BIS Just Stopped Scrap Batteries at the Border | Export Control Turns from Blocking Leakage to Hoarding Resources

Hello, this is Ryuta Hamamoto from TIMEWELL. Say "export control" and most people picture semiconductors or machine tools. Advanced technology with military potential, kept away from the wrong hands. That has been the working definition.

A measure that falls outside it landed in August 2026. What the U.S. Bureau of Industry and Security (BIS) restricted was shredded powder from spent lithium-ion batteries, and tungsten waste and scrap. Not technology. Not really even a product. Closer to garbage.

And the reason for stopping it is different from anything before. Not "this is dangerous in the wrong hands" but "we want to keep it here." That, I think, is the tell that the centre of gravity in economic security has moved.

What was decided: 100% domestic allocation from 27 August

The facts first.

On 6 August 2026, BIS published a temporary final rule in the Federal Register: a directive allocation order under the Defense Priorities and Allocations System (DPAS)¹². The authority traces to a Presidential Determination dated 30 July 2026, which found the covered recoverable critical minerals and materials to be scarce and essential to the national defense of the United States, and directed BIS to act immediately to secure their supply. That determination rests on Section 101 of the Defense Production Act of 1950²³.

The operative requirement is blunt. From 27 August 2026, U.S. persons selling the covered items must allocate 100% of their monthly sales to U.S. persons². Absent an adjustment or exception granted by BIS, they cannot sell to non-U.S. persons. The order runs through 27 August 2027, with room to extend³.

Two categories are covered.

Item	Definition	Schedule B codes
Black mass	Shredded lithium-ion battery scrap containing cathode materials (lithium, cobalt, nickel, manganese), anode materials (graphite, silicon), or other residual battery cell material	8549.13.00.00 / 8549.14.00.00 / 8549.19.00.00
Tungsten waste and scrap	Waste and scrap of tungsten	8101.97.00.00

Both from the same rule³. Having the codes specified down to that level is genuinely helpful: run them against your own trade data and you know within an hour whether you are affected.

There is relief. BIS may grant company-specific or generally applicable adjustments or exceptions, applications are accepted on a rolling basis, and BIS has stated it intends to respond within 14 days of receipt²³. Comments are due 4 November 2026³.

The instrument matters more than the item

The most interesting thing here is neither the commodity nor the deadline. It is which legal tool was used.

Conventional export control runs on the Export Administration Regulations. You identify the item on a control list, look at destination, end use and end user, and decide whether a licence is required. Grant the licence and it ships. The axis of judgement is whether the transaction creates a security concern.

None of that happened here. The instrument was the Defense Production Act, and the output was an allocation order, a mechanism designed for shortages, to steer scarce materials to defence needs. The government allocates who may be sold to. Setting that allocation at 100% U.S. persons means nothing is left to go abroad. Exports were not prohibited; domestic allocation was set to the whole, and the remainder is zero.

That distinction is not academic. It bites in three ways.

First, destination does not matter. Under the EAR, treatment varies by country. An allocation order draws one line, U.S. persons and everyone else. Allies are on the same side of it as anyone. So is Japan.

Second, the test is supply, not the buyer. Licence review looks at who you are. Allocation looks at whether there is enough at home. A perfectly legitimate commercial buyer gets nothing if domestic demand is unmet.

Third, the duration is short and easy to change. One year here. Unlike adding an item to a permanent control list, this can be relaxed when supply loosens or extended when it tightens. Policy gains agility, and companies lose visibility.

One question every affected practitioner should raise early: the order draws its line at U.S. persons, so where does a foreign company's U.S. subsidiary fall? Generally, entities organised under U.S. law are treated as U.S. persons, which would suggest a U.S. subsidiary buying domestically sits inside the allocation. What happens to any onward movement out of the country is a separate question, and given that the whole point is keeping material at home, "route it through the subsidiary" is unlikely to be the answer. This is one to confirm against the rule text with counsel rather than to assume.

Why waste? Black mass as an urban mine

It is worth understanding why something this humble was targeted.

Black mass is the black powdery intermediate left after spent lithium-ion batteries are shredded and sorted. It looks like dirt. Inside are lithium, cobalt, nickel, manganese and graphite, the metals you need to build the next battery. Against ore dug from the ground, this is the urban mine.

The important shift is that it is increasingly seen as feedstock rather than waste. Battery demand grows, so spent batteries grow with it. If you can recover metals from them, you have a supply source that scales faster than mine development and is less exposed to geopolitics. Provided you have refining capacity at home.

Tungsten sits in a similar place. Its hardness and melting point make it valuable for tooling, armour and penetrators, while supply is concentrated in a small number of countries. Recovery from scrap is a practical way to soften that concentration.

So what was stopped is not garbage. It is the feedstock for refining capacity a country is trying to build. Let the feedstock leave and a domestic recycling industry has nothing to process. Seen that way this looks less like export control and more like industrial policy, which is exactly what the choice of the Defense Production Act signals.

From blocking leakage to hoarding resources

What follows is my own reading.

Resource questions in economic security have mostly been discussed from the receiving end: another country restricts rare earth exports, and industries that depend on them stop. So you diversify sourcing, build stockpiles, develop substitutes. A defensive conversation.

This is the other side. The United States stopped resources from leaving. The target is secondary rather than primary material, and the authority is not export control law but defence production law. Not defence. Enclosure.

The scope of economic security has been descending in stages.

Stage	Target	Typical measure
Technology	Semiconductor equipment, design tools, AI models	Export licensing, Entity List, FDPR
Primary resources	Rare earths, critical minerals	Export controls, stockpiles, diversification
Secondary resources	Waste, scrap, recycled feedstock	Domestic allocation, Defense Production Act

Regulation that started at the top has reached the bottom. The order is meaningful in itself. Protecting technology achieves little if the materials to build with are not there. Import the materials and you are back to depending on whoever supplies them. So you keep them circulating at home, which means recycled feedstock cannot leave. The logic is consistent.

And it is not a logic unique to one country. Others may reach the same conclusion. For an export control function, that means the list you watch has to widen from products and technology to raw materials and waste.

For the record: measures like this are policy choices governments make to sustain their industrial base, and I am not grading which country is right. Japan has its own long-running debate about resources flowing offshore. What matters operationally is not the verdict but noticing the change early.

What to check

The direct impact falls on anyone sourcing black mass or tungsten scrap from the United States: battery recyclers, non-ferrous metal firms, carbide tooling makers, and the traders serving them. From 27 August 2026 they cannot buy without an exception from BIS.

Three things to do.

First, confirm whether you are covered. The Schedule B codes are specified, so match them against your import records: 8549.13/14/19 and 8101.97. Material can arrive indirectly through traders, so extend the check to your suppliers.

Second, if covered, consider an exception. This is an allocation, not an embargo, so the path exists. BIS has said it intends to respond within 14 days of receipt², which makes it worth moving early relative to your contract dates. Expect to explain what volume you need and why supplying it does not undercut U.S. defence supply.

Third, check whether the source is substitutable. A one-year measure with room to extend, decided on supply conditions, is not something to plan around. Know your dependence on U.S.-origin material and work out whether other regions or domestic collection can carry more.

To check which control regimes your own trade might touch, our export control check is a free starting point, and continuous tracking of regulatory change is what TRAFEED is for.

Closing: widen the list you watch

The record. On 6 August 2026 BIS issued a DPAS directive allocation order, following the 30 July 2026 Presidential Determination under Section 101 of the Defense Production Act¹²³. Covered: black mass (Schedule B 8549.13/14/19) and tungsten waste and scrap (8101.97). From 27 August 2026 to 27 August 2027, U.S. sellers must allocate 100% of monthly sales to U.S. persons, and cannot sell abroad without a BIS adjustment or exception. Applications are rolling, with a stated 14-day response intent. Comments close 4 November 2026³.

What I take from it is that the toolkit has broadened. Machinery built to stop technology leaking is now being used to keep resources at home. Change the purpose and you change the items in scope. Anyone who has been watching only semiconductors and machine tools will now be watching the waste and scrap columns too.

This also runs alongside a separate current: the push to prove where materials came from. As more countries enclose their feedstock, the pressure to demonstrate origin only grows. I wrote about that in Pax Silica and the Silicon Highway. Read together, the outline of what is happening becomes clearer.

Start this week by checking whether 8549 series or 8101.97 appear anywhere in your imports. If you want to talk through what to build, get in touch and we can work through it together.

References

Facts rest on the rule as published in the Federal Register, supported by neutral analyses from law firms.

Footnotes

1. DPAS Directive Allocation Order and Additional Requirements for Recoverable Critical Minerals and Materials — Federal Register — 6 August 2026 ↩ ↩²

2. BIS Restricts Exports of Black Mass and Tungsten Waste and Scrap without a License — Baker McKenzie ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶

3. BIS Imposes Critical Minerals Export Restrictions on Black Mass and Tungsten Waste and Scrap — Holland & Knight — August 2026 ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷