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By: Kun Zhao, Esq.
On September 12, 2012, Ralls Corporation (“Ralls”) filed a lawsuit in the United States District Court for the District of Columbia against the Committee on Foreign Investment in the United States (“”CFIUS”) and Timothy F. Geithner, in his official capacity as the Chairperson of CFIUS, alleging that CFIUS’ order which prohibited Ralls from accessing the project site and continuing operations and construction work at acquired properties are in violation of the Administrative Procedure Act and unconstitutional deprivation of private property without due process. In the complaint, Ralls seeks a declaratory judgment enjoining enforcement of the order issued by CFIUS.
The case is significant because it is first direct challenge to the validity of an order issued by CFIUS pursuant to the Defense Production Act. The following is an account of recent developments in the case.
On September 13, 2012, Ralls filed a motion for a temporary restraining order and preliminary injunction to enjoin the enforcement of CFIUS’ order. On September 19, 2012, Ralls and CFIUS reached an agreement which allows Ralls to conduct limited preliminary activities at the acquired properties. On the same day, Ralls withdrew its motion for a temporary restraining order and preliminary injunction.
On September 28, 2012, President Obama issued an order which prohibited Ralls’ acquisition and ordered Ralls to divest all interests acquired in the transaction. The order further directed Ralls to cease all operations at the acquired properties and remove all items, structures or physical objects from the acquired properties.
On October 1, 2012, Ralls amended its complaint to add President Obama as a defendant. It continued to pursue its lawsuit on the ground that the actions of CFIUS and President Obama are in violation of Administrative Procedure Act, beyond authority conferred under the Defense Production Act, and unconstitutional deprivation of private property without due process. Defendants’ answer to Ralls’ amended complaint is due by December 8, 2012.
On October 29, 2012, defendants filed a motion to dismiss for lack of subject matter jurisdiction, alleging that the Defense Production Act precludes judicial review of President’s order. A motion hearing will be held on November 28, 2012.
Discovery in the matter is stayed pending the Court’s ruling on the motion to dismiss, which is scheduled to be heard on November 28, 2012.