A federal appeals court panel in Washington, D.C., on September 25, 2026, upheld the Pentagon's designation of Anthropic as a supply chain risk. The 2-1 decision rejected Anthropic's argument that the Department of Defense's (DOD) ban on its Claude models was arbitrary, unauthorized, and unconstitutional. Judge Gregory Katsas, in the majority opinion, stated that the Department had ample support for its conclusion that the integration of Claude into its information systems presented a national-security risk. Judge Neomi Rao joined Katsas in the majority, while Judge Karen LeCraft Henderson dissented.
In March 2026, the DOD labeled Anthropic a supply chain risk, indicating that the company posed a threat to U.S. national security after negotiations regarding the military's use of its Claude AI models deteriorated. This designation prevents the U.S. military from utilizing Anthropic's models and restricts defense contractors from using them in their work with the agency.
Anthropic's relationship with the Trump administration has been contentious, with former President Trump criticizing the company's CEO, Dario Amodei, on social media. Amodei had previously called for a slowdown in AI development, which drew Trump's criticism. Trump stated on Truth Social that the administration would continue to prevent AI entities from engaging in potentially harmful activities.
Anthropic filed lawsuits against the Trump administration in both U.S. District Court in San Francisco and the D.C. Circuit Appeals Court in March, seeking to reverse its blacklisting. A federal judge in San Francisco ruled last month that one of the designations was illegal, while the D.C. appeals court upheld the second designation.
An Anthropic spokesperson expressed disagreement with the court's decision, noting that another federal court had already deemed the government's parallel designation unlawful. The spokesperson stated that the company remains confident in its position and is considering further legal options.
The appellate panel announced it would delay the decision's immediate effect to allow Anthropic time to petition for a rehearing or seek an en banc review from all judges on the D.C. Circuit Court of Appeals. Anthropic may also request the Supreme Court to take the case.
Before the public dispute, Anthropic had been an early partner with various U.S. agencies, including the DOD, signing a $200 million contract in July 2025. However, negotiations regarding the deployment of Claude on the DOD's GenAI.mil AI platform collapsed in September 2025. The DOD sought unrestricted access to Anthropic's models, while Anthropic sought assurances against the use of its technology for autonomous weapons or domestic surveillance. The parties could not reach an agreement, leading to accusations from Defense Secretary Pete Hegseth that Anthropic was attempting to gain veto power over military operational decisions.
Judge Katsas noted concerns raised by Hegseth regarding the risks of overly constrained AI models and the potential for manipulation of Claude. Despite Anthropic's refutation of these claims, Katsas stated that the decision-making authority rests with the President and the Secretary of War, affirming that the Secretary did not exceed his authority under the Supply Chain Security Act or the Constitution.