EXCLUSIVE: Pete Hegseth's Pentagon Forced Back Into Court Over Secret Evidence Used to Brand Drone Giant DJI a Chinese 'Military' Company
Pete Hegseth's Pentagon is locked in a legal battle with Chinese drone giant DJI over its designation as a Chinese 'military' company.
Sept. 10 2026, Published 6:30 p.m. ET
Pete Hegseth's Pentagon has been forced back into court over secret evidence used to brand global drone giant DJI a Chinese "military" company, RadarOnline.com can reveal.
According to court documents obtained by Radar, the U.S. Court of Appeals for the Washington, D.C., Circuit handed DJI a partial victory after finding a lower court improperly upheld a key portion of the Defense Department's decision without reviewing the government's classified justification.
Pete Hegseth's China Blacklist Fight
Hegseth's Pentagon has repeatedly placed DJI on its list of Chinese military companies.
Companies on the list face serious consequences, including being barred from certain federal contracts.
The legal battle centers on Section 1260H, which requires the Secretary of Defense to identify companies operating in the United States that qualify as "Chinese military companies."
DJI, which manufactures consumer and commercial drones sold worldwide, has repeatedly appeared on the Pentagon's list. The company challenged its designation, arguing it violated due process, lacked sufficient evidentiary support, and was inadequately explained.
The Pentagon concluded DJI was a "military-civil fusion contributor to the Chinese defense industrial base" and alleged the company knowingly received assistance from the Chinese government through science and technology efforts connected to China's military industrial planning apparatus.
Court Questions Hidden Justification
DJI has challenged the Pentagon's decision to classify the drone giant as tied to China's military.
But one crucial portion of that explanation was kept from public view.
The appellate judges noted that every word explaining why the Defense Department believed DJI actually "contributes" to China's defense industrial base was redacted from the unclassified record. The court said there was therefore "no publicly stated rationale" for that finding.
Instead of reviewing the classified explanation, the district court relied on other parts of the record and arguments made by government lawyers to uphold the designation. The appeals court ruled that approach could not stand, finding the lower court had effectively supplied reasoning that may not have been the Pentagon's own basis for its decision.
Judges Reject Pentagon Logic
The appeals court said the lower court could not rely on reasoning that was not publicly stated by the Pentagon.
The judges also rejected the government's attempt to rely on other evidence in the public record after the fact, writing that courts cannot substitute new legal arguments for the grounds actually invoked by an agency.
DJI did not score a complete victory. The appeals court rejected three of the company's four main arguments, including its due-process challenge and its contention that there was insufficient evidence it received Chinese government assistance.
The Pentagon pointed to DJI's recognition as a National Enterprise Technology Center in China and alleged that status brought benefits including tax breaks, cash subsidies, and financial support from state-owned funds.
Case Sent Back to Court
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The D.C. Circuit sent the dispute back for further proceedings involving the Pentagon's classified evidence.
The stakes are significant. Companies placed on the Section 1260H list cannot contract with the Defense Department or Department of Homeland Security and can also be barred from receiving certain Department of Energy grants, contracts, and loans.
The Pentagon has since placed DJI on a new 2026 list, citing additional alleged connections to Chinese state entities, the People's Armed Police and military-civil fusion programs.
The D.C. Circuit sent the disputed issue back to the district court, where the judge may now examine the classified record and determine whether the Pentagon's designation can ultimately be upheld. The court also left open whether DJI or its attorneys could receive some form of access to the secret material.
