Regarding the Acquisition of Four U.S. Wind Farm Project Companies by Ralls Corporation

President Obama issued a rare presidential order under the Defense Production Act blocking a Chinese-owned company (Ralls Corporation, affiliated with Sany Group) from acquiring four Oregon wind farm projects near a U.S. Navy weapons systems training facility. The order mandates divestment within 90 days (extendable by 3 months), removal of all equipment within 14 days, and imposes ongoing CFIUS oversight and compliance verification.

Federal Register Open PDF 77 FR 60281

Impact dates

Date TBD
CFIUS concludes verification procedures after divestment completed
Date TBD
CFIUS objection window for proposed third-party buyer
Mar 27, 2013
Maximum extension for divestment deadline if CFIUS requires
Dec 27, 2012
Complete divestment of all interests in Project Companies and assets
Oct 12, 2012
Remove all items/structures from Properties and submit signed certification

Key directives

Prohibit acquisition and ownership of four Oregon wind farm LLCs by Ralls/Sany/Duan/Wu
Divest all interests within 90 days (extendable by 3 months)
Remove all physical objects from Properties within 14 days
Submit signed certification of removal within 14 days
Cease all access to Properties
Block sale/transfer of Sany Group items for use at Properties
Condition any third-party sale on DoD verification, CFIUS notification, and 10-business-day CFIUS review window
Monthly compliance certifications until divestment completion
CFIUS authorized to conduct on-site inspections and interviews
Attorney General authorized to enforce order

Who is ordered

Timeline

Immediate

Transaction prohibited; ownership of any interest in Project Companies barred
Companies must cease all access to Properties
Monthly compliance certifications to CFIUS begin

Near term (90d)

Removal of all items/structures from Properties within 14 days
Complete divestment of all interests due within 90 days (extendable to ~180 days)
CFIUS review of any proposed third-party buyer within 10 business days of notification

Long term

CFIUS verification procedures conclude within 90 days after divestment completed
Potential precedent for future CFIUS actions against Chinese investment in U.S. energy/near military installations

Risks & tensions

First presidential veto of a foreign acquisition under CFIUS/section 721 since 1990; signals heightened scrutiny of Chinese investment near military installations
Creates tension with U.S.-China trade and investment relations; Sany/Ralls later challenged constitutionality of CFIUS process (Ralls v. CFIUS)
Wind farm proximity to Naval Weapons Systems Training Facility (Boardman, Oregon) cited as national security concern—specific location not detailed in order text
Potential chilling effect on Chinese renewable energy investment in U.S.
Relative deadline for CFIUS verification 'within 90 days after divestment' creates uncertainty if divestment timing is contested