The U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) ruled July 15 that President Obama’s September 2012 order requiring Ralls Corporation (Ralls) – on the basis of national security concerns – to divest itself of four Oregon wind farms deprived Ralls of its Fifth Amendment property rights without due process. The D.C. Circuit remanded the case to the district court with instructions that Ralls, a U.S. company owned by Chinese nationals, be provided access to the unclassified evidence on which the president based his decision and an opportunity to rebut such evidence.
In the summer of 2012, the Committee on Foreign Investment in the United States (CFIUS), a U.S. government interagency that reviews the national security implications of foreign acquisitions, reviewed Ralls’s acquisition of the wind farms, which are located near a U.S. Navy training facility. CFIUS imposed certain restrictions on Ralls, including a prohibition on Ralls’s access to the wind farms, and the president followed up with his divestment order.
One should not necessarily conclude that the D.C. Circuit’s decision will lead to a reversal of the substantive outcome in this case – Ralls being stripped of its ownership of the wind farms – but the case is significant for the due process requirements that it imposes on the president and for its potential implications for future CFIUS cases. We are continuing to review the D.C. Circuit’s decision and may provide additional commentary as warranted.