Anthropic has petitioned a federal appeals court in Washington, D.C. to rehear its challenge to the Pentagon's supply chain risk designation, arguing the ruling ignored evidence that the blacklisting was retaliation for the company's public AI safety commitments.
Anthropic filed a petition Tuesday asking a federal appeals court in Washington, D.C. to rehear its challenge to the Pentagon's decision to label the company a national-security supply chain risk — a designation that has barred defense contractors from using Anthropic's Claude AI models in their work with the agency.
The filing escalates a legal battle that began earlier this year after the Department of Defense, under Secretary Pete Hegseth, applied the supply chain risk label in March. That move followed a breakdown in negotiations over how the military could deploy Anthropic's Claude models on the Pentagon's GenAI.mil platform.
"The Secretary of War branded Anthropic — an American AI company whose models help defend the nation — a national-security 'supply chain risk' because it declined to permit its models to be used for mass surveillance of Americans or lethal autonomous warfare and publicly explained those AI-safety commitments," Anthropic's attorneys wrote in the Tuesday petition. "A divided panel upheld that extraordinary designation."
In September, the D.C. Circuit upheld the Pentagon's blacklisting in a 2-1 decision, rejecting Anthropic's argument that the ban was arbitrary, unauthorized, and unconstitutional. Anthropic's attorneys now contend the court ignored "straightforward evidence the designation was retaliation for Anthropic's speech about AI safety."
The dispute represents a sharp reversal from what had been a close working relationship between the two parties. Anthropic previously served as an early partner across multiple U.S. government agencies, including the Department of Defense, and signed a $200 million contract with the Pentagon in July 2025.
Talks began to deteriorate that September, when negotiations over Claude's deployment on the GenAI.mil platform collapsed. The conflict became public earlier this year when the DOD formally applied the supply chain risk designation, effectively cutting Anthropic out of the defense contracting ecosystem.
Anthropic sued the Trump administration in an effort to reverse that action. The company's latest petition, seeking a rehearing, argues the divided panel's ruling set a troubling precedent — that a federal agency can use a national-security label to penalize a private company for publicly stating its ethical limits around AI use.
A representative for Anthropic declined to comment beyond the contents of the filing. The Pentagon did not immediately respond to a request for comment.
The case arrives at a moment of heightened scrutiny over how the U.S. government engages with private AI developers, particularly on questions of autonomous weapons systems and domestic surveillance. Anthropic has publicly committed to restricting uses of its models that it deems unsafe, a position that placed it at odds with the military's preferred deployment terms.
Whether the D.C. Circuit agrees to rehear the case will determine whether Anthropic can revive its constitutional and statutory arguments before a full panel — or whether the September ruling stands as the final word on the Pentagon's authority to impose such designations.
TechEchelon Staff bylines are produced collectively by the newsroom for short, breaking, and wire-style coverage. Longer-form reporting is published under the responsible reporter's name.
More from the Staff →Kroger announced it will lay off 3,000 corporate employees over three years as it ramps up AI use to streamline operations, adding to a growing pattern of workforce reductions tied to automation across major U.S. industries.
The IMF warned AI is hitting labor markets like a "slow-moving tsunami," a survey found 85% of family offices chasing AI returns despite bubble fears, and TikTok's CEO predicted major scientific breakthroughs within three years.
Vertical microdrama streaming startup Vurt has launched dedicated Apple TV and Android TV apps, offering 3,500 episodes across more than 100 shows as it bets that short-form vertical content will find a second home on wide-screen televisions.
Written for readers who already know the basics — markets, AI, and the policy decisions that shape both.