Last week, the D.C. Circuit issued two opinions summarized below but also heard oral argument in the much-discussed dispute between AI developer Anthropic and the Defense/War Department. Let’s start with the oral argument.

A panel of the D.C. Circuit comprised of Judges Henderson, Katsas, and Rao heard oral argument in Anthropic PBC v. U.S. Department of War et al., No. 26-1049, which arises out of the government’s public rupture with Anthropic earlier this year after the company declined to remove two restrictions on the use of its AI model involving lethal autonomous warfare and surveillance of American citizens. Rather than winding down its relationship with Anthropic through ordinary procurement channels, the Department invoked the rarely used Supply Chain Security Act, 41 U.S.C. § 4713, designated Anthropic a national security risk, and sought immediately to halt use of the company’s products. Anthropic contends the Department violated both the procedural and substantive requirements of § 4713, as well as the company’s constitutional rights The same panel previously denied Anthropic’s request for a stay pending an expedited review.

At oral argument, the panel pressed counsel on both sides, focusing in particular on whether the “black box” nature of Anthropic’s AI systems justified the government’s risk designation and whether less intrusive mechanisms existed for terminating the contractual relationship. With the caveat that a judge’s questions at oral argument may not be an accurate prediction of how she will rule, Judge Henderson, who appeared remotely, leveled sharp criticism at the Department, describing its supply-chain designation as “a spectacular overreach,” while Judge Rao seemed sympathetic to the Department’s argument that the court should not be second-guessing national security risk determinations made by the Department.

Kelly Dunbar of WilmerHale argued the case for Anthropic and Sharon Swingle of the Department of Justice argued the government’s position.

The National Historic Preservation Act protects historic sites threatened by federally funded development projects. Under the Act, federal agencies must “take into account the effect of the undertaking on any historic property.” 54 U.S.C. § 306108. Agencies also must consult with any Indian tribe that “attaches religious and cultural significance” to property eligible for inclusion on the National Register of Historic Places. 54 U.S.C. § 302706(a), (b). Related regulations require agencies and stakeholders to either (i) adopt a formal “memorandum of agreement” or (ii) establish alternative mitigation measures when projects threaten historic resources via “programmatic agreements.” 36 C.F.R. §§ 800.3, 800.6, and 800.14. In developing those alternatives, agencies must consult with, among others, “affected Indian Tribes.” 36 C.F.R. § 800.14(f).

The dispute in Anthropic PBC v. U.S. Department of War et al., No. 26-1049, arose out of Rhode Island’s long-running effort to reconstruct an I-95 bridge in Providence. The Federal Highway Administration (FHA) concluded the project would adversely affect the Providence Covelands Archaeological District, a site of religious and cultural significance to the Narragansett Indian Tribe, though not part of tribal lands. In 2011, the FHA executed a first programmatic agreement with state agencies and the Tribe’s Historic Preservation Officer. That agreement contemplated the transfer of certain properties to the Tribe, but negotiations ultimately stalled. After years of impasse, the FHA proposed alternative mitigation measures in 2018. The Tribe objected, but discussions continued. The FHA ultimately executed a second programmatic agreement with several state agencies and invited the Tribe to join as a signatory. The Tribe declined and filed suit, alleging inadequate consultation, improper exclusion as a required signatory, and arbitrary-and-capricious agency action. The district court granted summary judgment to the FHA. It concluded the FHA had engaged in adequate consultation with the Tribe, the Tribe was not a required signatory to the Agreement, and the FHA had not acted arbitrarily or capriciously in reaching a different programmatic agreement the second time  

Judge Millett, writing for a unanimous panel that also included Judges Walker and Pan, concluded the Tribe had standing but failed on the merits. On standing, the panel held the Tribe had alleged a concrete and redressable injury because the asserted failure to consult properly created a procedural injury that could have affected the outcome. The panel also rejected the argument that an earlier standing ruling collaterally estopped the Tribe, concluding the prior decision had not reached a sufficiently “full and conclusive determination.”

On the merits, however, the panel rejected each of the Tribe’s claims. First, the Court held the Tribe was properly treated as an “invited signatory” rather than a “required signatory” because the Covelands site, while culturally significant, was located off tribal lands. See 36 C.F.R. § 800.6(c). Second, the Court concluded the FHA had adequately consulted with the Tribe by affording it repeated opportunities to participate in discussions, raise objections, and shape mitigation proposals. The fact that the Tribe ultimately disagreed with the agency’s decision did not render the consultation process defective. Third, the panel found no arbitrary or capricious conduct, concluding the agency reasonably explained both the changes between the first and second programmatic agreements and the alteration in the Tribe’s signatory status.

In Anthropic PBC v. U.S. Department of War et al., No. 26-1049, the D.C. Circuit reviewed dismissal of claims for defamation, defamation by implication, and false light invasion of privacy arising out of the revocation of Castillo’s membership in the National Academy of Sciences. Castillo was expelled in 2021 following a former student’s allegations of sexual harassment. NAS informed its membership that Castillo had been removed for violating the organization’s Code of Conduct and provided comment to a news outlet for an article titled “Sexual harassment investigation triggered ejection of Luis Jaime Castillo Butters.” NAS also posted publicly on its website: “Luis Jaime Castillo Butters; NAS Code of Conduct violation, Section 4; membership rescinded.”

An opinion authored by Senior Judge Ginsburg and joined by Judge Pan, the D.C. Circuit affirmed dismissal of the defamation-by-implication claim but reversed dismissal of the defamation and false-light claims. The Court reasoned that the district court failed adequately to appreciate the “two-layered” nature of the allegedly defamatory statements: not only whether NAS in fact made the statements, but whether the underlying misconduct actually occurred. Castillo alleged he had not violated Section 4 of the Code of Conduct, which proscribes conduct including sexual harassment, and the Court concluded that allegation was sufficient at the pleading stage to render the statements potentially defamatory. Applying similar reasoning, the panel also reinstated the false-light claim.

The Court nevertheless affirmed dismissal of the implied-defamation claim, concluding Castillo failed plausibly to allege that NAS intended or endorsed the allegedly defamatory inference arising from its comments to the press that NAS members should serve as role models and adhere to the highest standards of professional conduct.

Judge Henderson concurred in part and dissented in part. In her view, the implied-defamation claim should also have survived dismissal because the NAS statements had to be evaluated in the context of the article as a whole, not in isolation. The majority responded that third-party editorial content could not properly be attributed to NAS because the organization was not responsible for the article’s headline, which supplied the allegedly defamatory implication.