Update on Lawsuit Challenging CFIUS Action Blocking Chinese Wind-Farm Development

With my firm’s CFIUS experts, I put together a fuller analysis of the potentially significant CFIUS lawsuit I blogged earlier this month.  For those just tuning in now: the U.S. government’s Committee on Foreign Investment in the United States issued an order that blocked a Chinese-owned developer from proceeding with four wind-farm projects in Oregon; the developer sued, challenging not only the lack of transparency in CFIUS’s procedures and decision making, but also CFIUS’s authority to block  or unwind the transaction.

There have been a few noteworthy developments in the case.  First, just hours before the government was due to file its opposition to Ralls’ motion for a TRO, Ralls withdrew the motion after reaching an agreement with the government that allowed it to resume  preliminary construction at the wind-farm site while the suit is pending; the CFIUS order previously directed Ralls to “cease all [c]onstruction and [o]perations at the site.”  Although correlation does not imply causation, it suggests that the suit has improved Ralls’ position with respect to CFIUS.

Second, although correlation still does not imply causation, the day after the suit was filed, CFIUS sent a report to the President describing its assessment of the risks; by statute, once CFIUS sends such a report, the President has 15 days to  decide whether to take action (e.g., to block or mitigate the transaction).  The deadline runs tomorrow.

Because the  Foreign Investment and National Security Act of 2007 provides that the President’s actions and supporting findings “shall not be subject to judicial review,” there would be a question whether the President’s own actions (if any) would moot the lawsuit.  Ralls has a response (that the suit could continue under the “capable of repetition but evading review” exception to mootness doctrine. as CFIUS reviews each transaction in the first instance).  But  at a minimum, presidential action will be another factor the judge will have to consider as the case proceeds.

It will be interesting to see how things shape up.  For an insightful discussion of the matter, see China Hearsay.