U.S. Court Throws Out Chinese CFIUS Challenge
A U.S. federal court has thrown out a Chinese-owned company’s claim that it was denied due process when its purchase of several Oregon wind farms located near a naval installation was blocked by President Barack Obama and the Committee on Foreign Investment in the United States.
Ralls Corp., a company started by two executives of Chinese state-owned heavy-equipment maker Sany Group Co., had planned to install turbines built by Sany in the wind farms. After the president prohibited the deal last year, Ralls sued him and CFIUS, the interagency body which reviews transactions for national security issues and makes recommendations to the president, in an attempt to overturn the decision.
U.S. District Judge Amy Jackson in D.C. dismissed most of Ralls’s claims in February, ruling that the president’s decision was not subject to judicial review. But she allowed Ralls to proceed with its claim that it had a right under the Fifth Amendment of the U.S. Constitution to know the reasons for the president’s decision and to try to rebut them.
In an Oct. 10 decision, the judge rejected Ralls’s due process claim as well, finding that the company had failed to show it had a protected interest and that it had had sufficient process in any case. She noted that Ralls had initially proceeded with its transaction without seeking CFIUS review, which it could have done.
“Because Ralls had the ability to obtain a determination about whether the transaction would have been prohibited before it acquired the property rights allegedly at stake, but it chose not to avail itself of that opportunity, Ralls cannot predicate a due process claim now on the state law rights it acquired when it went ahead and assumed that risk,” the judge said.
In ruling that Ralls had had sufficient process already, she noted that the company had stated its position that its acquisitions posed no national security issues in its submission to CFIUS and that it had also communicated and met with the committee before it issued any order.
“[A]n analysis of the undisputed facts reveals that Ralls was given notice before the decision was made, and that it was heard,” Judge Jackson wrote, “so its constitutional claim is predicated solely on its assertion that it was entitled to know the president’s reasons for prohibiting the transaction—or at least the nonclassified reasons—and to have an opportunity to rebut those reasons specifically.”
But the judge said the president had a valid national security interest in withholding the evidence that informed his decision. She also noted that affording Ralls an opportunity to address the president’s reasoning would serve little purpose, since the statute that created the CFIUS process gave the president broad discretion and specifically barred the courts from reviewing his decision.
Ralls had cited a number of cases involving the secretary of State’s designation of foreign terrorist organizations, arguing that it should be given due process similar to groups challenging such designations. But Judge Jackson noted that the relevant statute in those cases provided for limited judicial review while the CFIUS one did not.
Viet Dinh of Bancroft represented Ralls, while Joel McElvain of the U.S. Department of Justice appeared for CFIUS.