U.S. government and Chinese company settle wind farm lawsuit

Global Business

Photo by Sany company.

Attorneys for the Ralls Corporation, a U.S. company affiliated with one of China’s largest machinery and equipment company the Sany Group, announced that they have settled their lawsuit against the U.S. government on Wednesday.

The company sued the Committee on Foreign Investment in the United States (CFIUS) and President Barack Obama in 2012 for barring their wind farm project in Oregon.

CCTV’s Jessica Stone reports.

Chinese firm\'s settlement with U.S. govt sets big precedent

Investing in companies in the U.S. can be vital to the expansion plans of foreign businesses. But it isn't always easy and many hurdles need to be jumped. A recent court victory by a Chinese-owned company Sany Group could help more foreign companies trying to invest in the United States. CCTV's Jessica Stone reports.

Follow Jessica Stone on Twitter @JessicaStoneTV

Ralls had purchased four wind farm projects in Boardman, Oregon, but the Obama Administration — on the recommendation of the U.S. Treasury Department which chairs the CFIUS — later ordered that the project be sold to another company due to national security risks after it was determined it was located located next to a U.S. Naval Weapons Systems Training Facility.

The move marked the first time since 1990 that a U.S. president formally blocked a business transaction or required a sale on such grounds, Reuters reported.

The Oregon wind farm site that Sany originally purchased.

The Oregon wind farm site that Sany originally purchased. (Photo by Sany)

In its lawsuit, the company said that Obama exceeded his powers by dictating the terms of the sale, allowing the government to inspect all aspects of its operations, and by not treating the firm equally as required by law.

The Ralls company announced Wednesday that it has dismissed its suit, and that the U.S. government has also dismissed it’s pending enforcement suit against Ralls.

Under the terms of the settlement, Ralls can sell its four properties to a third-party purchaser chosen by Ralls to whom the U.S. government had previously objected, the company’s attorneys said in a statement. That buyer is investor Dr. Xiuexin Tang.

The settlement also says that CFIUS determined that the Ralls company’s acquisitions “have not raised national security objections, and that Ralls and the Sany Group are welcome to submit future transactions and investments to CFIUS for review,” the statement said.

The company had previously prevailed against the U.S. government in the U.S. Court of Appeals for the District of Columbia Circuit when the court ruled that Obama’s order blocking the acquisition by Ralls deprived the company of its “constitutionally protected property interests without due process of law.”

U.S. District Court ruling on Ralls Corp. v. Committee on Foreign Investment in the United States

The court ruled that Ralls cannot be deprived of a vested property interest without first receiving notice of the intended decision, access to the unclassified evidence supporting the conclusion, and an opportunity to rebut that evidence, the company’s statement said.

The U.S. court also said that the government’s review process by CFIUS is “susceptible to judicially manageable standards” which means that if a foreign company is unhappy with a decision by CFIUS, they can now challenge the process in court.

“I suspect in the future if some companies, foreign companies, feel their rights infringed by the process, they can follow the roadmap, laid down by this case,” said Sany attorney Tim Xia.

As part of the settlement, the U.S. government approved two new Sany windfarms, one in Colorado and one in Texas, which is already generating 20 megawatts of wind power for the nation.

“From the beginning of this case, we have defended our property rights under the United States Constitution and our rights to due process. In the face of a prolonged legal battle in which the court of appeals had already ruled in Ralls’ favor, the U.S. Government worked with Ralls to mitigate any remaining CFIUS concerns,” David Liu the general manager of Ralls said.

“This is a favorable settlement for all parties and a win of the U.S. legal system.”

Stephen Heifetz on foreign investment in the US

CCTV America spoke to Stephen Heifetz, a partner at Steptoe & Johnson LLP about the role of the Committee on Foreign Invesntment in U.S. (CFIUS).

Stephen Heifetz on foreign investment in US

CCTV America spoke to Stephen Heifetz, a partner at Steptoe & Johnson LLP about the role of the Committee on Foreign Invesntment in U.S. (CFIUS).