Obama blocks Chinese co wind acquisition

Monday, October 1, 2012

President Obama has blocked a Chinese-owned company's acquisition of four Oregon wind farm development companies, citing "credible evidence" that the company "might take action that threatens to impair the national security of the United States."

Wind energy project Ralls Corporation had acquired four wind project development companies in Oregon earlier this year.  Those companies -- Lower Ridge Windfarm, LLC, High Plateau Windfarm, LLC, Mule Hollow Windfarm, LLC, and Pine City Windfarm, LLC -- were developing wind projects in or near restricted airspace at the Naval Weapons Systems Training Facility in Boardman, Oregon. Ralls is owned by two executives of Chinese wind turbine manufacturer Sany Group, whose turbines were to used in the Oregon projects.

Earlier this summer, as Ralls acquired the project companies from Terna Energy USA Holdings Corporation, the Committee on Foreign Investment in the United States (CFIUS) began to review the transactions.  The CFIUS -- an interagency panel whose purpose is to review transactions that could result in the control of a U.S. business by a foreign person in order to determine the effect of such transactions on the national security of the United States -- determined that "there are national security risks to the United States that arise as a result of the Transaction" and issued a series of orders compelling Ralls and the project companies to cease work and stay away from the project sites.

In an order issued last Friday, President Obama formally prohibited the transaction, and ordered Ralls to divest itself of the project companies and their assets within 90 days.  Ralls is prohibited from selling the companies and assets until it removes everything from the project sites, and must give the CFIUS an opportunity to reject the proposed third-party buyer.  The order cites Section 721 of the Defense Production Act of 1950 as authority.  The Ralls order appears to be the first presidential exercise of this power since 1990, when President George Bush issued an order banning the China National Aero-Technology Import and Export Corporation from acquiring a Seattle-based aerospace developer.

Ralls has reportedly challenged the order in a lawsuit filed with the U.S. District Court in Washington, D.C.

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