A presidential order that blocked the sale of some Oregon wind units to Ralls Corp., a firm owned by Chinese nationals, suffered a legal setback July 15 before the U.S. Court of Appeals for the District of Columbia Circuit.
In 2012 President Obama issued a presidential order saying that the purchase of four wind projects in Oregon should be blocked as a threat to national security. Now, a three-judge panel for the D.C. Circuit has reversed an earlier decision by a U.S. District Court judge who dismissed a challenge by Ralls, which had argued that it was denied due process.
“In sum, we conclude that the Presidential Order deprived Ralls of constitutionally protected property interests without due process of law,” the D.C. Circuit held. “We remand to the district court with instructions that Ralls be provided the requisite process set forth herein, which should include access to the unclassified evidence on which the President relied and an opportunity to respond thereto.”
Ralls has bought four limited liability companies involved in Oregon wind power in March 2012. The transaction quickly came under scrutiny from the Committee on Foreign Investment in the United States (CFIUS), an Executive Branch committee created by the Defense Production Act of 1950 (DPA). Although Ralls is an American corporation, the transaction fell within the ambit of the DPA because both of Ralls’s owners are Chinese nationals.
CFIUS concluded that the Ralls purchase threatened national security and issued temporary orders restricting further construction at the sites. The matter was then submitted to the president, who also concluded that the transaction posed a threat to national security. He issued a permanent order that prohibited the transaction and required Ralls to divest itself of the project companies.
At the District Court level, Ralls argued that neither CFIUS nor the President (collectively, with Treasury Secretary and CFIUS Chairman Jacob Lew provided Ralls with the opportunity to review and challenge the evidence behind the order.
CFIUS includes the Secretaries of Treasury, Homeland Security, Commerce, Defense, State and Energy; the Secretary of Labor and the Director of National Intelligence, who participate as non-voting, ex officio members; the United States Attorney General; and other officials as the President deems appropriate.
Ralls is an American company incorporated in Delaware with its principal place of business in Georgia. Ralls is owned by two Chinese nationals, Dawei Duan and Jialiang Wu. Duan is the chief financial officer of Sany Group, a Chinese manufacturing company, and, at the time of the transaction at issue, Wu was a Sany vice-president and the general manager of Sany Electric.
Ralls’s amended complaint asserts that “Ralls is in the business of identifying U.S. opportunities for the construction of wind farms.
Ralls bought the Butter Creek projects
In March 2012, Ralls purchased the project companies, which are four American-owned, limited liability companies: Pine City Windfarm, LLC; Mule Hollow Windfarm, LLC; High Plateau Windfarm, LLC; and Lower Ridge Windfarm, LLC. The project companies were developed by Oregon Windfarms LLC and the project companies are collectively known as the Butter Creek projects.
In 2010 Oregon Windfarms sold its interests to Terna Energy USA Holding. Terna sold the projects to Intelligent Wind Energy, a Delaware company owned by U.S. Innovative Renewable Energy, LLC (USIRE). USIRE sold IWE to Ralls.
The Butter Creek projects had certain assets that included power purchase agreements with PacifiCorp and transmission connections.
The Butter Creek project sites are located in and around the eastern region of a restricted airspace and bombing zone maintained by the U.S. Navy. Three of the sites are located within seven miles of the restricted airspace while the fourth––Lower Ridge––is located within the restricted airspace.
After the Navy urged Ralls to move the Lower Ridge site “to reduce airspace conflicts between the Lower Ridge wind turbines and low-level military aircraft training.” Ralls relocated the windfarm but it remains within the restricted airspace.
Ralls’s complaint alleges that Oregon Windfarms has developed nine other wind projects (Echo Projects) in the same general vicinity as the Butter Creek projects and that all nine use foreign-made wind turbines. According to Ralls, seven turbines used by the Echo Projects are located within the restricted airspace and one of the nine Echo Projects––Pacific Canyon––is currently owned by foreign investors.
Ralls also maintains there are “dozens if not hundreds” of existing turbines in or near the western region of the restricted airspace.
Ralls Corp. versus Committee on Foreign Investment in the U.S. et al is D.C. Circuit Case No. 13-5315.