Court Ruling's Impact

Inside U.S. Trade reported last week about a recent U.S. appellate court ruling in favor of a Chinese company suing the president and the Committee on Foreign Investment in the United States (CFIUS) because it was ordered to divest from an Oregon wind farm project that was near Navy airspace.

The ruling will not have a meaningful impact on the outcome of the case and is likely do little to boost the transparency of the CFIUS review process, Inside U.S. Trade reports, adding:

One of the main arguments being pursued by the Ralls Corporation was that, under the constitutional right to due process, it should have access to the unclassified material CFIUS and the president considered before ordering Ralls to divest from an Oregon wind farm project that was near U.S. Navy airspace.

Ralls was not seeking to actually overturn the presidential decision, due to the fact that the Foreign Investment and National Security Act of 2007 expressly prohibits any judicial review of such orders.

The appellate court reversed the lower court's decision that Ralls did not have a right to this information, and in theory, Ralls could now at least try to rebut some of the facts presented. But experts familiar with CFIUS procedures doubted that any of the unclassified information given to Ralls -- or any other company put in a similar situation in the future -- would be substantive.

"There isn't a lot of non-deliberative information that's not classified or not derived from classified material that can be shared," said Nova Daly, former head of CFIUS at the Treasury Department. According to Daly, CFIUS conducts a threat assessment and, for mitigations, a risk assessment. The threat assessment is classified. The risk assessment identifies national security vulnerabilities, which can also be classified.

Scott Flicker, an attorney who handles CFIUS cases, also questioned the ability of a party to rebut a presidential order with limited information. "What are they going to do with unclassified information based on a partial record?" he said. "There might not be much that can be done."