China, windpower, and conflict

By far the most important element of a successful wind turbine installation is locating it in a windy place.  But good site selection also means having a handy link to the power grid so the electricity generated has somewhere to go.  The rest, from mast construction to gear box, blade, and generator selection, is mostly just details.  In the case of what gets hoisted to the top of the mast, that decision can even be changed if newer, more efficient generators are designed.

Ultimately, in any green design scheme that includes wind-power, the fight over the "ownership" rights to the best wind sites is the only conflict worth having.  And guess what? The Obama administration has just decided to pick a fight with the Chinese over the rights to develop a prime wind site.  The excuse is "national security" although it might be a new form of protectionism.  After all, the ability to produce "green" electricity may be an argument over national sovereignty itself.  You can be sure the USA politicians of the 19th century would have seen it that way.

On Wall Street, where protectionism is an even dirtier word than inflation, the howls are predictable and loud.  Nothing so trivial as national security or even national sovereignty can be allow to stand in the way of the rights of the international investment community.  My guess we are going to see more of this as folks begin to understand the true value of the prime wind sites.

Obama Demands Chinese Divest From Windfarm And Rip Up Everything They've Already Built

Joe Weisenthal and Brett LoGiurato | Sep. 28, 2012

It's hard not to read this as anything but an election year move. The White House, though, is painting it as taking action on national security interests.

According to Bloomberg, President Obama has barred a Chinese company — Ralls Corporation — from building a wind farm near a Navy base in Oregon.

Bloomberg reports that it's the first time in 22 years a transaction like this has been blocked.

“The president’s action demonstrates the administration’s commitment to protecting national security while maintaining the United States’ longstanding policy on open investment,” the U.S. Treasury said in a statement. "The President’s decision is specific to this transaction and is not a precedent with regard to any other foreign direct investment from China or any other country."

The Committee on Foreign Investment in the U.S. — which is headed by Treasury Secretary Timothy Geithner — ordered the company in July to keep away from wind-development sites due to vague "national security risks." The matter was referred to Obama after Ralls filed suit against the CFIUS earlier this month.

CNBC's Eamon Javers tweeted that the company will have to remove even early developments like concrete foundations:

Here's the full statement from the US Treasury:

WASHINGTON – As chair of the Committee on Foreign Investment in the United States (CFIUS), the U.S. Department of the Treasury today issued the following statement about the President’s decision regarding Ralls Corporation:

The President issued an order prohibiting the acquisition and ownership of four wind farm project companies by Ralls Corporation, its owners, its subsidiaries, and its affiliates. The order directs Ralls Corporation to divest its interest in the wind farm project companies that it acquired earlier this year, and to take other actions related to the divestment. Ralls Corporation is owned by Chinese nationals, and is affiliated with a Chinese construction equipment company that manufactures wind turbines. The wind farm sites are all within or in the vicinity of restricted air space at Naval Weapons Systems Training Facility Boardman in Oregon.

The President took this action pursuant to section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment and National Security Act of 2007 (“section 721”). Section 721 authorizes the President to suspend or prohibit certain acquisitions of U.S. businesses by foreign persons where he finds that there is credible evidence that the foreign interest exercising control might take action that threatens to impair national security, and where provisions of law other than section 721 and the International Emergency Economic Powers Act do not provide adequate and appropriate authority to protect national security in the matter under review. 

The President’s action demonstrates the Administration’s commitment to protecting national security while maintaining the United States’ longstanding policy on open investment. The President exercises his authority under section 721 with a focus on national security concerns and is committed to ensuring the fair and equitable treatment of all foreign investors. The Administration will continue to ensure that the United States remains the most attractive place for businesses to locate, invest, grow, and create jobs. The President’s decision is specific to this transaction and is not a precedent with regard to any other foreign direct investment from China or any other country.

The President’s decision took into consideration the factors described in subsection 721(f), as appropriate, and the recommendation by the Committee on Foreign Investment in the United States (“CFIUS”) that he issue an order prohibiting this transaction. CFIUS is an interagency committee whose purpose is to review transactions that could result in the control of a U.S. business by a foreign person in order to determine the effect of such transactions on the national security of the United States. In assessing the transaction’s impact on national security, CFIUS conducted both a 30-day, first-stage review, and an additional 45-day, second-stage investigation. CFIUS’s detailed analysis took into account all relevant national security factors, including those elements enumerated in section 721. CFIUS also received a thorough analysis of the threat posed by this transaction from the Office of the Director of National Intelligence, as required by section 721.

CFIUS is chaired by the Secretary of the Treasury and includes as members the Secretaries of State, Defense, Commerce, Energy, and Homeland Security, the Attorney General, the Director of the White House Office of Science and Technology Policy, and the U.S. Trade Representative. The Director of National Intelligence and the Secretary of Labor participate as non-voting, ex-officio members. more

Well, that didn't take long.  I don't know—if I were China, I would seriously question if I should be wasting lawyer money on this.  CFIUS is pretty well dug into the permanent Washington power structure, after all.

China blowback: Chinese co. sues Obama over 'state security' wind farm ban

03 October, 2012

Chinese-owned Ralls Corporation is suing US President Barack Obama for shutting down their wind farm project near a naval air base in Oregon. Obama cited national security concerns, but the company claims the order was unconstitutional.

Obama acted in "an unlawful and unauthorized manner" in issuing the order without providing "any evidence or reasoned explanation" for his decision, Ralls corporations said in an amended complaint filed on Monday in Washington DC. 

The complaint called the Government seizure of the property “unconstitutional” and stated they “violated Ralls’s constitutional right to equal protection.”

Last week, Obama ordered Ralls Corporation to liquidate its holdings in its wind farm projects near a naval base used to test drones and other experimental aircraft in Oregon. The US President justified the decision through a rarely-used authority provided to his office by the Committee on Foreign Investments in the United States (CFIUS), citing national security concerns for his decision.

“There is credible evidence that leads me to believe" that Ralls "might take action that threatens to impair the national security of the United States," Obama said, without elaborating further.

Ralls purchased the four wind farm sites in March 2012, with only one of them situated within the naval base’s restricted airspace. However, the executive order from the White House has ordered Ralls Corporation to divest itself of all four sites.

It was the first time in 22 years a US president used CFIUS authority to order a foreign company to abandon an American investment. The last time was in 1990, when President George H. W. Bush voided the sale of Seattle-based MAMCO Manufacturing. That prohibited sale was also to a Chinese agency.

Ralls faces an uphill battle if they expect to win the lawsuit.

"It's a very, very difficult case," said Ivan Schlager, a partner with Skadden, Arps, Slate, Meagher & Flom, a law firm that handles CFIUS cases.

"The statute was crafted to give the president a great deal of discretion and authority to act to protect the national security interests of the United States,” he said, Reuters reports.

Foreign companies are encouraged to allow CFIUS to review their planned acquisitions in the US, but even if they do not, CFIUS still has the authority to intervene. more