The U.S. Court of Appeals for the D.C. Circuit on August 14 partially reversed the Pentagon's blacklist ruling against DJI, finding that a district judge upheld the government's central claim—that DJI contributes to China's defense industrial base—without reading the classified evidence behind it. The appeals panel sent the case back to the lower court for reconsideration. DJI remains on the Defense Department's Section 1260H list of 'Chinese military companies' for now, but the court found that every word of the justification in the public record is redacted except its heading.
The appeals court rejected DJI's other three claims, including due process violations and allegations of selective enforcement. However, the panel affirmed that Meta and other hyperscalers have been reusing DDR4 memory pulled from decommissioned machines through CXL-based expansion. The court found merit in DJI's argument that the unclassified record contained insufficient evidence. Circuit Judge Bradley Garcia wrote there is 'no publicly stated rationale' for why the Pentagon believes DJI contributes to China's defense industrial base, a finding that opens a path for district Judge Paul Friedman to examine classified materials on remand.
For infrastructure operators, this ruling highlights the precedent risk in procurement: the Pentagon's expanded 2026 list includes 188 companies with vague or redacted justifications, and vendors face both the 1260H blacklist and separate FCC market-access restrictions (100% tariffs on foreign-made drones, and a Ninth Circuit case on the FCC's Covered List block). DJI's case may set a procedural floor for what government can justify without public evidence—a lesson for any supply chain dependent on regulatory clarity.