Anthropic Asks Full Court to Rehear 2-1 Pentagon Ban Ruling

Anthropic asked the U.S. Court of Appeals for the D.C. Circuit on 13 October 2026 to rehear the 2-1 ruling that upheld the Department of War’s decision to exclude its Claude models from the department’s supply chain, according to the petition filed on the court docket. It asks for rehearing by the same panel or by the full court.

A divided panel denied Anthropic’s petitions for review on 25 September. Judge Katsas wrote the opinion for the court, Judge Henderson dissented, and Judge Rao was the third member of the panel. The petition argues the decision is wrong in four ways and says it will govern every future use of the statute.

What Anthropic Is Asking For

The petition, filed by WilmerHale, says the majority decided four questions in conflict with decisions of the D.C. Circuit, the Supreme Court and the Northern District of California:

• Statutory scope. It says the majority read 41 U.S.C. § 4713, a law aimed at hostile foreign actors, so broadly that it reaches every government contractor, in conflict with the Supreme Court’s Fischer decision.
• Statutory process. It says the Secretary skipped the notice and chance to respond that the statute requires, and that the majority wrongly called that harmless.
• Due process. It says the majority deferred to the Secretary’s claims of urgency instead of applying the court’s “particularized need” standard.
• First Amendment. It says the majority found no retaliation on a record that a federal court in California read the other way.

The petition sums up: “Any one of these errors would warrant rehearing. Together, they compel it.”

What the Panel Held

The opinion says the department made its decision after Anthropic refused to relax contract terms barring the use of Claude for lethal autonomous warfare or domestic surveillance. It held that the department “had ample support” for treating Claude as a covered national-security risk.

The opinion says Anthropic encodes restrictions into Claude, that these have stopped Claude from performing tasks government users requested, and that a dispute arose over whether the contract barred Claude’s use in “an ongoing overseas military operation”.

On motive, the majority wrote that it had “no reason to doubt” that Anthropic acts “with noble intentions”, but that the statute “turns on what Anthropic does, not why Anthropic does it.” It held that Anthropic suffered no prejudice from the timing of the notice, and that the exclusion rested on a contract dispute, not on Anthropic’s advocacy.

Judge Henderson read the statute as covering only subversive, deceptive acts. Her dissent says that under the ruling, a contractor faces a choice: “Agree to the Secretary’s demands or risk being designated a national security threat under FASCSA.”

How the Designation Happened

According to the opinion, Secretary Hegseth met Anthropic’s chief executive on 24 February and demanded that the company accept an “all lawful uses” contract term by 27 February. Anthropic publicly refused on 26 February.

The petition says President Trump on 27 February ordered all agencies to “IMMEDIATELY CEASE” using Anthropic’s technology. The opinion says the Secretary made his written determination in a letter dated 3 March, emailed to Anthropic on 4 March, and that Anthropic sought review five days later.

A second designation, under 10 U.S.C. § 3252, was challenged in California. The opinion notes that the Northern District of California set that designation aside on 27 August, and says the § 3252 definition is much narrower than the one in § 4713. Our report on the Northern District of California ruling covered that decision.

What the Petition Says Is at Stake

The petition says a designation “can be crushing, even fatal: it risks expelling a contractor from wide swaths of the defense industrial base and triggers cascading reputational and commercial harm.” The petition we read puts no dollar figure on Anthropic’s own losses.

It says § 4713 had never been publicly used before, and that the broader Supply Chain Security Act had been used once, against a Swiss company with Kremlin ties. Because the D.C. Circuit’s jurisdiction over these challenges is “exclusive”, it says, the ruling will be the last word short of the Supreme Court.

The petition counts fifteen amicus briefs in support, from trade associations, former national-security officials, 149 former judges, civil-liberties groups and AI professionals. Our 25 September report on the panel ruling set out the opinion itself.

The Structural Read

As we read it, the dispute the opinion describes is narrow: two contract restrictions, on lethal autonomous warfare and domestic surveillance, that Anthropic would not drop.

As we read it, the petition’s strongest lever is the split it describes between this ruling and the Northern District of California, which set aside the parallel § 3252 designation on 27 August.

As we read it, the commercial stakes in the filings are stated in general terms: the petition calls a designation potentially “crushing, even fatal” but puts no figure on Anthropic’s losses.

Three Implications

ANTHROPIC The petition asks for rehearing by the same panel or by the full court; until the court acts, the panel’s denial of review stands.

OTHER CONTRACTORS The petition says every contractor now bargains under the ultimatum the dissent described, and that the ruling will govern every future use of § 4713.

THE DEPARTMENT OF WAR The opinion upheld its decision to exclude Claude from its supply chain; we have not seen its response to the petition.

The Business Engineer Lens

This story maps onto the Business Engineer framework Inside Anthropic’s Permission Layer.

The framework puts it this way: “It is becoming the first major AI lab actively attempting to define the governance layer of the AI stack.”

As we read it, this case is that governance layer meeting the state: Anthropic wrote two use limits into its terms, the department treated those limits as a supply-chain risk, and the courts are now deciding whose permissions govern.

What Is Not Established

The court has not ruled on the petition, and we have not seen a response from the department to it.

Separately, the Pentagon told the BBC on 5 October that it has ceased using Anthropic products. CNBC reported the petition; we did not read its article and nothing here relies on it.

The Bottom Line

As we read it, the petition turns a contract dispute over two use restrictions into a test of how far the department can go with a supply-chain label against an American AI company that sets its own rules for its models.

The panel said the statute turns on what Anthropic does, not why. The petition asks the full court to decide whether that reading leaves any contractor outside its reach.