Defense Secretary Pete Hegseth has denied Anthropic’s request to reconsider the AI startup’s designation as a national security risk, the Pentagon told the D.C. Circuit Court of Appeals on Thursday.
The move clears the way for a three-judge panel to decide the novel questions raised in Anthropic’s lawsuit challenging the Defense Department’s designation and the scope of its powers over domestic companies. Judges raised concerns last month that the courts may have to wait for the Pentagon to handle Anthropic’s reconsideration request before they can take up the case.
The dispute between the leading AI firm and the government began over disagreements over Anthropic’s restrictions on use of its products in domestic surveillance and autonomous weapons.
The panel, including two appointees of President Donald Trump, indicated during oral arguments in March that it will likely issue a ruling that establishes sweeping authority for the executive branch to label domestic companies supply-chain risks. The designation has historically been reserved for foreign companies with ties to U.S. adversaries. The judges, though, suggested that subsequent directives barring the military or other agencies from using a company’s products and services may still be challenged in court.
Hegseth wrote in his June 3 decision that the “pre-deployment risks with the Covered Entity’s products and services, the loss of trust, and other risk factors … were and remain sufficient to support the prior Determination.” The Pentagon urged the court to decide the urgent questions raised in the case now that the Defense Department has closed out Anthropic’s request for internal review.
Hegseth also clarified that the initial supply-chain risk designation rested on that loss of trust and other “pre-deployment risks” associated with Anthropic’s Claude, rather than the company’s supposed ability to unilaterally manipulate the AI model in real time — post-deployment. Anthropic has argued that it does not actually possess that capability, saying Hegseth initially relied on a misunderstanding.
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