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Ralls Corp. v. Committee on Foreign Investment in the United States

ELR Citation: 44 ELR 20156
Nos. 13-5315, (D.C. Cir., 07/15/2014)

The D.C. Circuit held that an American corporation owned by Chinese nationals was deprived of its constitutionally protected property interests without due process of law when President Obama issued an order blocking on national security grounds the corporation's windfarm project located near a U.S. Navy facility off Oregon's coast. The windfarm project was acquired by an American corporation that, in turn, is owned by the Chinese nationals. The transaction came under scrutiny from the Committee on Foreign Investment in the United States (CFIUS), which determined that the corporation's acquisition of the project threatened national security. The matter was then submitted to the president, who also concluded that the transaction posed a threat to national security. He issued a presidential order that prohibited the transaction and required the corporation to divest itself of the project. The corporation challenged the order, but the district court ruled that the corporation's property interests were not constitutionally protected because it acquired the property interests "subject to the known risk of a Presidential veto" and "waived the opportunity . . . to obtain a determination from CFIUS and the President before it entered into the transaction." But the corporation's interests in the windfarms constitute "property" under Oregon law, and the corporation's state-law property rights fully vested upon the completion of the transaction, meaning due process protections necessarily attached. Nor did the corporation waive its property interest by failing to seek pre-approval of the transaction. Because due process requires that an affected party be informed of the official action, be given access to the unclassified evidence on which the official actor relied, and be afforded an opportunity to rebut that evidence, and because the corporation was not given any of these procedural protections at any point, on remand, the corporation must be provided access to the unclassified evidence on which the president relied and an opportunity to respond thereto.