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A little-known U.S. agency that investigates transactions that raise national security issues advised President Barack Obama to block a wind-farm project near a naval base in Oregon. (Ferdinand Ostrop/AP)
A little-known U.S. agency that investigates transactions that raise national security issues advised President Barack Obama to block a wind-farm project near a naval base in Oregon. (Ferdinand Ostrop/AP)

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Chinese firm schools Uncle Sam on rule of law Add to ...

A Chinese company has schooled Uncle Sam on the rule of law. Ralls won a U.S. appeals court order that forces the Obama administration to explain its veto of the company’s wind farm project. National security may have been at stake, but investors deserved at least a glimpse at the evidence. It’s a reminder that transparency and due process often go hand in hand.

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Ralls, which is owned by Chinese nationals, bought the rights in 2012 to build wind turbines near a naval facility in Oregon. Other foreign-owned turbines whirred close by, and the Department of Defense and Federal Aviation Agency approved the project.

But the little-known Committee on Foreign Investment in the United States (CFIUS), which investigates transactions that raise national security issues, decided to take a closer look. Without explanation, President Barack Obama followed its recommendation to kill the project.

It was the first time in 22 years that a president had blocked a foreign deal, and Ralls was not about to give up. In a surprising challenge to executive authority in this area, the company filed a lawsuit claiming CFIUS and Obama had exceeded their powers.

The appeals court on Tuesday bought the argument, ruling that Ralls had the right to see and respond to any unclassified evidence backing the President’s decision. The case now returns to a lower court for a decision on exactly what the company can review.

The national security concerns may have been real. China, after all, often uses private individuals and companies for espionage in the United States. It’s possible, for example, that the wind-tower foundations could conceal equipment for tracking flights from the nearby naval station.

The ruling seems, however, an entirely reasonable way to protect security while also preserving fundamental constitutional rights. It may be too late for Ralls and its plans for the wind farm. But the company – and the court – has highlighted an important distinction between America and authoritarian regimes like China’s.

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