A small Chinese firm has sued US President Barack Obama for quashing its bid to build wind farms close to a US naval training site, but experts say the suit is long shot for a firm that greatly underestimated US suspicions about Chinese intentions.
Ralls Corp (羅爾斯), which is owned by two Chinese nationals, was installing wind turbines close to the training site in Oregon, which, according to the facility’s Web site, is used to test unmanned drones — a highly sensitive and prized US technology.
Obama put the brakes on the project last week and ordered Ralls to sell off the four planned wind farms due to national security risks, the first time since 1990 that a US president has formally blocked a business transaction or required a sale on such grounds. Ralls has until Dec. 27 to comply.
In its suit, made public on Tuesday, Ralls alleges Obama exceeded his power by dictating the terms of the sale, by allowing the government to inspect all aspects of its operations, and by not treating the firm equally as required by law.
The lawsuit comes in the final weeks of the US presidential campaign, during which Obama’s Republican rival Mitt Romney has accused the president of not pushing back against China’s trade and investment practices.
Obama’s order followed a recommendation from the Committee on Foreign Investment in the United States (CFIUS), an inter-agency group headed by the US Secretary of the Treasury Timothy Geithner, that evaluates the national security risks of foreign investments in US companies or operations.
Ralls initially sued CFIUS last month for ordering the company to halt operations temporarily while the committee completed its probe.
Its chances of winning the suit are slim given the president’s broad authority on national security and the fact that courts do not often second guess the executive branch on security issues, experts say.
“It’s a very, very difficult case,” said Ivan Schlager, a partner with Skadden, Arps, Slate, Meagher & Flom, who is in charge of the firm’s CFIUS practice. “The statute was crafted to give the president a great deal of discretion and authority to act to protect the national security interests of the US.”
A Treasury spokeswoman said the administration believes the lawsuit has no merit and would defend its case vigorously. In issuing the rare presidential order, Obama said there was credible evidence that led him to believe that Ralls and the Chinese Sany Group Co (三 一集團) executives who own the company might take actions that threaten US security.
The statement did not get into the specifics of the risk, but experts have said that the government was likely to have been wary of any potential for espionage.
Ralls Corp said the government has not given any evidence or explanation.
The company’s three other wind-farm projects are located close to the training facility.
According to court documents, the US Navy said the company should be obliged to move the wind farm located in the restricted airspace to another spot, even though it had no authority to require the move.
Hundreds of wind turbines are already located close to the Oregon training site, according to maps included in the court documents filed by Ralls. The maps also show that a handful of turbines are already operating within the restricted airspace.