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President prohibits Chinese wind farm project in Oregon

| Oct 13, 2012 | Civil Litigation |

President Obama has barred a Chinese company from completing a planned wind farm project in Oregon, citing concerns about potential threats to national security. Obama issued an order instructing the company to divest all interest in the wind turbines, which were to be constructed near a naval weapons system training facility, over credible evidence that the company could take action that threatens to impair the national security of the United States.

Companies hoping to build near military sites in Oregon often face complex litigation, especially if those companies are based outside of the United States. However, there are already Danish and German-owned wind farms operating in the same region of the state, a fact the Chinese company may highlight if it contests the order. The company has 90 days to comply with the instructions, but is still reportedly assessing the order and has no immediate plans to divest interest in the project.

The Committee on Foreign Investment in the United States assesses many proposed deals from foreign companies every year for possible national security risks, but rarely compels the President to issue an order as most companies under such scrutiny voluntarily divest assess or abandon their projects.

Obama’s order for the Chinese company to halt its wind farm deal marks the first such action since George H.W. Bush prevented a Chinese takeover of an American manufacturing company. A former government official who was involved in the CFIUS review process called the order a big deal, highlighting the fact that the last Presidential order blocking a foreign transaction occurred more than two decades ago.

In response to the order, the company filed a lawsuit against the CFIUS for wrongfully prohibiting its planned construction. Although it is uncertain when the case will be resolved, company representatives said they believed the courts hearing the claim would rule against the CFIUS in accordance with the law and Constitution.

Source: Chicago Tribune, “Obama blocks Chinese wind farms in Oregon over security,” Rachelle Younglai, Sept. 28, 2012