September 20, 2012

Ralls drops bid for court order to resume wind project

By Sara Forden | Bloomberg | 20 September 2012

Ralls Corp. dropped its bid for a court order permitting the Chinese-owned company to resume a wind-farm project near a U.S. Navy installation in Oregon that was blocked by a Treasury Department-led national-security panel.

The parties have reached an agreement about the “resumption of certain preliminary construction activities,” according to a motion filed yesterday in federal court in Washington. U.S. District Judge Amy Berman Jackson canceled a hearing set for today and asked for a status report on Oct. 1.

Ralls, which is owned by executives of China-based Sany Group Inc., bought the wind-farm assets this year without reporting the transaction to the Committee on Foreign Investment in the U.S., according to a government filing in the case. The assets consist of four locations, one of which is within restricted airspace the Navy uses for training, according to court documents. Three other properties are within five miles of the restricted airspace, according to the filings.

After conducting an investigation, the CFIUS issued an order on July 25 citing “national security risks” raised by the sale of the assets to Ralls and directing the company to stop all construction and operations at the wind-farm locations, according to the filing.

More Prohibitions

An amended order on Aug. 2 added more prohibitions, including the sale or transfer of the assets to any third party for the “use or installation at the properties of any items made or otherwise produced by the Sany Group.”

Ralls said the panel exceeded its authority when it ordered the company to cease operations and keep out of the wind-farm sites, according to a complaint filed Sept. 12.

A Justice Department lawyer told Jackson on Sept. 18 that President Barack Obama would decide whether to let the wind-farm project proceed. She urged the government and Ralls to try to reach an agreement. The deadline for the president to decide is Sept. 28.

CFIUS is an interagency committee headed by Treasury Secretary Timothy Geithner that reviews the national security implications of transactions that could lead to a non-U.S. citizen controlling a U.S. business.

The heads of the departments of Justice, Homeland Security, Commerce, Defense, State, and Energy, among others, sit on the committee. The panel’s recommendations can be enforced only by the president under the law.

Ralls had been seeking a temporary restraining order and preliminary injunction that would permit the company to resume construction of the wind farms by today. If the wind farms aren’t in service by Dec. 31, then the company won’t be able to obtain $25 million in federal investment tax incentives, 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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