Ralls Corp. v. Comm. on Foreign Inv. - 411 U.S. App. D.C. 105, 758 F.3d 296 (2014)

Rule:

Due process ordinarily requires that procedures provide notice of the proposed official action and the opportunity to be heard at a meaningful time and in a meaningful manner. The right to know the factual basis for the action and the opportunity to rebut the evidence supporting that action are essential components of due process.

Facts:

In March 2012, Appellant Ralls Corporation purchased four American limited liability companies (Project Companies) previously formed to develop windfarms in north-central Oregon. The transaction quickly came under scrutiny from the Committee on Foreign Investment in the United States (CFIUS), an Executive Branch committee created by the Defense Production Act of 1950 (DPA), codified as amended at 50 U.S.C. app. § 2170, and chaired by the Secretary of the U.S. Treasury Department (Treasury Secretary). Pursuant to section 721 of the DPA, CFIUS was reviewing any transaction which could result in foreign control of any person engaged in interstate commerce in the United States. CFIUS determined that Ralls's acquisition of the Project Companies threatened national security and issued temporary mitigation orders restricting Ralls's access to, and preventing further construction at, the Project Companies' windfarm sites. The matter was then submitted to the President, who also concluded that the transaction posed a threat to national security. He issued a permanent order (Presidential Order) that prohibited the transaction and required Ralls to divest itself of the Project Companies. Ralls challenged the final order issued by CFIUS (CFIUS Order) and the Presidential Order in district court, alleging, inter alia, that the orders violated the Due Process Clause of the Fifth Amendment to the United States Constitution because neither CFIUS nor the President (collectively, with Treasury Secretary and CFIUS Chairman Jacob Lew, Appellees) provided Ralls the opportunity to review and rebut the evidence upon which they relied. The district court dismissed Ralls's CFIUS Order claims as moot and its due process challenge to the Presidential Order for failure to state a claim.

Issue:

Did the final order issued by CFIUS and the Presidential Order in district court violate the Due Process Clause of the Fifth Amendment to the United States Constitution? 

Answer:

Yes.

Conclusion:

At the outset, the Court noted that it had jurisdiction to review the constitutional due process claims of a corporation owned by Chinese nationals since the statutory bar to review of the President's determinations under the Defense Production Act of 1950, 50 U.S.C.S. app. § 2170, that the corporation's acquisition of companies now under foreign control threatened national security did not preclude review of the constitutionality of the process by which those determinations were made. Moreover, the political question doctrine also only precluded review of the determinations and did not preclude review of whether the corporation received due process. With respect to the substantial issue, the Court held that the corporation was denied due process since it was never advised of the nature of the concern with the acquisitions, nor was the corporation advised of the evidence considered in making the determinations or provided an opportunity to rebut the evidence. The order of dismissal was reversed and the case was remanded.