Nov. 28 (Bloomberg) -- An affiliate of Sany Group Co., China’s biggest machinery maker, urged a U.S. judge to consider its lawsuit challenging President Barack Obama’s decision to block a corporate transaction on national security grounds.
Lawyers for Ralls Corp. told U.S. District Judge Amy Berman Jackson during a hearing today that Obama violated the company’s constitutional rights by shutting down a planned Oregon wind-farm project without explanation or any opportunity to seek to change the president’s mind.
“Out of the blue we get an order saying ‘national security’,” Viet Dinh, a lawyer for Ralls, said during today’s two hour argument in Washington. “We do not know whether it’s locational or whether it’s equipment related or the height of the tower. We’ve been asked to disprove a negative in an entire universe of negatives.”
The Justice Department said the lawsuit must be dismissed, arguing the Defense Production Act bars judicial review of presidential orders suspending or prohibiting an acquisition of a U.S. business by a foreign person.
The statute “clearly states that findings and actions are precluded from judicial review,” Joel McElvain, a Justice Department lawyer, told Jackson, who didn’t rule on the government’s request.
Ralls, based in Delaware, is “actually controlled” by Sany, even though the listed legal owners are two of the group’s executives, Zhou Qing, Sany’s in-house lawyer, said in an Oct. 3 telephone interview.
Obama’s Sept. 28 order requiring Ralls to divest the wind-farm assets was the first time in 22 years a president has blocked a transaction on national security grounds. Obama was added as a defendant to a lawsuit filed Sept. 12 that challenged an earlier ruling by the Committee on Foreign Investment in the U.S., known as CFIUS, blocking the project.
Ralls was seeking to place Sany-made wind turbines at the Oregon installations after purchasing land and other rights earlier this year. The assets consist of four locations, three of which are near, and one is within, restricted Navy airspace, the Treasury Department, which heads CFIUS, said Sept. 28.
Ralls said Obama’s decision could cost the company $20 million in lost design and construction costs. It will also miss out on $25 million in federal investment tax incentives if the wind farms aren’t in service by Dec. 31, according to a court filing.
The case is Ralls Corp. v. Committee on Foreign Investment in the U.S., 1:12-cv-01513, U.S. District Court, District of Columbia (Washington.)
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