On September 12 a U.S. wind project development company, Ralls Corporation ("Ralls"), owned by two Chinese nationals, filed suit against the Committee on Foreign Investment in the United States ("CFIUS"), an inter-agency U.S. government body charged with assessing the potential national security effects of foreign acquisitions of U.S. businesses. National security concerns may arise in a number of ways when a foreign entity acquires a U.S. renewable energy business. However, the CFIUS order to which the lawsuit responds marks an unprecedented intervention by the U.S. government in renewable energy project development, which, since its inception, has benefitted from substantial investment by foreign investors.

The Ralls complaint alleged that CFIUS exceeded its authority by blocking Ralls’ investment in and development of a proposed 40 megawatt wind project in Oregon, through its acquisition of four Oregon limited liability companies (the "Oregon Projects"). Ralls and CFIUS subsequently reached an agreement regarding the resumption of preliminary construction activities but, by September 28, President Obama is expected to decide whether to let the Oregon Projects proceed or to require divestiture on terms specified by CFIUS. In light of this order, such "national security" risks may potentially prove a greater risk to renewable energy transactions than previously understood.

Click here to read more on the scope of a CFIUS review and what puts a transaction at risk.