The Pentagon has to give a company notice before branding it a Chinese military company, and the company that won that ruling is still on the list

Hesai won, and nothing about its listing changed.

The D.C. Circuit held on Tuesday that the Secretary of Defense violated the Fifth Amendment when he named the Chinese lidar maker a Chinese military company without first telling it what the evidence was. Then the court declined to strike the designation, and sent the case back for the Secretary to do the process properly.

Hesai makes light detection and ranging sensors, used mostly in driver assistance systems and autonomous vehicle fleets. Section 1260H of the 2021 defence authorisation act requires the Secretary to publish an annual list of Chinese military companies operating in the United States. Hesai first appeared on it on 31 January 2024. It sued in May. In October the Secretary rescinded that designation and relisted the company the same day, which is the decision this appeal is about.

What the list does to a company

Three statutes attach to a name on it. The Defense Department may not enter into, renew or extend a procurement contract with a listed company or anything it controls. Homeland Security may not spend federal money on a contract, agreement or grant with one, or lend to it. The Energy Department may not extend covered support.

That combination is what won the case. The court applies a test it calls stigma plus, which needs reputational damage and a change in legal status. The government conceded the reputation half. On the second half it argued Hesai had not pointed to any particular contract it was shut out of, and the court answered that the exclusion from being considered at all is the deprivation, and no specific lost contract is required.

The Secretary said notice would help companies hide

The government offered two defences and lost both.

The first was that national security justified acting first and explaining later. The court accepted that the setting can change what process is due, and not that it removes it, drawing on its own line of cases about foreign terrorist organisation designations. The Secretary said advance warning would let designated entities obscure ties to foreign governments by spinning off assets or concealing ownership. Judge Garcia, writing for the court, replied that no particularised account was given of how telling a publicly traded company it was about to be relisted would produce that, and that the connection is harder to see here because Hesai already knew it was on the list.

The second was that the failure was harmless because Hesai never said what it would have argued. The court refused that too, noting the relisting rested on new material the company had never seen, and that the second decision added bases and evidence the first one did not have.

The remedy is the part to read twice

Having found a constitutional violation, the court remanded without vacating the 2024 designation. It followed two earlier cases where it did the same thing, and it noted the awkwardness plainly: the Secretary published a fresh list in June 2026 with Hesai on it again, which cuts against the urgency of the national security interest and also cuts against the point of striking down the older designation.

So the judgment below is reversed, the case goes back to the district court, and the district court sends it to the Secretary. The company stays listed while that happens. The court did not reach Hesai's separate argument that the Secretary misread the statute and lacked the evidence, and it says so.

Four days earlier the same court decided a similar case brought by the drone maker SZ DJI Technology, which this opinion cites on whether a fresh listing makes a challenge to an older one moot. It does not.