Hesai Technology Co., Ltd and Hesai Inc. v. United States Department of Defense

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 19, 2026 Decided August 18, 2026

No. 25-5256

HESAI TECHNOLOGY CO., LTD AND HESAI INC.,
APPELLANTS

v.

UNITED STATES DEPARTMENT OF DEFENSE, ET AL.,
APPELLEES

Appeal from the United States District Court
for the District of Columbia
(No. 1:24-cv-01381)

James E. Tysse argued the cause for appellants. With him
on the briefs were Lide E. Paterno, Margaret O. Rusconi, and
Caroline L. Wolverton.
Urja Mittal, Attorney, U.S. Department of Justice, argued
the cause for appellees. With her on the brief were Brett A.
Shumate, Assistant Attorney General, and Sharon Swingle,
Attorney.
Before: PILLARD and GARCIA, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge GARCIA.

2

GARCIA, Circuit Judge: Federal law requires the
Secretary of Defense to annually publish a list identifying all
“Chinese military companies” operating in the United States.
In 2024, the Secretary included Hesai Technology Co., Ltd.,
and its subsidiary, Hesai, Inc. (collectively, Hesai) on that list.
Hesai sued, claiming the Secretary violated the Fifth
Amendment’s Due Process Clause and the Administrative
Procedure Act. The district court granted summary judgment
to the Secretary.
We reverse based on Hesai’s due process claim. Because
the Secretary’s designation carries reputational and legal
consequences, it implicates a protected interest. The
Constitution therefore required the Secretary to provide Hesai
notice of the unclassified materials on which he intended to
rely and a meaningful opportunity to respond before finalizing
the designation. The Secretary provided neither, and that error
was not harmless. We therefore reverse and remand so that
the Secretary may afford Hesai the process it is due.
I
A
Section 1260H of the William M. (Mac) Thornberry
National Defense Authorization Act for Fiscal Year 2021
directs the Secretary of Defense to identify “Chinese military
compan[ies]” operating in the United States. Pub. L. No. 116-
283, § 1260H, 134 Stat. 3388, 3965 (2021) (codified at 10
U.S.C. § 113 note). Each year, the Secretary must submit a
list of those companies to Congress and concurrently “publish
the unclassified portion of such list in the Federal Register.”
§ 1260H(b)(2)(A).
1
The statute sets out several categories of
companies that qualify for designation. See § 1260H(g).
Nothing in the statute expressly requires the Secretary to

1
Unless otherwise specified, citations to § 1260H are to the
version in effect on the date of publication of this opinion, as codified
at 10 U.S.C. § 113 note.

3

provide an entity notice or an opportunity to respond before
designating it a Chinese military company operating in the
United States.
An amended version of Section 1260H took effect on
December 23, 2024. See Pub. L. No. 118-159, § 1346, 138
Stat. 1773, 2123–26 (2024). Among other changes, it
expanded the grounds for designation and required the
Secretary, when he publishes the list, to include “the
justification for inclusion in such list” for each company
named. Id. at 2123; § 1260H(b)(2)(B).
Inclusion on the Section 1260H list carries concrete legal
consequences. The Secretary of Defense may not “enter into,
renew, or extend a contract for the procurement of goods,
services, or technology” with a listed company or an entity
controlled by one. National Defense Authorization Act for
Fiscal Year 2024, Pub. L. No. 118-31, § 805(a)(1)(A), (a)(2),
137 Stat. 136, 315 (2023), as amended by National Defense
Authorization Act for Fiscal Year 2026, Pub. L. No. 119-60,
§ 845, 139 Stat. 718, 977 (2025). The Department of
Homeland Security likewise may not use federal funds to enter
into a “procurement contract, memorandum of understanding,
or cooperative agreement” with, or “make a grant to, or provide
a loan or guarantee to,” a listed company or its subsidiary.
Further Consolidated Appropriations Act, 2024, Pub. L. No.
118-47, § 536, 138 Stat. 460, 622 (2024). And the
Department of Energy may not extend “any covered support,”
including a “grant, contract, subcontract, award, [or] loan,” to
one. 42 U.S.C. § 18912(a)(2), (a)(3)(B), (c)(1)–(2).
Designation also carries reputational consequences.
Because “the unclassified portion” of the Section 1260H list
must be publicly announced “in the Federal Register,”
§ 1260H(b)(2), designation “can be a blow to designated
companies’ reputations,” Idrees Ali, Alexandra Alper &
Michael Martina, Pentagon Calls Out Chinese Companies It

4

Says Are Helping Beijing’s Military, Reuters (Feb. 1, 2024),
https://perma.cc/GK6P-XQSE.
B
Hesai develops, manufactures, and sells Light Detection
and Ranging (LiDAR) products. LiDAR uses light to
measure distances and generate real-time, three-dimensional
representations of the surrounding environment. Hesai’s
products are used principally in advanced driver-assistance
systems and autonomous-vehicle fleets, where they enable
“autonomous or assisted driving systems to navigate complex
environments in a wide variety of driving conditions.” Hesai
Tech. Co. v. DOD, 792 F. Supp. 3d 22, 29 (D.D.C. 2025)
(quotation marks omitted).
The Secretary first designated Hesai as a Chinese military
company on January 31, 2024. Hesai filed this suit in May of
that year. The parties cross-moved for summary judgment,
and while those motions were pending, the Secretary informed
the district court he “had received new information relevant to
Hesai’s listing and [that he] expected to make a new decision.”
Id. at 30. On October 15, 2024, the Secretary rescinded the
initial designation and immediately redesignated Hesai. See
id. at 31; J.A. 144–45; 89 Fed. Reg. 86,230 (Oct. 29, 2024)
(providing notice of the rescission and redesignation).
Hesai amended its complaint to challenge the
redesignation under the APA and the Fifth Amendment’s Due
Process Clause. Its APA claims alleged, among other things,
that the Secretary misconstrued Section 1260H, inadequately
explained its decision, and lacked substantial evidence to
support the redesignation. Its due process claim alleged that
the Secretary failed to provide constitutionally required notice
of the materials on which it intended to rely and a meaningful
opportunity to respond before the redesignation became final.
The parties then filed new cross-motions for summary
judgment. The district court granted summary judgment to

5

the Secretary, upholding the redesignation under the APA.
Hesai Tech., 792 F. Supp. 3d at 32–48. Without deciding
whether Hesai was entitled to pre-designation process, the
court held that any due process violation was harmless because
Hesai had not shown prejudice from the alleged violations.
Id. at 48–49. Hesai appealed, and we heard oral argument in
March 2026. In June 2026, the Secretary notified us that he
had published a new Section 1260H list, which again included
Hesai. Consistent with the amended statute, the unclassified
portion of the list set forth the reasons for designating Hesai.
Notice of Availability of Designation of Chinese Military
Companies, 91 Fed. Reg. 35,189, 35,192 (June 10, 2026).
II
We begin with jurisdiction. The Secretary’s publication
of a new Section 1260H list while this appeal was pending
raises the question of whether Hesai’s challenge to the October
2024 redesignation is moot. The Secretary has not argued
mootness and thus has not carried the “heavy burden” of
establishing it. Trump v. Mazars USA, LLP, 39 F.4th 774, 785
(D.C. Cir. 2022). But because we have an “independent
obligation to ensure that appeals before us are not moot,” id.
(cleaned up), we explain why this case remains live.
Our recent decision in SZ DJI Technology Co. addressed a
similar question. There, we held that a renewed Section
1260H designation did not moot a challenge to an earlier
designation in part because the record did not show that the
earlier designation ceased to have any effect or that the
challenged conduct was unlikely to recur. SZ DJI Tech. Co. v.
DOD, No. 25-5367, slip op at 6–8 (D.C. Cir. Aug. 14, 2026).
Those considerations apply equally here. The record does not
establish that the October 2024 designation lacks continuing
reputational effect, nor does it establish that the asserted failure
to provide pre-designation process will not recur (indeed, that
asserted failure may already have recurred). Therefore, “on
the present record, this case is not moot.” Id. at 7 (cleaned up).

6

III
We review the district court’s grant of summary judgment
de novo. See Epsilon Elecs., Inc. v. Dep’t of the Treasury, 857
F.3d 913, 918 (D.C. Cir. 2017). Hesai presses APA and due
process challenges to the October 2024 redesignation. We
agree with Hesai’s due process argument and do not reach the
APA issues. See People’s Mojahedin Org. of Iran v. Dep’t of
State (PMOI), 613 F.3d 220, 227 (D.C. Cir. 2010) (per curiam)
(taking the same approach).
A
The Fifth Amendment provides that “[n]o person shall
be . . . deprived of . . . liberty[] or property[] without due
process of law.” U.S. Const. amend. V. Corporations are
“person[s]” within the meaning of the Due Process Clause, so
Hesai may invoke its protections. See Old Dominion Dairy
Prods., Inc. v. Sec’y of Def., 631 F.2d 953, 962 n.19 (D.C. Cir.
1980). “The first inquiry in every due process challenge” is
whether the government has deprived the plaintiff of a
protected liberty or property interest. Am. Mfrs. Mut. Ins. Co.
v. Sullivan, 526 U.S. 40, 59 (1999). If the challenged action
implicates such an interest, we then determine “how much
process is due.” Reeve Aleutian Airways, Inc. v. United States,
982 F.2d 594, 598 (D.C. Cir. 1993).
Hesai contends that the Section 1260H designation
implicates a protected interest under the “stigma-plus”
doctrine. Under that doctrine, “in addition to reputational
harm” a plaintiff must show that either “(1) the government has
deprived [the plaintiff] of some benefit to which [it has] a legal
right” or “(2) the government-imposed stigma is so severe that
it ‘broadly precludes’ [the plaintiff] from pursuing ‘a chosen
trade or business.’” Gen. Elec. Co. v. Jackson, 610 F.3d 110,
121 (D.C. Cir. 2010) (quoting Trifax Corp. v. District of
Columbia, 314 F.3d 641, 644 (D.C. Cir. 2003)).

7

Hesai relies on the first option, which has its roots in
Wisconsin v. Constantineau, 400 U.S. 433 (1971).
2
There, a
police chief publicly “posted” a notice “in all retail liquor
outlets” in town identifying the plaintiff as a person to whom
liquor could not be sold. Id. at 435. The posting attached a
“stigma or badge of disgrace” and legally prohibited others
from selling liquor to her. Id. at 435–37. The Supreme Court
held that “procedural due process require[d] notice and an
opportunity to be heard” before the government could take that
action. Id. at 436. As the Court later explained in Paul v.
Davis, 424 U.S. 693 (1976), the legal prohibition was critical:
The posting both damaged the plaintiff’s reputation and
deprived her of “the right to purchase or obtain liquor in
common with the rest of the citizenry.” Id. at 708. That
“alteration of legal status,” “combined with” the reputational
injury, triggered due process safeguards. Id. at 708–09.
We have long applied the same principle in the
government-contracting context. In Kartseva v. Department
of State, 37 F.3d 1524 (D.C. Cir. 1994), we explained that
government action sufficiently changes a plaintiff’s legal status
when it “formally or automatically excludes” the plaintiff
“from work on some category of future [government]
contracts.” Id. at 1528. That is, combined with reputational
harm, depriving someone of “the right to be considered for
government contracts in common with all other persons”
suffices to trigger constitutional protections. Gen. Elec., 610
F.3d at 121 (quotation marks omitted); accord Trifax, 314 F.3d
at 643.
Hesai satisfies the stigma-plus test. It is undisputed that
Hesai meets the reputational-harm component: Publication
on the Section 1260H list labels Hesai a “Chinese military

2
By contrast, in our recent decision in SZ DJI Technology Co.,
the plaintiff’s stigma-plus claim rested exclusively on the second
theory, that the designation broadly precluded it from pursuing its
chosen trade or business. Slip op. at 9–11.

8

company,” a designation that “can be a blow to a company’s
reputation.” Supra Section I.A (quoting Ali et al.); see also
J.A. 524 (sworn declaration explaining how “[t]he listing is
causing Hesai serious reputational injury”); Appellees’ Brief
53–54 (disputing only whether Hesai identified a relevant
change in legal status). And Hesai has also been deprived of
a legal right it would otherwise enjoy: Federal law makes
listed companies automatically ineligible for certain
government contracts and forms of financial assistance. See
supra Section I.A. Those statutory exclusions supply the
“plus.”
The Secretary argues that, because Hesai has not identified
“any specific contracts, benefits, grants, or loans” that it
intends to pursue but cannot because of the designation, its
claim rests on potential future effects and is therefore “unripe
and unfit for review.” Appellees’ Brief 53–54. That
argument falls flat under our case law. A deprivation of the
“right to be considered for government contracts in common
with all other persons” is the prototypical example of a
sufficient change in legal status. Gen. Elec., 610 F.3d at 121
(quotation marks omitted). And it is the disqualification from
consideration, not the withholding of any particular benefit,
that matters. Accordingly, cases applying the stigma-plus
doctrine do not require a plaintiff to go further by identifying a
specific contract or grant it imminently intends to pursue.
Similarly, in Constantineau, the Court did not ask whether the
plaintiff intended to purchase alcohol within city limits during
the one-year prohibition—the formal prohibition, combined
with the accompanying stigma, was sufficient. See 400 U.S.
at 436–37. As we put it in Trifax, “formally debarring a
corporation from government contract bidding . . . would . . .
unquestionably constitute[] a deprivation of liberty.” 314 F.3d
at 643. That is precisely what occurred here: Hesai is

9

presently excluded from opportunities available to other non-
designated companies.
3

B
Having concluded that the designation implicates a
protected interest, we turn to what process the Constitution
requires and when that process must occur. Due process
generally demands notice and an opportunity to be heard “at ‘a
meaningful time and in a meaningful manner.’” Alaska
Commc’ns Sys. Holdings, Inc. v. NLRB, 6 F.4th 1291, 1298
(D.C. Cir. 2021) (quoting Goldberg v. Kelly, 397 U.S. 254, 267
(1970)). “Absent exigent circumstances,” that process must
happen “before final deprivation.” Esparraguera v. Dep’t of
the Army, 101 F.4th 28, 40 (D.C. Cir. 2024) (cleaned up). We
have applied those principles in analogous challenges to
Foreign Terrorist Organization (FTO) designations by the
Secretary of State under the Antiterrorism and Effective Death
Penalty Act of 1996. Two such decisions are particularly
instructive here.
In National Council of Resistance of Iran v. Department
of State (NCRI), 251 F.3d 192 (D.C. Cir. 2001), two
organizations challenged the Secretary of State’s decision to
designate them collectively as one FTO. Id. at 195–96. We
held that, once the Secretary reached a “tentative
determination” to designate them, due process required her to
notify the organizations of the impending action, disclose the
unclassified materials on which she proposed to rely, and afford
them an opportunity, “at least in written form,” to rebut the
administrative record or otherwise negate the basis for

3
We note that Hesai has not disavowed an interest in pursuing
the opportunities from which it is excluded, see Reply Brief. 27–28,
30 n.4, and those opportunities are not so attenuated from its business
as to arguably render the deprivation merely theoretical. We
therefore need not and do not decide whether such circumstances
would alter the analysis.

10

designation. Id. at 208–09. And in accord with the
“fundamental norm” that notice and opportunity to respond
ordinarily come “before” a deprivation occurs, that process had
to precede the designation unless the Secretary made a
“showing of particularized need” to postpone it. Id. at 205,
208.
We later applied those requirements in PMOI, which
involved the denial of a petition to revoke an FTO designation.
613 F.3d at 222. Although the organization had been
permitted to submit evidence supporting delisting, that
opportunity was inadequate because the organization had no
chance to “rebut the unclassified portion of the record the
Secretary [of State] was compiling” before the decision
became final. Id. at 227.
We see no basis for deviating from those requirements in
the context of Chinese military designations under Section
1260H, which similarly reflect consequential judgments based
on compiled administrative records. See also Ralls Corp. v.
CFIUS, 758 F.3d 296, 318–20 (D.C. Cir. 2014) (applying NCRI
and PMOI to a Presidential Order prohibiting a corporation’s
acquisition of four other companies under the Defense
Production Act of 1950). And the Secretary’s process here did
not comply with them. It is undisputed that the Secretary
redesignated Hesai without providing Hesai the unclassified
materials on which he intended to rely or an opportunity to
respond before finalizing the decision. Hesai was “notified of
the Secretary’s decision and permitted access to the . . . record
only after the [re-listing] decision was final.” PMOI, 613 F.3d
at 227.
The Secretary offers two responses, but neither succeeds.
First, the Secretary contends that pre-designation process
was unnecessary because Section 1260H serves national-
security interests. Appellees’ Brief 57–60. NCRI rejected a
similar argument. There, the Secretary of State invoked both

11

the importance of national security and the sensitive nature of
the information underlying FTO designations to argue that
process could be postponed until after designation. 251 F.3d
at 207. We acknowledged that the national security context
could affect what process was due—for example, by permitting
certain measures to protect classified information—but
explained that it did not, without more, justify postponing that
process. Id. at 207–08.
At the same time, NCRI held out the possibility that
postponement could be warranted based on a “particularized”
showing that “earlier notification would impinge upon the
security and other foreign policy goals of the United States.”
Id. at 208. As an example, we cited Palestine Information
Office v. Shultz, 853 F.2d 932 (D.C. Cir. 1988), which upheld
the closing of a foreign mission without advance hearing given
the “changeable and explosive nature of contemporary
international relations” and the resulting need for prompt
action. NCRI, 251 F.3d at 207 (cleaned up). By contrast, in
NCRI itself, it was “not immediately apparent how the foreign
policy goals of the government . . . would be inherently
impaired by” notifying the organizations that the Secretary of
State intended to designate them an FTO. Id. at 208.
Here, the Secretary of Defense gestures at a more specific
concern: He states that advance notice might allow
designated entities to “obscure their ties to foreign
governments” by “spinning off assets to create new entities,
concealing their ownership, or otherwise shielding relevant
information about their activities.” Appellees’ Brief 58–59.
But the Secretary has not explained in a “particularized” way
how notifying Hesai—a publicly-traded company—that the
Secretary intends to designate it and providing the unclassified
evidence on which he intends to rely would lead to the types of
evasive actions the Secretary posits. NCRI, 251 F.3d at 208.
Nor is that connection “immediately apparent.” Id. In fact,
any such connection is especially difficult to discern here given

12

that Hesai had already been designated. That is, Hesai already
knew it was on the Secretary’s radar for inclusion on the
Section 1260H list. The Secretary does not identify what
additional incentive for evasion notice of the impending
redesignation would have created.
The Secretary also invokes Calero-Toledo v. Pearson
Yacht Leasing Co., 416 U.S. 663 (1974), to justify departing
from the default of pre-deprivation process. Appellees’ Brief
58. But that case, like Palestine Information Office, only
underscores what is missing here. There, the Court upheld the
seizure of a yacht under a forfeiture statute without advance
notice. Postponement of process was permissible in that
“extraordinary” situation because, among other things, there
was a “special need for very prompt action,” and providing
advance notice could have allowed the yacht to be removed
from the jurisdiction, destroyed, or concealed, thereby
frustrating the seizure. Pearson, 416 U.S. at 677–80. Here,
by contrast, the Secretary has not shown how advance notice
and an opportunity to respond would similarly frustrate the
designation process.
Second, the Secretary argues, as the district court held, that
any procedural violation was harmless. The Secretary urges
that Hesai has neither identified what additional evidence it
would have submitted to contest the designation nor explained
how such evidence might have affected the Secretary’s
decision. Appellees’ Brief 60–61. NCRI and PMOI again
mark our path. In NCRI, we expressly acknowledged that we
had “no reason to presume that the petitioners in this particular
case could have offered evidence which might have either
changed the Secretary’s mind or affected the adequacy of the
record.” 251 F.3d at 209. We granted relief anyway, because
“without the due process protections we ha[d] outlined, we
[could not] presume the contrary either.” Id. Similarly, we
held in PMOI that even if the administrative record otherwise
appeared sufficient, the designation could not stand “absent the

13

procedural safeguards required by our precedent.” 613 F.3d at
227; see also id. at 228 (refusing to assume that “nothing the
PMOI would have offered . . . could have changed [the
Secretary’s] mind”). In neither case did we demand the kind
of evidentiary showing the Secretary contends should be
required here.
Our hesitancy to find harmless error in this context fits
with the general principle that an agency’s “utter failure to
comply” with required procedures “cannot be considered
harmless if there is any uncertainty at all as to the effect of that
failure.” Sprint Corp. v. FCC, 315 F.3d 369, 376 (D.C. Cir.
2003). Here, the uncertainty concerns not just what additional
evidence Hesai might have submitted, if any. Due to the lack
of any pre-deprivation process, Hesai also was unable to
respond to the unclassified evidence the Secretary intended to
rely upon and tailor its arguments accordingly, before the
Secretary made a final decision. See PMOI, 613 F.3d at 227
(emphasizing that PMOI was unable to “rebut the unclassified
portion of the record the Secretary [of State] was compiling”).
Hesai’s awareness of the original determination did not
mitigate this concern because the final decision differed from
the original designation in “important respects.” Hesai Tech.,
792 F. Supp. 3d at 31. Before redesignating Hesai, the
Secretary informed the district court it had “new information
relevant to Hesai’s listing and expected to make a new decision
on whether Hesai would remain on the [January 2024] 1260H
list.” Hesai Tech., 792 F. Supp. 3d at 30 (cleaned up). And
the new decision did in fact “add[] several bases and evidence
to justify the listing.” Id. at 31.

14

On this record, we “cannot presume” that an opportunity
to respond before the Secretary’s decision became final would
have had no effect. NCRI, 251 F.3d at 209.
C
The remaining question is remedy. In NCRI and
PMOI, despite finding due process violations, we declined to
vacate the designations at issue while the government cured
those violations, citing “the realities of the foreign policy and
national security concerns asserted by the Secretary in support
of those designations.” NCRI, 251 F.3d at 209; see PMOI, 613
F.3d at 230–31. The fact that Hesai has been redesignated in
the Secretary’s 2026 list arguably undercuts the national
security interests at stake here, but that fact also undercuts the
significance of vacating the Secretary’s designation. We
accordingly see no reason to deviate from the course indicated
by NCRI and PMOI, and we remand without vacating the 2024
designation before us.
IV
The district court’s judgment is reversed, and the case is
remanded to the district court with instructions to remand the
matter to the Secretary for further proceedings consistent with
this opinion.
So ordered.