A federal appeals court panel in Washington, D.C., on Friday upheld the Pentagon’s blacklisting of Anthropic, dealing a blow to the artificial intelligence company in its months-long battle with the Trump administration. The 2-1 decision rejected Anthropic’s argument that the Department of Defense’s ban on its Claude models was arbitrary, unauthorized and unconstitutional. Judge Gregory Katsas wrote in the majority opinion that “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.” Judge Neomi Rao joined the majority; Judge Karen LeCraft Henderson, appointed by former President George H.W. Bush, dissented. The designation, made in March, labels Anthropic a supply chain risk, meaning the company purportedly threatens U.S. national security. It prevents the U.S. military from using Anthropic’s models and blocks defense contractors from using them in work with the agency. The dispute stems from a failed negotiation over deploying Claude on the DOD’s GenAI.mil AI platform. The Pentagon wanted unfettered access to the models for all lawful purposes, while Anthropic sought assurances that its technology would not be used for fully autonomous weapons or domestic mass surveillance. The talks collapsed, and Defense Secretary Pete Hegseth accused Anthropic of attempting to “seize veto power over the operational decisions of the United States military.” In his opinion, Katsas noted Hegseth’s concern that “overly constrained” AI models could shut down unexpectedly and that Claude might be “subject to manipulation.” He added that “in our Republic, it is the President and the Secretary of War who must determine how best to balance the competing risks,” and that the Secretary did not transgress any limits on his authority under the Supply Chain Security Act or the Constitution. Anthropic sued the Trump administration in both a San Francisco district court and the D.C. Circuit Appeals Court in March, seeking to reverse its blacklisting. A San Francisco federal judge ruled last month that one of the two designations the DOD relied on was illegal. The D.C. appeals court’s ruling on Friday upheld the second designation. An Anthropic spokesperson told CNBC, “We respectfully disagree with the court’s decision. 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.” The appellate panel said it would delay the decision from taking immediate effect to give Anthropic time to petition for a rehearing or seek an en banc review, or to ask the Supreme Court to take the case. Prior to the public clash, Anthropic had been an early partner across many U.S. agencies, including the DOD, and had signed a $200 million contract with the Pentagon in July 2025.
Key facts
- The D.C. appeals court upheld the Pentagon’s designation of Anthropic as a supply chain risk by a 2‑1 vote.
- Judge Gregory Katsas wrote the majority opinion, joined by Judge Neomi Rao; Judge Karen LeCraft Henderson dissented.
- The designation bars the U.S. military and its contractors from using Anthropic’s Claude AI models.
- Anthropic had a $200 million contract with the Pentagon signed in July 2025, but negotiations over deployment on the DOD’s GenAI.mil platform collapsed.
- Anthropic is considering further legal options, including a rehearing or Supreme Court review.