Ralls Continues to Fight Presidential Divestiture Order Stemming from CFIUS Investigation

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Ralls Corp., a privately-held company owned by executives of the China-based heavy machinery manufacturing conglomerate Sany Group, recently filed an appeal in its ongoing effort to avoid President Obama’s order requiring the company to divest itself of its interest in four wind farms in Oregon. We have previously reported on the order, which was issued by the president on the recommendation of the Committee on Foreign Investment in the U.S. (CFIUS) and followed a similar CFIUS order. The CFIUS order was withdrawn following issuance of the executive order. Our earlier articles can be found at http://www.lawofrenewableenergy.com/tags/ralls-corp/.

On February 7, Ralls Corp. filed an appeal of the D.C. Circuit Court’s October ruling that Ralls Corp. was not deprived of due process and that it was not entitled to know the specific basis for the executive order. The appeal asserts, among other things, that the district court erred in finding that Ralls Corp. has no constitutionally protected interest in the wind projects and in granting undue discretion to the president to prohibit a transaction on national security grounds. Ralls Corp. takes particular issue with the federal government’s failure to state with specificity the factual basis for the orders and to give Ralls Corp. an opportunity to address and rebut such a statement.

Separately, the US government has initiated a civil action to force the sale of the wind projects, which are located adjacent to a US Naval facility that is believed to be used to test unmanned drones and other electronic warfare equipment, as required by the executive order.

A successful outcome for Ralls Corp. seems unlikely, given the deference the judicial branch has historically given the executive branch with respect to matters of national security. The ongoing dispute continues to serve as a reminder of the extensive authority of CFIUS and the president to intervene in transactions to protect national security interests and, therefore, the importance of notifying CFIUS of transactions that may concern national security.

 


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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