{"schema":"sanctity-signal/0.2","record_type":"signal","id":"dc-circuit-anthropic-fascsa-e033","domain":"governance","drop_id":"signal-e033","occurred_at":"2026-09-25","how_to_use":"This is a structured record of one real-world action and its competing interpretations, from Sanctity Signal. To build content from it (a reel script, a blog, a thread): open on the hook, ground the viewer with plain and observed, walk the dated trail, present the interpretations as live tension between named readings, and close on the before/after shift and what_to_watch. Hard rules: items under established are fact; items under unknown are never presented as fact; the evidence status (verified or reported) is stated, not dropped; sources are cited.","actor":"US Court of Appeals for the District of Columbia Circuit","action_type":"appellate judgment denying petitions for review","observed":"Friday September 25, 2026. The United States Court of Appeals for the District of Columbia Circuit issued its opinion in Anthropic PBC v. United States Department of War, No. 26-1049, argued May 19, 2026 and decided September 25, 2026. The panel was Circuit Judges Karen LeCraft Henderson, Gregory Katsas and Neomi Rao. Judge Katsas wrote for the majority, joined by Judge Rao; Judge Henderson dissented. Disposition: the petitions for review were denied. The statute is the Federal Acquisition Supply Chain Security Act of 2018, at 41 U.S.C. section 4713, which lets an agency exclude a source it finds presents a supply chain risk. The majority held the Department acted \"not because of its advocacy, but because Anthropic refused to agree to a contract term\" the Department considered necessary, that post-deprivation notice satisfied due process where there is a \"need to move quickly,\" and that review under the Administrative Procedure Act is \"deferential\" and asks only whether the action was \"reasonable and reasonably explained.\" Judge Katsas wrote that the Department \"had ample support for its conclusion that the continued integration of Claude into the department's information systems ... presented a statutorily covered national-security risk,\" that \"the nub of this dispute was contractual, and the First Amendment did not require the Department to continue a contractual relationship that it viewed as creating a national-security risk,\" and that the Department \"reasonably feared that Anthropic might manipulate Claude's design to prevent it from performing national-security functions.\" Judge Henderson's dissent argued that reading the word manipulate neutrally \"renders an unnerving amount\" of the statute \"mere surplusage,\" and that the law does not treat a contractor's honest and upfront enforcement of its own published restrictions as a ground for exclusion. The dated record behind it: in early 2026 the Department sought to change its Anthropic contract to permit all lawful use, replacing limits on mass surveillance and autonomous weapons; Anthropic refused by the Department's February 27 deadline; Secretary Pete Hegseth directed the designation on February 27; it was announced March 3, notice reached Anthropic March 4, Anthropic filed its petition March 9, a supplemental notice with the full record followed March 19, the D.C. Circuit denied a stay on April 8 without reaching the merits, and the Secretary denied reconsideration on June 3. The earlier terminated contract was worth about 200 million dollars. What the designation does: it lets the Department remove Claude from its own systems and bars its contractors from using Anthropic products for Department work. It does not exclude Anthropic from the rest of the federal government. The parallel case is Anthropic PBC v. U.S. Department of War, No. 26-cv-01996 in the Northern District of California before Judge Rita Lin, who granted a preliminary injunction on March 26 and on August 27 set the designation aside under the narrower definition in 10 U.S.C. section 3252, which requires adversarial intent. The D.C. Circuit distinguished that ruling on the ground that section 4713's definition omits the word adversary and reaches any person. Anthropic said it \"respectfully disagrees,\" that \"another federal court has already held the government's parallel designation unlawful,\" and that it is \"considering all options, including further review.\" Secretary Hegseth posted: \"Confirmed: @AnthropicAI = Supply Chain Risk. The @DeptofWar does what is right for the Country.\" Matt Schruers, president of the Computer and Communications Industry Association, said the ruling \"should alarm any government contractor\" and that the designation is \"a tool normally reserved for foreign adversaries\" and \"must be used with discretion and proper procedure, not as punishment for a company over a disagreement.\" Charlie Bullock of the Institute for Law and AI noted that Judges Katsas and Rao have historically shown great deference to administration assertions on national security. Anthropic is reported to be preparing a listing as early as November.","corrections":[],"evidence":{"status":"verified","note":null,"sources":[{"role":"primary","label":"D.C. Circuit opinions issued September 25, 2026, listing No. 26-1049 Anthropic PBC v. United States Department of War","url":"https://media.cadc.uscourts.gov/opinions/bydate/2026/9"},{"role":"primary","label":"Anthropic PBC v. United States Department of War, No. 26-1049 (D.C. Cir. Sep 25, 2026), opinion text","url":"https://law.justia.com/cases/federal/appellate-courts/cadc/26-1049/26-1049-2026-09-25.html"},{"role":"corrob","label":"CNN: Federal appeals court rules Pentagon's blacklist of Anthropic was legal, Sep 25","url":"https://www.cnn.com/2026/09/25/tech/anthropic-pentagon-blacklist-dc-ruling"},{"role":"corrob","label":"Defense One: Anthropic loses legal fight to shed DOD's designation as a supply-chain risk, Sep 25","url":"https://www.defenseone.com/threats/2026/09/anthropic-lawsuit-supply-chain-risk/416252/"},{"role":"corrob","label":"CCIA statement on the D.C. Circuit ruling, Sep 25","url":"https://ccianet.org/news/2026/09/tech-industry-concerned-by-dc-court-ruling-in-pentagon-anthropic-dispute"}]},"strength":{"cost":"High","commitment":"High","reversibility":"Hard","persistence":"Years","rationale":"This is the most expensive kind of action in the set, because a court spent institutional capital and produced something that binds. Cost is high: the case was argued in May, decided in September, and produced a signed published opinion with a dissent, which is the most a circuit panel can spend. Commitment is high because a published circuit opinion is precedent that the government will cite in the next designation and that every contractor's counsel will now read. Reversibility is hard rather than impossible: en banc rehearing and Supreme Court review both exist, Judge Lin's August 27 order still stands, and the Ninth Circuit has the government's appeal, so the law here is unsettled in a way the D.C. Circuit alone cannot fix. Persistence is years, which is the honest floor: even if Anthropic wins later, the reading that published safety restrictions can be a statutory supply chain risk is now in the reports and available to any agency that wants it. We are not scoring the reaction. We are scoring one panel ruling in one circuit that another court has already contradicted."},"shift":{"prior":"A lab's published limits on what its model may be used for were a safety commitment the government had to work around.","action":"Friday September 25, 2026. The United States Court of Appeals for the District of Columbia Circuit issued its opinion in Anthropic PBC v. United States Department of War, No. 26-1049, argued May 19, 2026 and decided September 25, 2026. The panel was Circuit Judges Karen LeCraft Henderson, Gregory Katsas and Neomi Rao. Judge Katsas wrote for the majority, joined by Judge Rao; Judge Henderson dissented. Disposition: the petitions for review were denied. The statute is the Federal Acquisition Supply Chain Security Act of 2018, at 41 U.S.C. section 4713, which lets an agency exclude a source it finds presents a supply chain risk. The majority held the Department acted \"not because of its advocacy, but because Anthropic refused to agree to a contract term\" the Department considered necessary, that post-deprivation notice satisfied due process where there is a \"need to move quickly,\" and that review under the Administrative Procedure Act is \"deferential\" and asks only whether the action was \"reasonable and reasonably explained.\" Judge Katsas wrote that the Department \"had ample support for its conclusion that the continued integration of Claude into the department's information systems ... presented a statutorily covered national-security risk,\" that \"the nub of this dispute was contractual, and the First Amendment did not require the Department to continue a contractual relationship that it viewed as creating a national-security risk,\" and that the Department \"reasonably feared that Anthropic might manipulate Claude's design to prevent it from performing national-security functions.\" Judge Henderson's dissent argued that reading the word manipulate neutrally \"renders an unnerving amount\" of the statute \"mere surplusage,\" and that the law does not treat a contractor's honest and upfront enforcement of its own published restrictions as a ground for exclusion. The dated record behind it: in early 2026 the Department sought to change its Anthropic contract to permit all lawful use, replacing limits on mass surveillance and autonomous weapons; Anthropic refused by the Department's February 27 deadline; Secretary Pete Hegseth directed the designation on February 27; it was announced March 3, notice reached Anthropic March 4, Anthropic filed its petition March 9, a supplemental notice with the full record followed March 19, the D.C. Circuit denied a stay on April 8 without reaching the merits, and the Secretary denied reconsideration on June 3. The earlier terminated contract was worth about 200 million dollars. What the designation does: it lets the Department remove Claude from its own systems and bars its contractors from using Anthropic products for Department work. It does not exclude Anthropic from the rest of the federal government. The parallel case is Anthropic PBC v. U.S. Department of War, No. 26-cv-01996 in the Northern District of California before Judge Rita Lin, who granted a preliminary injunction on March 26 and on August 27 set the designation aside under the narrower definition in 10 U.S.C. section 3252, which requires adversarial intent. The D.C. Circuit distinguished that ruling on the ground that section 4713's definition omits the word adversary and reaches any person. Anthropic said it \"respectfully disagrees,\" that \"another federal court has already held the government's parallel designation unlawful,\" and that it is \"considering all options, including further review.\" Secretary Hegseth posted: \"Confirmed: @AnthropicAI = Supply Chain Risk. The @DeptofWar does what is right for the Country.\" Matt Schruers, president of the Computer and Communications Industry Association, said the ruling \"should alarm any government contractor\" and that the designation is \"a tool normally reserved for foreign adversaries\" and \"must be used with discretion and proper procedure, not as punishment for a company over a disagreement.\" Charlie Bullock of the Institute for Law and AI noted that Judges Katsas and Rao have historically shown great deference to administration assertions on national security. Anthropic is reported to be preparing a listing as early as November.","update":"Those limits are a supply chain risk the government may lawfully exclude you for, and the exclusion reaches your customers' contractors too."},"inference":{"established":["On September 25, 2026 the D.C. Circuit denied Anthropic's petitions for review in No. 26-1049 by two votes to one, with Judge Katsas writing, Judge Rao joining and Judge Henderson dissenting, leaving the Department of War's section 4713 supply chain risk designation in force.","The majority held that the Department's action was contractual rather than retaliatory, that post-deprivation process was adequate, and that the Department had ample support for finding a covered national security risk.","The designation bars Department staff and Department contractors from using Anthropic products for Department business, and does not reach the rest of the federal government.","A federal judge in the Northern District of California set aside the parallel designation on August 27, 2026 under 10 U.S.C. section 3252, and the D.C. Circuit distinguished that ruling because section 4713 does not require showing the supplier is an adversary."],"unknown":["That Anthropic has lost. En banc rehearing and Supreme Court review are both open, Judge Lin's order stands, and the Ninth Circuit has not ruled.","That Claude is unsafe or was found to be. The court reviewed whether the Department's reasoning was adequate, not whether its fear was correct.","That other agencies will follow. No other department has made a section 4713 designation of an AI supplier, and nothing in the opinion requires one.","That Anthropic's listing or revenue is materially impaired. No filing quantifies the loss, and the Department work at issue was one contract of about 200 million dollars."]},"narrative":{"hook":"A federal appeals court said the Pentagon may shut Anthropic out because Claude refuses some military work.","plain":"On September 25 the D.C. Circuit, by two votes to one, denied Anthropic's challenge to the Pentagon's designation of it as a supply chain risk, which bars Defence Department staff and its contractors from using Claude for Department business. The court held that the dispute was about a contract term Anthropic would not accept rather than about Anthropic's public criticism, so the First Amendment did not require the Department to keep buying. The caveat that matters is that this does not end the fight: a federal judge in California set aside a parallel designation under a different statute on August 27, that ruling still stands, and Anthropic can ask the full D.C. Circuit or the Supreme Court to look again.","story":["Strip out the subject matter and this is an ordinary administrative law case, decided the ordinary way. An agency made a finding, wrote down its reasons, gave notice, and considered a request to reconsider. A court asked whether that was reasonable and reasonably explained, said yes, and declined to substitute its own judgement. Two of the three judges had already signalled in April, when they refused a stay, that they would weigh the military's unwillingness to keep an unwanted vendor heavily. The First Amendment argument failed on a narrow point that is hard to argue with on its own terms: the Department stopped buying because Anthropic would not sign a clause, and refusing to sign a clause is not speech the government punished.","What makes it a signal is the clause. Anthropic would not agree to all lawful use, which in plain terms means mass surveillance and autonomous weapons, and it said so in public rather than quietly. The majority's answer is that the Department could reasonably fear Anthropic would design Claude so it would not do the things the Department wants, and that this fear is enough to trigger a statute written for foreign hardware. Judge Henderson's dissent puts the consequence plainly: if enforcing your own published restrictions counts as manipulation, most of the statute stops doing any work. Every lab that publishes a usage policy now knows what the American state can do about it, and an industry body that represents the buyers as well as the sellers said within hours that this should worry any contractor. Those limits are a supply chain risk the government may lawfully exclude you for, and the exclusion reaches your customers' contractors too."],"trail":[{"d":"FEB 27","t":"Anthropic refuses the Department's deadline to permit all lawful use of Claude; the Secretary directs the supply chain risk designation the same day."},{"d":"MAR 26","t":"Judge Rita Lin enjoins the parallel designation in the Northern District of California; she sets it aside on August 27 under the narrower defence statute."},{"d":"APR 8","t":"The D.C. Circuit denies a stay without reaching the merits, saying the balance of equities favours the government. Argument follows on May 19."},{"d":"SEP 25","t":"The panel denies the petitions two to one. Katsas writes, Rao joins, Henderson dissents. Hegseth posts the result. Anthropic says it is considering further review."},{"d":"Reacts","r":true,"t":"Every frontier lab that publishes a usage policy, because the policy is now a designation risk; Defence Department contractors who had Claude in their tooling and must remove it; OpenAI, Google and xAI, who hold the Department work Anthropic does not; the Computer and Communications Industry Association and the procurement bar, who read this as a precedent about process rather than about AI; Anthropic's bankers and the investors in a listing reported for as early as November, who now have a ruling to price; the Ninth Circuit, which still has the government's appeal of Judge Lin's order and now has a circuit split to consider; the Supreme Court, if Anthropic petitions; the Institute for Law and AI and the other groups that filed briefs; and every general counsel at a supplier that has ever told the federal government no."}],"glossary":[{"term":"Supply chain risk designation","def":"A finding under the Federal Acquisition Supply Chain Security Act that a supplier endangers government systems. It was written for hardware and foreign adversaries, and it lets an agency exclude the supplier without a normal procurement process."},{"term":"41 U.S.C. section 4713","def":"The section used here. It permits exclusion of any person found to present a supply chain risk and, unlike the defence-specific section 3252, does not require showing the supplier is an adversary."},{"term":"Petition for review","def":"A challenge filed directly in an appeals court against an agency decision, rather than a lawsuit started in a trial court. Denying it leaves the agency decision in force."},{"term":"En banc","def":"A rehearing by all the judges of an appeals court rather than the three who decided the case. It is granted rarely and is Anthropic's first route to reverse this."}]},"judgment":{"prompt":"Which explanation do you believe?","interpretations":[{"id":"a","label":"A published safety limit is now a legal liability in the United States.","text":"The Department's stated fear was that Anthropic would design Claude so it would not do what the military wants. A court called that a statutory supply chain risk. Any lab that writes down what it will not do has just learned what the state can do back.","abstain":false},{"id":"b","label":"A narrow contract dispute that turned on one clause.","text":"Anthropic refused a term, the Department stopped buying, and the court said refusing a term is not speech. The opinion rests on that and says nothing about safety policy in general. A second court reading a narrower statute reached the opposite result, which is what unsettled law looks like.","abstain":false},{"id":"c","label":"The administration using procurement as a weapon, and a friendly panel letting it.","text":"The designation was directed on the day the deadline passed, the tool is one normally aimed at foreign adversaries, and it went to a panel whose two majority judges defer heavily to national security claims. The industry body's reaction was about process, not about AI.","abstain":false},{"id":"d","label":"Ordinary deference, working the way it always does.","text":"Courts have reviewed agency exclusions this way for decades. The standard is whether the reasoning was reasonable and explained, the record was supplemented in March, reconsideration was denied in June, and the panel declined to second-guess a military judgement. Nothing about AI changed the method.","abstain":false},{"id":"e","label":"Too early to call.","text":"The evidence cannot yet separate these.","abstain":true}],"distribution":{"status":"held back until you have made your call","calls":null}},"story_thread":"anthropic-war-court-e004","what_to_watch":[{"linked_interpretation":"a","direction":"strengthens","observable_event":"A second federal agency issues a supply chain risk or equivalent exclusion of an AI supplier and cites the supplier's own usage restrictions or model behaviour policy as a reason, by June 30, 2027.","window_end":"2027-06-30","state":"unresolved"},{"linked_interpretation":"a","direction":"weakens","observable_event":"The D.C. Circuit grants rehearing en banc, or the Ninth Circuit affirms Judge Lin, or the Supreme Court grants review and the designation is vacated or stayed, by June 30, 2027.","window_end":"2027-06-30","state":"unresolved"}]}