A federal appeals court in Washington on Friday upheld the Pentagon’s blacklisting of Anthropic as a supply chain risk, CNBC reported, dealing a blow to the AI company in its months-long fight with the Trump administration.
In a 2-1 decision, Circuit Judges Gregory Katsas and Neomi Rao rejected Anthropic’s argument that the Defense Department’s ban on its Claude models was arbitrary, unauthorized and unconstitutional, CNBC said. Circuit Judge Karen LeCraft Henderson dissented.
“The Department had ample support for its conclusion that the continued integration of Claude into the Department’s information systems, by the Department or its contractors, presented a statutorily covered national-security risk,” Katsas wrote in the opinion for the court.
Politico reported that the panel found the department had good reason for that conclusion because Anthropic includes code in its models that restricts them from performing certain tasks. Politico said the decision expands the executive branch’s authority to designate U.S. businesses as national security risks.
The majority also rejected Anthropic’s due process and First Amendment claims, according to opinion excerpts published by Reason’s Volokh Conspiracy. Henderson dissented on statutory grounds, writing that the law’s history refutes treating as a supply chain risk “a contractor’s honest and upfront enforcement of restrictions on a covered article’s use disfavored by the government.”
The ruling leaves the designation in place. It prevents the U.S. military from using Anthropic’s models and blocks defense contractors from using them in their work with the agency, CNBC said.
“We respectfully disagree with the court’s decision,” an Anthropic spokesperson told CNBC. “Another federal court has already held the government’s parallel designation unlawful. We remain confident in our position and are considering all options, including further review.” Reuters also reported that Anthropic is considering its options, including further judicial review.
CNBC said the panel delayed its decision from taking immediate effect to give Anthropic time to seek a rehearing from the same panel or from the full D.C. Circuit. Anthropic could also ask the Supreme Court to take the case, CNBC said.
The fight began when talks over how the military could use Claude collapsed, CNBC reported. The Pentagon wanted access to Anthropic’s models for all lawful purposes, while Anthropic wanted assurance they would not be used for fully autonomous weapons or domestic mass surveillance. The Defense Department labeled Anthropic a supply chain risk in March.
The department relied on two separate designations that had to be litigated in two courts, CNBC said. A San Francisco federal judge last month struck down one of them, finding the administration had unlawfully retaliated against Anthropic for its views on AI safety, Reuters said. Friday’s ruling upheld the second.
Sources
- https://www.cnbc.com/2026/09/25/pentagon-anthropic-ai-risk-appeals-court.html
- https://www.politico.com/news/2026/09/25/anthropic-national-security-risk-pentagon-ruling-01093285
- https://www.reuters.com/world/us-appeals-court-declines-block-pentagons-blacklisting-anthropic-2026-09-25/
- https://reason.com/volokh/2026/09/25/anthropics-first-amendment-claim-against-department-of-war-rejected/