Stroock Special Bulletin
"DC Circuit Reverses the Ralls Decision -- Promises a Jolt of Due Process for CFIUS Reviews"
In 2012, President Barack Obama vetoed the acquisition of Oregon windfarms by Ralls Corporation, an American company owned and controlled by two senior officials of Sany Group, a Chinese corporation. The transaction was vetoed following review by the Committee on Foreign Investment in the United States ("CFIUS") on grounds that the acquisition threatened U.S. national security.
The proximity of the windfarms to a sensitive military installation was widely reported as the basis for the decision. The extraordinary veto (the first since 1990) was followed by something even more extraordinary: the first legal challenge to a Presidential veto. Ralls argued, among other things, that it had been denied its property without due process, in violation of the Constitution, because it was not apprised of the factual basis for the veto, or given an opportunity to rebut the evidence. The District Court dismissed the complaint.
On July 15, however, in a bluntly worded opinion, a unanimous three-judge panel of the US Court of Appeals for the District of Columbia Circuit reversed the District Court decision. This Stroock Special Bulletin looks at that decision, in which the DC Circuit found that due process required "at the least" that the parties be afforded (1) notice of the official action, (2) access to the unclassified information "on which the official actor relied," and (3) an opportunity to rebut that evidence.