Washington Reaches for an Allocation Order Instead of an Export Licence: All US Black Mass and Tungsten Scrap Sales Must Now Go to American Buyers
Presidential Determination 2026-19, signed 30 July 2026 and published in the Federal Register on 4 August, made the findings that unlock Defense Production Act section 101 allocation authority over recoverable critical minerals, a category defined to include black mass, end-of-life rare-earth permanent magnets, swarf and other scrap, and to exclude copper. On 6 August the Bureau of Industry and Security published a temporary final rule under RIN 0694-AK51 requiring US persons who sell black mass and tungsten waste and scrap to allocate 100 percent of monthly sales to US persons unless BIS grants an adjustment or exception in advance. It takes effect 27 August 2026, expires 17 September 2027, and comments close on 4 November. The measure never regulates the border. It reorders domestic sales, and the export stops as a consequence.
Watch · The story in brief
How a Defense Production Act determination signed on 30 July became a binding BIS rule six days later, requiring 100 percent of US black mass and tungsten scrap sales to go to American buyers, and why an allocation order rather than an export licence changes where the fight happens. With the two WTO cases Washington won against China on the same conduct.
What happened
On 30 July 2026 the President signed Presidential Determination 2026-19 under section 101 of the Defense Production Act, finding that recoverable critical minerals and materials are critical industrial resources necessary to the national defense. The determination defines the category to include black mass, end-of-life rare-earth permanent magnets and other goods that have completed manufacturing, swarf, and other waste and scrap containing critical minerals. Copper scrap is carved out, already covered by Proclamation 10962 of July 2025. The determination imposed no restriction by itself; it directed the Secretary of Commerce to implement through regulations and procedures, and it was published in the Federal Register on 4 August.
Commerce moved within a week. On 6 August the Bureau of Industry and Security published a temporary final rule, RIN 0694-AK51 in docket BIS-2026-0364, requiring US persons engaged in the sale of black mass and tungsten waste and scrap to allocate 100 percent of monthly sales to US persons unless an adjustment or exception is obtained in advance from the Office of Strategic Industries and Economic Security. The rule takes effect on 27 August 2026 and expires on 17 September 2027. Comments are due by 4 November, after the rule is already operating.
An allocation order, not an export control
The mechanism is the point. American export controls normally run through the Export Administration Regulations, where a commodity gets a classification, a licence requirement attaches to a destination, and the exporter applies. Nothing of that kind happened here. BIS instead used the Defense Production Act's allocation power, which lets the government direct where domestically produced material goes, and set the domestic share at everything. The border is never mentioned, and the prohibition is an arithmetic consequence of the allocation.
That choice buys speed and avoids the machinery of the Commerce Control List, and it creates its own exposure. Allocation authority under section 101 was built to prioritise defense contracts and direct scarce materials to them, not to shape trade flows, so the question of whether this use fits the statute is open. The rule also issued as a temporary final rule, effective before the comment period closes, which puts the adequacy of that procedure in play under the Administrative Procedure Act alongside the substantive authority question.
Why it matters for dispute formation
Three fronts open at once. The first is contractual: sellers with forward commitments to Korean or Southeast Asian refiners face performance that becomes unlawful on 27 August, and whether that is force majeure, supervening illegality or a straightforward breach depends on clause wording nobody drafted with an allocation order in mind. The second is administrative, where an exporter or an association with standing can challenge the statutory fit and the procedure, and the pre-effective comment period gives them a record to build on.
The third is external and the most awkward. GATT Article XI:1 prohibits export restrictions made effective through quotas, licences or other measures, and an allocation order requiring 100 percent domestic sales is comfortably an other measure. The United States brought and won the two leading cases on exactly this conduct, against China, and the reasoning it relied on then now points the other way. Washington will reach for the national security exception, which is where the argument will actually be had, and the answer will shape what every other government thinks it may do to its own scrap.
Who's exposed
Exposed as the sellers whose order book is now allocated by rule. American plants generated roughly 9 percent of global black mass capacity in the first quarter of 2026 and the country ships about 33,000 tonnes of e-scrap a month, volumes that domestic refining cannot yet absorb. Producers must route 100 percent of monthly sales to US persons from 27 August unless BIS grants relief in advance, which turns pricing power over to a short list of domestic offtakers.
Exposed as the trade that the rule removes. ReMA's Robin Wiener has said the requirement overlooks critical industry dynamics and threatens export markets the sector depends on, which frames the comment record closing 4 November and any subsequent challenge. Cargoes contracted before 27 August but shipping after it are the immediate commercial problem.
Exposed as the buyers on the other end. The Posco and Huayou Cobalt joint venture in South Korea has been a principal destination for US black mass, and Korean and Southeast Asian refiners built capacity around a feed stream that a US allocation order can now switch off without touching their own law. Their remedy, if they have one, runs through their governments rather than through BIS.
Exposed to the upside and to the concentration risk that comes with it. Amermin's Ryan McAdams has welcomed the measure as protecting domestic capacity, and a captive feedstock does support the buildout the determination is meant to encourage. The rule expires on 17 September 2027, so investment decisions taken on the strength of it are being made against a one-year instrument.
The historical parallel · China — Raw Materials (WTO DS394) and China — Rare Earths (WTO DS431)
The United States built the modern law against export restraints on raw materials by suing China twice and winning both times. In the Raw Materials dispute, decided in 2012, and in Rare Earths, decided in 2014, panels and the Appellate Body held that China's export quotas and related restraints breached Article XI:1 and could not be rescued by the Article XX(g) conservation exception, because measures aimed at conserving an exhaustible resource have to bite on domestic consumption as well as on exports. An allocation order that sends 100 percent of monthly sales to domestic buyers is the mirror image of the even-handedness the United States argued for. The instrument is different, an allocation power rather than a quota, and the defence will be national security rather than conservation, but the conduct is the one Washington spent a decade establishing was unlawful when someone else did it.
What to watch
- Whether BIS publishes criteria for adjustments and exceptions, or decides them case by case through DPASAllocations without a published standard.
- The comment record closing 4 November, and any petition for review of the temporary final rule on APA or statutory-authority grounds.
- Treatment of cargoes contracted before 27 August 2026 but shipping after it, and the first force-majeure notices between US sellers and Asian refiners.
- Whether Korea, Japan or the EU raise the measure at the WTO, and whether the United States pleads Article XXI.
- Whether the category is extended by further rulemaking to the rest of the determination's scope, particularly end-of-life rare-earth magnets and swarf.
Sources
- The White House — Presidential Determination pursuant to DPA section 101 on recoverable critical minerals
- Federal Register — Presidential Determination 2026-19 (published 4 August 2026)
- The White House — fact sheet on the DPA delegation
- Regulations.gov — BIS docket BIS-2026-0364 (temporary final rule, RIN 0694-AK51)
- Recycling Today — Commerce moves to restrict black mass and tungsten scrap exports
- Resource Recycling — executive order empowers feds to block mineral exports
- MINING.COM — US bans export of tungsten and battery waste to secure supplies
- Fastmarkets — the US as a burgeoning black mass exporter
- Forbes — US to restrict foreign exports of recycled critical minerals
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Get the Intelligence BriefFor general information only; not legal advice, and no attorney–client relationship is formed through this article. Company names appear because the operators are exposed to a public development — not as a statement of wrongdoing or a predicted outcome. Figures are as reported by the linked sources.