Anthropic PBC alleges in two federal courts that the Pentagon labeled it a supply-chain risk to punish its limits on Claude’s weapons and surveillance use. The U.S. District Court for the Northern District of California entered final judgment for Anthropic on August 27, 2026. On September 25, 2026, the D.C. Circuit upheld the separate § 4713 designation, and Anthropic has petitioned for rehearing.
Latest development Oct 13, 2026
On October 13, 2026, Anthropic petitioned the D.C. Circuit for panel rehearing or rehearing en banc. The petition challenges the court’s September 25, 2026, decision upholding the Pentagon’s supply-chain risk designation under 41 U.S.C. § 4713.
Why it matters
The case will decide whether the executive branch can use national security procurement designations to punish a contractor for refusing to loosen its own product safeguards. The outcome affects AI companies and other suppliers that set usage limits on products sold to the government.
Background
On February 27, 2026, Secretary of War Pete Hegseth issued a public directive on Anthropic PBC. It instructed the U.S. Department of War (the renamed Department of Defense) to designate the AI company a “Supply-Chain Risk to National Security.” The designation followed Anthropic’s refusal to remove usage restrictions in Claude’s terms of service. Those restrictions barred Claude’s use for lethal autonomous weapons without human oversight and for mass domestic surveillance of Americans. Anthropic says the Trump administration retaliated against it by branding it a security risk and pressuring federal agencies to stop using its products.
On March 9, 2026, Anthropic sued the Department of War, Secretary Hegseth, and the United States in the U.S. District Court for the Northern District of California. The complaint seeks declaratory and injunctive relief under the First and Fifth Amendments and the Administrative Procedure Act (APA). The same day, it petitioned the U.S. Court of Appeals for the District of Columbia Circuit to review the designation under 41 U.S.C. § 4713 and related supply-chain risk statutes. Anthropic argues that Congress never gave the Pentagon or the President authority to blacklist a contractor for refusing to loosen its own product safeguards. It says the designation caused it substantial reputational and commercial harm.
On March 26, 2026, the district court granted a preliminary injunction blocking the designation and the presidential and Hegseth directives. It found Anthropic likely to succeed on its First Amendment retaliation, due process, and APA claims. On April 2, 2026, the government appealed to the U.S. Court of Appeals for the Ninth Circuit, which held the appeal in abeyance pending the D.C. Circuit’s decision. On April 8, 2026, the D.C. Circuit denied Anthropic’s motion for a stay of the designation, and it heard oral argument on May 19, 2026. After a hearing on July 30, 2026, the district court granted summary judgment to Anthropic on August 27, 2026, and entered an order of final relief.
The district court held that the designation was unlawful retaliation for protected speech, violated Fifth Amendment due process, and was arbitrary and capricious under the APA. The order covers the presidential directive, the Hegseth directive, and the designation under 10 U.S.C. § 3252. On September 3, 2026, a senior Pentagon official stated publicly that Anthropic remains designated a supply-chain risk. On September 25, 2026, a divided D.C. Circuit panel denied Anthropic’s petitions for review of the separate § 4713 designation. On October 13, 2026, Anthropic petitioned for panel rehearing or rehearing en banc.
Timeline 12 events
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AppealAnthropic seeks panel or en banc rehearing in D.C. Circuit
The petition challenges the September 25 decision upholding the Pentagon’s supply-chain risk designation of Anthropic under the Federal Acquisition Supply Chain Security Act.
Anthropic Asks D.C. Circuit to Rehear Pentagon Supply-Chain Risk CaseWhy Anthropic Is Asking for a Rehearing En BancAnthropic seeks rehearing of case over Pentagon's security risk brandingAnthropic asks US appeals court for en banc review of supply chain decision
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JudgmentD.C. Circuit denies Anthropic’s petitions and upholds § 4713 designation
A divided panel held that the Secretary of War did not exceed his authority under the Federal Acquisition Supply Chain Security Act of 2018 or violate the Constitution. Judge Katsas wrote for the court, and Judge Henderson dissented.
Opinion, Anthropic PBC v. United States Department of War, No. 26-1049 (D.C. Cir. Sept. 25, 2026)Anthropic PBC v. United States Department of War, No. 26-1049 (D.C. Cir.), docketU.S. appeals court upholds Pentagon designation of Anthropic as supply chain riskUS appeals court upholds Pentagon’s blacklisting of Anthropic
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OtherPentagon official reaffirms designation despite district court ruling
Days after the summary judgment ruling, a senior Pentagon official said publicly that Anthropic remains designated a supply-chain risk to national security. The statement indicated the department has not withdrawn the designation.
Pentagon Official Reaffirms Anthropic Supply Chain Risk Designation – Unite.AITop Pentagon official reaffirms Anthropic blacklist despite Lutnick commentsPentagon confirms Anthropic remains a 'supply chain risk'
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JudgmentDistrict court grants summary judgment to Anthropic and enters final judgment
The court found First Amendment retaliation, a Fifth Amendment due process violation, and arbitrary and capricious agency action. Its order of final relief covers the presidential directive, the Hegseth directive, and the Section 3252 designation.
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HearingJudge Lin hears cross-motions for summary judgment
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HearingD.C. Circuit hears oral argument on petition for review
The D.C. Circuit heard oral argument on Anthropic’s petition challenging the Pentagon’s supply-chain risk designation under federal procurement risk statutes.
Anthropic, Defense Department face off in DC court over blacklisting
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OrderD.C. Circuit sets oral argument for May 19
The court set the date after denying Anthropic’s stay motion.
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OrderD.C. Circuit denies Anthropic’s motion for a stay pending review
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AppealGovernment appeals preliminary injunction to the Ninth Circuit
The appeal was docketed as No. 26-2011.
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OrderJudge Lin grants a preliminary injunction against the supply-chain risk designation
The court found Anthropic likely to succeed on First Amendment retaliation, Fifth Amendment due process, and Administrative Procedure Act grounds. It enjoined the designation and the presidential and Hegseth directives.
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FilingAnthropic sues in California and petitions the D.C. Circuit
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OtherHegseth directs supply-chain risk designation
Secretary of War Pete Hegseth issued a public directive instructing the Department of War to designate Anthropic as a Supply-Chain Risk to National Security.
Experimental AI forecast
How it is madeWill the D.C. Circuit grant rehearing of its September 25, 2026, ruling upholding Anthropic’s § 4713 supply-chain risk designation by March 31, 2027?
- Panel ruling for Pentagon stands65%
- D.C. Circuit grants rehearing16%
- Still pending on March 31, 202713%
- Pentagon withdraws designation or settles6%
- Resolves by
- Mar 31, 2027in 5 months
- Record confidence
- Medium
The September 25, 2026, panel ruling upholding the § 4713 designation will most likely stand, at 65%, with rehearing denied by March 31, 2027. Rehearing is rarely granted in the D.C. Circuit, though the dissent and the constitutional stakes raise the odds above the usual baseline.
How it resolves. Resolves on the D.C. Circuit docket in Nos. 26-1049 and 26-1162 as of March 31, 2027. “Grants rehearing” if the court orders panel rehearing or rehearing en banc, or vacates the September 25, 2026, judgment for further review. “Panel ruling stands” if the court denies both panel and en banc rehearing. “Withdraws or settles” if, before any ruling on the petition, the Pentagon publicly rescinds the § 4713 designation or the parties file a settlement or joint dismissal. “Still pending” if none of these has occurred.
Reasoning
Starting point. Petitions for panel rehearing or rehearing en banc in the D.C. Circuit, especially after divided panel rulings on agency action: The D.C. Circuit grants en banc rehearing in well under 1% of petitions and only a few cases a year. Panel rehearing is also rarely granted. Petitions after a divided ruling on a nationally significant question succeed more often, plausibly in the 5% to 20% range.
The D.C. Circuit rarely grants rehearing en banc, typically only a handful of cases a year, and panel rehearing is uncommon. Two features lift this petition above that baseline. The panel divided, with a written dissent, and the case raises First Amendment and statutory authority questions with broad effects on federal contractors. The conflict with the Northern District of California’s August 27, 2026, final judgment on the related § 3252 designation adds pressure for fuller review. Against that, the panel had already denied a stay, and the court gives the executive branch wide latitude on national security procurement. The petition was filed October 13, 2026, and the court usually acts within one to three months, longer if it calls for a response, so a ruling by March 31, 2027, is likely. A negotiated withdrawal stays unlikely because the Pentagon publicly reaffirmed the designation on September 3, 2026. The filing of the petition was expected and the record shows no other new development, so no outcome moved from the September 29, 2026, forecast. The leading alternative is a grant of rehearing, most plausibly en banc, given the dissent.
Very low base rate for D.C. Circuit rehearing grants · Divided panel with a written dissent · Conflicting district court final judgment on § 3252 designation · Pentagon’s public reaffirmation makes withdrawal unlikely · Typical one-to-three-month timeline for rehearing decisions
Previous forecast: correct “How will the D.C. Circuit rule on Anthropic’s petition for review of the § 4713 supply-chain risk designation by June 30, 2027?” (Sep 24, 2026). On September 25, 2026, a divided D.C. Circuit panel denied Anthropic’s petitions for review on the merits and upheld the § 4713 designation. Anthropic said it is considering review by the full D.C. Circuit. It put “D.C. Circuit upholds designation” at 35%. Track record
Generated automatically by Claude Opus 5.5 on Oct 18, 2026 from this case’s record on this site, and published without editorial review. The probabilities are the model’s judgment, not measured frequencies, and they are scored publicly as cases resolve. Not legal or investment advice. How the forecasts are made
Disclosure: Anthropic, which makes the model that wrote this forecast, is a party to this case.