing the Secretary of Commerce to take appropriate action under Section 101 of the Defense Production Act of 1950 with respect to recoverable critical minerals and materials (“DPA Determination on Recoverable CMMs”). That memorandum defines CMM as 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.” The term does not include copper scrap, which is already covered under Proclamation 10962 of July 30, 2025 (Adjusting Imports of Copper Into the United States). The determination considers CMMs as industrial resources necessary to promote the national defense that are scarce.
The temporary allocation requirements should also be viewed in the context of the Administration’s broader Section 232 action on imports of processed critical minerals and derivative products. That action advances similar policy objectives, including strengthening the security and resilience of U.S. critical-mineral supply chains. Following the investigation the U.S. President directed Commerce and United States Trade Representative to negotiate agreements with trading partners and encouraged measures such as price floors for processed critical minerals (including tungsten).
The action also comes amid continued disruption in global tungsten markets. Chinese export controls introduced in February 2025 materially affected global supply and pricing, reinforcing U.S. concerns regarding the concentration of tungsten production and processing capacity.
