Chinese-Controlled Ralls Corp. Can’t Challenge Order Blocking Wind Farm Purchase, Judge Rules
By David Stout | February 26, 2013 12:05 am

A federal judge has dismissed much of a lawsuit brought by a Chinese-controlled company that was blocked by President Barack Obama from operating wind farms near a Navy base in Oregon reportedly used for drone training flights.

But the judge ruled that the company could still try to show that it was deprived of its property without due process.

Judge Amy Berman Jackson of U.S. District Court for the District of Columbia rejected claims by the Ralls Corp. that Obama exceeded his authority by blocking the transaction on national security grounds. On the contrary, the judge ruled Friday, the Defense Production Act gives a president broad authority, free of court review, to stop foreign acquisitions of American businesses if he sees a security threat.

“The statute is not the least bit ambiguous about the role of the courts,” Jackson wrote. “The actions of the president…and the findings of the president…shall not be subject to judicial review.”

Last year the Committee on Foreign Investment in the United States, a secretive multi-agency panel that vets merger and acquisition transactions by foreigners for national security risks, ordered Ralls to halt construction on the Oregon property, remove all stockpiled materials and vacate the premises. After Ralls Corp. challenged the order in a Sept. 12 lawsuit, Obama on Sept. 28 exercised his executive authority to order the company to divest the wind farm.

It was the first time since 1992 that a president had blocked a transaction at the recommendation of CFIUS. Usually companies withdraw voluntarily or modify their transactions to satisfy the panel before the matter escalates to presidential action.

Jackson, however, said she would allow a separate due process claim brought by Ralls to continue. It “raises purely legal questions about the process that was followed in implementing the statute, and that claim will stand.” The judge emphasized that she was not concluding that the due process claim has any merit, “simply that it is bound to go on to decide the claim on its merits.” Accordingly, the judge directed parties to submit further briefs.

Ralls is owned by two Chinese nationals, Dawei Duan and Jialiang Wu, principals in Sany Group, a Chinese manufacturer of turbines and other equipment. It acquired the interests in the Oregon wind farms last March.

Last fall, Ralls asserted that its enterprises posed “no security threat whatsoever” to the United States. Since then, revelations of of widespread hacking of American companies by the Chinese have increased public distrust of such assertions, though CFIUS recently approved a deal by Chinese oil company CNOOC Ltd.

“Ralls only asks that the courthouse doors be kept open so that Ralls can fully challenge, on the merits, the extraordinary assertion of unlawful executive power that occurred in this case,” the company said last fall, as we reported. Former Assistant Attorney General Viet Dinh, partner at Bancroft PLLC, argued on behalf of Ralls in federal court. Bancroft’s Paul Clement, a former U.S. Solicitor General, is on the Ralls legal team as well.

Clement and Dinh, who is also a member of the board of directors of Rupert Murdoch’s News Corp., both served in the George W. Bush administration.

The only point on which Ralls moved forward was its contention that the courts should decide whether a presidential order deprived it of its property without due process of law. The judge rejected the government’s argument that the company’s claim was insubstantial. “The court does not find the claim to be so frivolous as to obviate any further consideration,” Jackson wrote.

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