DJI v. DoD
The D.C. Circuit affirmed in part, reversed in part, and remanded DJI’s challenge to its designation as a Chinese military company under Section 1260H, holding that most of DJI’s claims failed but that the district court could not uphold the Secretary of Defense’s separate finding that DJI contributes to China’s defense industrial base without examining the agency’s stated, classified rationale.
What it does The court held that DJI’s challenge was not moot despite a newer 2026 designation. It rejected DJI’s due-process claim because the company did not show the designation broadly precluded its chosen business, upheld substantial-evidence support for the finding that DJI knowingly received Chinese government assistance through military-industrial planning efforts, and rejected the claim that the Secretary had to explain why other companies were not listed. It vacated the contribution-related portion of the judgment and remanded for the district court to review the classified record, while applying the Chenery rule against post hoc agency rationales.
Who it affects The decision directly affects DJI and the Department of Defense, and provides guidance for entities listed under the Section 1260H Chinese military company regime. Inclusion can restrict federal contracting and certain Department of Energy benefits and cause reputational harm.
Why it matters The opinion confirms deferential review of evidentiary inferences supporting 1260H designations but requires courts to evaluate the agency’s actual rationale for a determination, including classified material where authorized, rather than supply explanations from litigation briefing.
Key dates and numbers
- Section 1260H was enacted in 2021 and amended in 2024.
- DJI was listed in October 2022, January 2024, January 2025, and June 2026.
- The court decided the appeal on August 14, 2026, after argument on February 6, 2026.
- Appeal No. 25-5367 was remanded for further proceedings.