Ralls asks judge to hear wind-farm case

Updated: 2012-11-29 12:25

By Zhang Yuwei in New York and Cai Chunying in Washington (China Daily)

  Print Mail Large Medium  Small 分享按钮 0

Ralls asks judge to hear wind-farm case

Ralls Corp, owned by executives of Chinese industrial giant Sany Group, asked a federal judge in Washington on Wednesday to hear its case against US President Barack Obama's decision to scrap the purchase of four wind-farm projects near a US navy facility in Oregon.

Lawyers for Ralls told US District Judge Amy Berman Jackson at a two-hour hearing that the Georgia company's rights were violated by the Sept 28 move to bar the wind-farm deals due to an unspecified national-security risk. The company also argues that it hasn't been given a chance to address the Obama administration's concerns.

Viet Dinh, one of the lawyers representing Ralls, said the company was informed of the national-security reservations "out of the blue".

"We do not know whether it's locational or whether it's equipment-related or the height of the tower," Dinh told Jackson at Wednesday's hearing. "We've been asked to disprove a negative in an entire universe of negatives."

Ralls, which is incorporated in Delaware and operates out of Peachtree City, Georgia, is privately owned by two Chinese nationals - Duan Dawei, chief financial officer of Sany Group, and Wu Jialiang, a Sany vice-president and general manager of subsidiary Sany Electric Co.

"Bringing this to the court is really the last thing we want to do, as we all know going to court is a big deal in any country, either in China or the US," Wu told China Daily after the hearing.

"Had we been given fair treatment and the opportunity to discuss this decision, we wouldn't have come this far," he said.

Ralls had been seeking to build or acquire US wind farms where electricity-generating turbines manufactured by Sany could be used. In March 2010, Oregon Windfarms sold four small farms to the US arm of Greek company Terna Energy, which later sold them to Ralls. Installation of the turbines began in April of this year.

The US Navy, however, expressed concern over one of Ralls' wind farms because of its proximity to restricted airspace above a military base. Ralls agreed to relocate the wind farm and acceded to the Navy's request to pursue additional approvals from Oregon's Public Utility Commission.

In late June, Ralls and Terna submitted a voluntary notice about the wind farms to the Committee on Foreign Investment in the United States, or CFIUS, which often reviews sensitive transactions by foreign entities. According to Ralls, CFIUS, at a meeting with the two companies after their notice was filed, didn't cite evidence it had obtained or specify any action it was considering.

"By failing to provide Ralls with sufficient notice and opportunity to be heard prior to prohibiting its acquisition of the wind farms and imposing extraordinary restrictions on the use and enjoyment of its property interests, CFIUS and the president have unconstitutionally deprived Ralls of its property absent due process," Ralls said in an amended complaint filed with the court in October.

Defending Obama's decision, the Justice Department argued that Jackson should dismiss Ralls' lawsuit because the federal Defense Production Act prohibits judicial review of a presidential order to block the foreign acquisition of a US business. The administration has no obligation to explain the reasoning behind its decision, the department said.

Jackson didn't rule on the government's request to dismiss Ralls' lawsuit.

Legal experts say the suit is almost sure to be thrown out, but they also agree that the case won't likely have much impact on Chinese investment in the US.

"The Exon-Florio amendment specifically exempts presidential decisions such as this from judicial review, so Ralls' lawsuit has virtually no chance of being successful," said Clif Burns, a lawyer with Washington firm Bryan Cave LLP who specializes in export controls and economic sanctions. He was referring to a federal law enacted in 1988 that provides for scrutiny of foreign investments.

"I don't think that Obama's decision to block (the wind-farm deals) will have much effect on future Chinese investment in the US because of the unique security concerns posed by this investment, given that the wind farm is located quite close to a military drone testing facility," Burns said.

Ann Lee, a New York University economics professor and author of What the US Can Learn from China, agreed.

"I don't think this case will have an impact over other Chinese investments especially if they're smaller transactions that don't involve technology or natural resources," she said.

"The case will be a near impossibility to win, since rarely do private interests have the resources or political capital to go against a government which makes all the rules," Lee added. "It will be a good way for the Chinese to get experience working the US legal system even if they lose."

But Ralls argued on Wednesday that Obama's move could cost the company at least the $20 million it has spent on design and construction since acquiring the Oregon sites.

Wu, the Sany executive who is one of Ralls' co-owners, wouldn't say when asked by China Daily if he thought the case has been politicized. He insisted that neither company would do anything that could pose a threat to US national security.

"We just want to do business here, and help the local economy with job creation," Wu said. "But CFIUS' decision labeled us a 'national security' risk without further evidence and ordered us to end the project without any mention of compensation or anything.

"Equipment we've designed and made for this project cannot be used somewhere else given the (wind) specifics in this area, so no doubt there is quite a loss on us."

Wu also said, "CFIUS has done this to other Chinese companies, too, so we hope bringing our case through legal channels will make CFIUS realize that it should show justice toward all Chinese companies, and provide evidence of decisions they make."

Contact the writers at yuweizhang@chinadailyusa.com