Recycled Input Buys No Headroom Under the Defense Battery Statute
Every Department of Defense contract entered into after December 18, 2025 is already inside the advanced battery sourcing statute, and the exemption it offers turns on a question no bill of materials answers.
10 U.S.C. 4865 was added by section 842 of the National Defense Authorization Act for Fiscal Year 2026, Pub. L. 119-60, approved December 18, 2025. Subsection (a) is one sentence. "The Secretary of Defense shall procure advanced batteries and cells whose functional cell components and technology, whether as end items or embedded within warfighting and support systems, are not owned, sourced, refined, or produced from a foreign entity of concern."
Section 842(b) limits the whole section to contracts or other agreements entered into after the date of enactment, so the population was fixed by a signature date that has already gone by. The obligation itself arrives on three dates in subsection (b):
- All new acquisition programs on January 1, 2028.
- Standard batteries on January 1, 2029.
- Existing acquisition programs on January 30, 2031.
One date comes earlier, from a different statute. Section 154 of the National Defense Authorization Act for Fiscal Year 2024, Pub. L. 118-31, provides that beginning on October 1, 2027 no Department of Defense funds may be obligated or expended to procure a battery produced by one of six named companies, Contemporary Amperex Technology Company (CATL), BYD, Envision Energy, EVE Energy, Gotion High tech and Hithium, or any successor. Section 4865 folds those six into its own definition of a foreign entity of concern, which it otherwise borrows from section 40207(a) of the Infrastructure Investment and Jobs Act, 42 U.S.C. 18741(a).
The third condition is not an arithmetic question
Subsection (c)(1)(A) switches subsection (a) off when three things are true, joined by "and":
- Final assembly is carried out by an entity other than a foreign entity of concern.
- Functional cell components comprising more than 95 percent of the costs of the functional cell components are from sources other than foreign entities of concern.
- The battery or cell "is produced without technology licensed from a foreign entity of concern."
Two of those come out of a cost model. The statute even supplies the denominator, defining functional cell components at subsection (e)(3) as the cathode materials, anode materials, separators, anode foils and other functional materials that contribute to the chemical processes necessary for energy storage.
The third asks where the process came from. A cathode license. A line built to a licensor's specification and commissioned by its engineers. None of that shows up in a bill of materials, and none of it is cured by buying the same cathode powder from a different seller.
Domestic recycling does not clean a source here
Subsection (c)(1)(B) is a single sentence pointed straight at the 95 percent test. "For the purposes of subparagraph (A)(ii), any material or component from an entity that has been recycled and reprocessed domestically is considered to originate from that entity regardless of origin."
Under the DFARS covered materials regime, recycled magnet material can escape the restriction when the milling and sintering happen in the United States. Under section 4865, material that goes into a domestic recycler carrying an origin comes back out carrying it, and a supplier that built its margin over the 95 percent line on recycled input has to compute that margin again.
Which date you are on was decided before the statute existed
Subsection (e)(1) puts a program in the new lane if, before the date of enactment, it had not reached the initiation of the engineering and manufacturing development phase or an equivalent phase of development. That includes a defense acquisition program that had not undergone a formal Milestone B approval or equivalent decision point by then. Subsection (e)(2) puts a program in the existing lane if it had.
So the distance between January 1, 2028 and January 30, 2031 is a milestone decision taken before December 18, 2025, by people who were not managing a battery statute when they took it. It is a fact about a program's history and no restructuring reaches back to change it. A program office that cannot state its own Milestone B date cannot say which of the two dates it is working against.
There is no codified clause to sign
Section 842(c) directed the Secretary of Defense to revise the DFARS to incorporate the requirements of section 4865 not later than 180 days after enactment, which fell on or about June 16, 2026. Title 48 of the Code of Federal Regulations, current as of September 16, 2026, does not carry it. DFARS 252.225 runs from 7000 through 7065 and none of those sixty-five sections is a battery clause, and a search of every section heading in title 48 for "batter" returns nothing. The Federal Register carries no such rule either.
So there is no codified representation, provision or certificate for a supplier to sign against either battery statute. A prime that wants the protection before the regulation carries it writes its own terms, and that paper is contract law rather than regulation.
The statute is already sorting contracts by the date they were signed. The record that answers its third condition is a licensing history, and that is not a document anybody assembles in the week a prime asks for it.