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Chinese firm sues Obama over ban on wind farm

Company linked to heavy machinery giant Sany in fight to overturn 'national security' ruling

PUBLISHED : Wednesday, 03 October, 2012, 12:00am
UPDATED : Wednesday, 03 October, 2012, 6:45pm

A Chinese-owned company has sued US President Barack Obama over his decision to bar its Oregon wind-farm project as a national security risk, claiming the order violates its constitutional rights.

Ralls, a Delaware-based company owned by two executives of the mainland's biggest machinery manufacturer, on Monday added the president to a lawsuit filed on September 12 that challenged a ruling by the committee on foreign investment in the United States (CFIUS), that blocked the deal.

"The physical and regulatory takings of Ralls's property interests constitute unconstitutional takings in violation of the US Constitution, deprive Ralls of its property interests absent due process, and violate Ralls's constitutional right to equal protection," according to the amended complaint.

The challenge to Obama follows presidential campaign charges by Republican challenger Mitt Romney that Obama had been too soft on China.

Obama's order blocking Ralls from acquiring the wind-farm assets was the first time in 22 years a president has blocked a transaction on national security grounds.

Ralls, which is owned by executives of Sany Group, was seeking to place Sany-made wind turbines at the Oregon installations after buying land and other rights earlier this year.

The assets consisted of four sites near or within restricted navy air space, the Treasury department, which heads the CFIUS committee, said last week. The decision should not be viewed as a precedent for any other investment from China, Treasury said.

In the area around the sites the navy conducts training for bombing, electronic combat manoeuvres and develops drones, according to the base's website.

Obama ordered Ralls to remove all property and installations from its sites within two weeks and divest all of its interests in the wind-farm project within 90 days.

The amended complaint includes claims that Obama acted beyond the powers of the presidency.

"It's going to be very difficult to get a judge to intervene, given that traditionally agencies are given a wide amount of discretion," said Josh Zive, a lawyer with Bracewell & Giuliani in Washington who has handled CFIUS cases. "When it comes to the deference given to the executive branch on national security and foreign policy, the deference is even greater."

Ralls continues "to show its profound faith in transparency and due process, and seeks only fair treatment under the law and the constitution", said Tim Xia, a lawyer who represents Ralls.

CFIUS is a committee headed by Treasury Secretary Timothy Geithner that reviews security implications of transactions that could lead to a non-US citizen controlling a US business.

The heads of the departments of Justice, Homeland Security, Commerce, Defence, State, and Energy also sit on the committee.

The president's order replaced an interim one issued by CFIUS in July when it told the company to stop operations and keep out of development sites it bought near a navy weapons facility, according to Ralls' lawsuit.

CFIUS rulings are rarely referred to the president but resolved some other way, according to a report to Congress covering 2008 to 2010.

The last transaction blocked on CFIUS grounds was by then-president George Bush in 1990 in the proposed acquisition of Mamco Manufacturing, a maker of motors and generators based in Washington state, by China National Aero-Technology and Export Corp.

US District Judge Amy Berman Jackson in Washington already has said she could not review the president's decision because of the deference that she was legally obliged to give on national security issues. She called for a deal to be reached.

Sany Group is the owner of China's biggest machinery maker. Duan Dawei, Sany's chief financial officer and Wu Jialiang, a vice-president of the group and general manager of Sany Electric, a group unit, own Ralls, according to court filings.

Ralls bought the wind-farm assets without reporting the transaction to CFIUS, according to a filing in the case.

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