Chinese Company Sues Obama for Blocking Wind Farm Deal

on Oct 3, 2012

Ralls, a small Chinese company, plans to sue US President Barack Obama for blocking its wind farm projects because of allegations that they pose a threat to national security. Jialiang Wu and Dawei Duan, the two owners of the company, claim that the decision made by the president was unconstitutional and violates the legal process and their property ownership rights. Ralls would like to have the ban overturned or be compensated for the losses incurred.

The wind farm project was first challenged by the Committee on Foreign Investment in the US (CFIUS), the governmental agency which decides whether foreign takeovers of American businesses could be a threat to national security. According to the Financial Times, after Ralls bought the farms it did not submit a formal notification to the CFIUS and the committee found out about the acquisition only after seeing it reported in Wind Power Monthly. In June the committee issued an order and halted all construction work on the project on the grounds that one of the sites was situated in restricted airspace used by the US Navy and the other three were within five miles proximity.

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As reported by the FT, Ralls decided to file a lawsuit against CFIUS and hired two high-profile lawyers from the Bush administration to represent them in court – Paul Clement, former solicitor-general, and Viet Dinh, who used to be assistant attorney-general. In mid-September the Chinese company surprisingly won an agreement from the government that it could carry on with some of its building work until a formal decision by President Obama was made.

!m[](/uploads/story/513/thumbs/pic1_inline.png)On September 28 the US president decided to block the project: “There is credible evidence that leads me to believe that Ralls Corporation … might take action that threatens to impair the national security of the United States.” In the president’s order there is a brusque explanation on why this decision was taken and a rather detailed list of instructions for Ralls – the company has to sell its holdings within 90 days and remove all equipment, structures and even the concrete foundations from the sites within 14 days.

According to lawyers quoted by the FT, Ralls will be in for a tough legal process as US courts in general are reluctant to challenge decisions made by the CFIUS or the president where national security is concerned.
“It’s going to be very difficult to get a judge to intervene, given that traditionally agencies are given a wide amount of discretion,” opined Josh Zive, a lawyer with Washington-based Bracewell & Giuliani “When it comes to the deference given to the executive branch on national security and foreign policy, the deference is even greater.”

President Obama’s order to enforce the CFIUS ruling is the second of its kind in the history of the US, the only other one being issued in 1990 by George H.W. Bush, who blocked companies backed from the Chinese government from buying Mamco Manufacturing, a Seattle-based aerospace company.
Presidential candidate Mitt Romney has attacked Obama on a number of occasions blaming him for China’s trade advantage over the US. The Ralls’ case might prove as a strong counterargument to Romney’s accusations and could also serve as a deterrent to other Chinese companies thinking of starting projects in the US.
“The president’s decision is specific to this transaction and is not a precedent with regard to any other foreign direct investment from China or any other country.” said the Obama administration.


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