Which Battery Policy Instruments Produce Route-Level Answers Today

A procurement team evaluating battery sourcing routes faces the same question across four federal policy instruments now in effect or recently announced: can it determine today whether a particular route is affected? The instruments range from a binding allocation rule with disclosed commercial consequences to an executive order that has not yet produced a single implementing document. Here is what the public record supports as of September 4, 2026.

Black-mass allocation rule: binding, with disclosed commercial exposure

The Bureau of Industry and Security published a temporary final rule under the Defense Priorities and Allocation System (DPAS) effective August 27, 2026, running one year. Covered U.S. sellers must allocate 100% of monthly black-mass sales to U.S. persons and keep the material physically in the United States unless BIS authorizes otherwise. Black mass is shredded lithium-ion battery scrap containing cathode, anode, or residual cell materials, and the rule defines it by three specified Schedule B codes.

The enforcement side is populated. BIS can investigate, request information, seek injunctions, and impose statutory penalties. Customs and Border Protection can detain shipments. A seller with existing foreign customers can file a written exception request, and BIS says it intends to respond within 14 days, but filing does not suspend the domestic-sales requirement unless BIS grants written interim relief.

The rule text is public and the covered product categories are defined, so a team sourcing domestically produced black mass can verify that the rule applies to its supplier's export routes. Whether any specific company has received an exception is a different question. The rule directs exception requests to a BIS email address and imposes no publication requirement on company-specific decisions.

American Battery Technology Company is the concrete case. ABTC disclosed in an August 20 SEC filing that black-mass sales represented the majority of its revenue and that substantially all current customers were outside the United States. Preliminary Q4 FY2026 revenue was $8.2 million. ABTC said it had requested an exception from BIS and warned that unavailable, delayed, or commercially impracticable relief could materially affect revenue, cash flow, and its ability to fund operations.

Through September 4, no public BIS decision, exception order, or DPAS temporary license for ABTC has appeared in the Federal Register, the BIS comment docket, BIS public notices, or ABTC's subsequent SEC filings. Searches of SEC filings and public news archives for Li-Cycle, Redwood Materials, Ascend Elements, and Cirba Solutions located no comparable disclosure. That establishes that ABTC is the only public data point. It does not establish that other recyclers lack affected sales or that none of them filed privately.

Of the four instruments, this is the only one where statutory authority, enforcement mechanism, and disclosed commercial consequence are all in place.

BABA battery-storage waivers: the government documenting its own supply gap

The Build America, Buy America Act requires that iron, steel, manufactured products, and construction materials used in federally funded infrastructure projects be produced domestically. Enforcement works through the funding itself: a project using noncompliant components without a waiver is ineligible for the financial assistance. Where no domestic source can meet the required specifications, the funding agency can issue a project-specific nonavailability waiver.

DOE approved Waiver 2026-07 for a Johnson County REMC project in Franklin, Indiana, a 3.5 MW / 14.88 MWh LFP battery energy storage system with $4.9 million in waived products against $7.6 million in infrastructure cost. Market research conducted from July 2024 through March 2025 found no fully BABA-compliant manufacturer meeting the required size, type, and voltage configuration. DOE described North American LFP-cell production as scarce.

That finding is not isolated. DOE's approved-waiver records contain at least six additional storage-related waivers spanning LFP systems, distribution-scale battery storage, vanadium-redox-flow batteries, and hybrid inverters:

• Waiver 2025-01 (December 2024): four distribution-system BESS awards, no BABA-compliant offering found.
• Waiver 2025-13 (January 2025): Dairyland Power Cooperative, Invinity vanadium-redox-flow battery packs, $23–24 million.
• Waiver 2026-05: five LFP systems for Pueblo, Colorado health centers. DOE's August 2025 market review found domestic capacity and critical-mineral access insufficient for a fully compliant stationary-storage system.
• Waivers 2026-15 and 2026-16 (June 2026): LFP home-battery systems and hybrid inverters for a Wisconsin microgrid. No reviewed manufacturer could certify a fully BABA-compliant LFP system, in each case because of foreign-sourced cells and subcomponents.

DOE has now documented, repeatedly and across multiple system configurations, that fully BABA-compliant battery energy storage is not available from domestic manufacturers. A team assembling a federally funded storage project should plan on needing a waiver for battery components, and can point to the government's own repeated nonavailability findings when it does.

The scope of that inference is narrow. Each waiver is tied to a named award, specific technical requirements, and a defined project period, and each requires its own market research and DOE review. Prior approvals do not carry over to a new project, configuration, or timeline. BABA also reaches only federally funded work; procurements outside DOE financial assistance are unaffected.

Grid-security executive order: authority issued, nothing published to check against

The executive order dated August 26, 2026, titled "Declaring a National Emergency to Secure the United States Bulk-Power System," covers grid-connected inverters, battery energy storage systems, UPS systems supporting critical infrastructure, and the associated software, firmware, remote access, digital services, maintenance services, and supply-chain dependencies. (The White House webpage labels this EO 14420. The Federal Register copy published August 31 assigns it EO 14421, having given 14420 to an August 10 order on childhood vaccines. I cite by title and date.)

The order requires two DOE determinations before a new transaction becomes prohibited: that the equipment or capability is connected to a covered foreign entity, and that the transaction presents an enumerated security or infrastructure risk. For previously installed equipment, DOE may require identification, isolation, monitoring, disconnection, or replacement after making the relevant findings. Section 3 directs DOE to publish implementing rules or regulations "as needed" within 120 days, which puts the deadline at December 24, 2026.

As of September 4, DOE has published nothing under the order: no implementing rule, covered-entity determination, supplier list, equipment-model list, transaction decision, licensing procedure, safe harbor, mitigation template, or prequalified-vendor list.

The practical consequence is that a buyer has nothing to check a transaction against. Whether a named supplier counts as a covered foreign entity is undetermined, as is whether any particular cell, rack, inverter, energy management system, firmware package, or maintenance contract has drawn a risk determination, and whether an otherwise covered transaction could proceed under a license or mitigation agreement. The order creates discretionary authority and the outline of a future compliance framework, but does not yet produce anything a specific transaction can be evaluated against.

The 120-day clock is the first public milestone. Until DOE publishes, the order exists as legal authority but does not yet function as a sourcing constraint.

45X and prohibited-foreign-entity restrictions: interim guidance, no new action

Status here is unchanged from prior coverage.

The 45X advanced manufacturing production credit, claimed on IRS Form 7207, provides $35/kWh for battery cells, $10/kWh for battery modules, and $45/kWh for modules not using cells, plus a separate credit for electrode active materials calculated as 10% of production costs. The 2025 statutory amendments overlay two restrictions on these credits: prohibited foreign entity (PFE) status, and a material assistance cost ratio (MACR). The MACR sets phased thresholds, tightening each year, for the share of a facility's applicable input costs that can originate from PFE sources. A facility exceeding the applicable threshold in a given tax year loses the credit for that year. The annual thresholds are set out in Notice 2026-15.

The IRS implementation page identifies Notice 2026-15 as the operative interim guidance. Treasury and IRS have stated their intent to publish proposed regulations and PFE-specific safe-harbor tables. Neither has appeared. Searches of IRS guidance, Internal Revenue Bulletins, Treasury releases, and Federal Register documents through September 4 located no proposed regulation, final regulation, replacement notice, safe-harbor table, or public enforcement action.

Notice 2026-15 is itself a defined compliance pathway. Taxpayers calculate the applicable MACR, identify PFE-sourced inputs, maintain supplier certifications, and attach the required substantiation. It is interim because final rules have not replaced it, not because the rules are absent. The final general Section 45X regulations published in 2024 govern the base credit mechanics. What remains unsettled is the PFE and material-assistance overlay.

The verification gap described in Issue #11 has not moved. Form 7207 requires a separate facility-level computation for each manufacturing facility, including address, owner, and technical description, so the IRS holds facility-level data. Section 6103 makes returns and return information confidential. A procurement team can verify the governing thresholds and interim methods from published guidance, but it cannot verify a supplier's facility-level credit claim, MACR calculation, or IRS treatment without voluntary contractual disclosure from the taxpayer. No US facility has publicly disclosed a facility-specific 45X MACR computation.

Where this leaves sourcing decisions

One instrument out of four yields a route-level answer today without waiting on further government action. Each of the other three has an identifiable thing that has to happen first: a DOE waiver decision on the specific project and configuration, a first implementing publication under the grid-security order, or a supplier willing to open its facility-level tax computation under contract.

For sourcing decisions being made this quarter, that distinction matters more than the relative severity of the four instruments. Planning against an instrument that has not yet produced its implementing rules is a judgment about timeline and risk tolerance, not a compliance exercise, and should not be recorded in a program plan as one.