Cybersecurity Policy Report, Federal Court Gives DJI Another Chance to Challenge DoD Restrictions, (Aug 17, 2026)

By Lynn Stanton

The U.S. Court of Appeals for the District of Columbia Circuit has directed a lower court to reconsider its decision granting summary judgment against drone maker SZ DJI Technology Co. Ltd (DJI) in its lawsuit challenging the secretary of Defense’s designation of the company as a “Chinese military company” operating in the U.S., pursuant to a provision of the National Defense Authorization Act (NDAA) of 2021.

In doing so, the district court should consider the classified materials submitted by the Department of Defense, the appeals court directed.

The lower court had “relied only on the unclassified record,” which contained no explanation of the secretary’s conclusion that “DJI contributes to the Chinese industrial base,” and “found no need to examine the unredacted version of the Secretary’s report,” Circuit Judge Bradley N. Garcia said in writing for the appeals court panel, SZ DJI Technology Co., Ltd., and SZ DJI Baiwang Technology Co., Ltd., v. U.S. Department of Defense et al., Dkt. 25-5367 (Aug. 14, 2026).

Subsequent to oral argument in this case, “the Secretary informed us that he had published a new Section 1260H list, which again included DJI. The new list—subject to the requirement that it ‘shall include’ the ‘justification for [each entity’s] inclusion,’ § 1260H(b)(2)(B) —states the reasons for listing DJI as follows:

“DJI is indirectly affiliated with [the State-Owned Assets Supervision and Administration Commission of the State Council] and is directly affiliated with [the Chinese Ministry of Industry and Information Technology] and the People’s Armed Police (PAP) (Section 1260H(g)(2)(B)(i)(I)). DJI is a military-civil fusion contributor to the Chinese defense industrial base because it knowingly received assistance from the Government of China through science, technology, research, and industrial efforts initiated, granted, or created by, or provided under, or related to, the Chinese military industrial planning apparatus, or in furtherance of Chinese military industrial planning objectives through multiple designations, such as a ‘Single Champion’ designation; it is affiliated with [the Chinese Ministry of Industry and Information Technology], and it resides in or is affiliated with a military-civil fusion enterprise zone,” Judge Garcia wrote.

The fact that “the statute defines the entire phrase ‘military-civil fusion contributor’ raises the question whether the statute imposes a separate requirement that the company ‘contribute’ to the Chinese defense industrial base, or instead automatically renders any company that fits one of the criteria in Subsection (g)(3) a ‘contributor.’ See Hesai Tech. Co. v. Dep’t of Def., 792 F. Supp. 3d 22, 37–38 (D.D.C. 2025) (considering but rejecting the argument that there is no separate contribution requirement). But because the parties in this case agree that the statute imposes a distinct contribution requirement, we assume without deciding that the Secretary had to make that finding,” Judge Garcia said.

“On that assumption, the district court’s analysis cannot stand. The Secretary’s report contained a section titled ‘DJI Contributes to the Chinese Defense Industrial Base,’ but every word of that section except for the heading was redacted in the unclassified record. J.A. 273–74. There is, in other words, no publicly stated rationale for why the Secretary believes DJI contributes to the Chinese defense industrial base,” he continued.

“Rather than examine the Secretary’s classified basis for that finding, the district court relied on arguments in the Secretary’s briefing and information drawn from other sections of the report to find that DJI’s operations satisfied the court’s definition of ‘contribut[e].’ SZ DJI Tech. Co. v. Dep’t of Def., 2025 WL 2761210, at *16–17 (D.D.C. Sept. 26, 2025). That approach is a straightforward violation of the Chenery principle: Courts ‘must judge the propriety of [agency] action solely by the grounds invoked by the agency,’” he added.

“The district court’s grant of summary judgment is affirmed in part and reversed in part, and the case is remanded for further proceedings not inconsistent with this opinion,” he concluded.

Judge Garcia was joined in the decision by Chief Judge Sri Srinivasan and Circuit Judge Robert L. Wilkins.

Separately, DJI has challenged the inclusion of its communications and video surveillance equipment and services on the FCC’s “covered list” equipment and services deemed to be a national security risk to the nation’s communications networks (CPR, May 5).

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