11/28/2012 04:54 pm ET Updated Nov 28, 2012

Ralls Corp, Obama Administration Face Off In Landmark Case Over National Security

A small Chinese company is battling the Obama administration in court Wednesday over the president's decision to cite national security in squashing a deal -- the first time in two decades that the president has made such a move.

Wind farm company Ralls Corp. sued President Obama last month for halting the company’s plans to build a plant in Oregon, which Obama claimed was too close to a military training site. Ralls has ties to Sany, a major Chinese company headed by Liang Wengen, who is sixth on Forbes China Rich List.

Ralls filed the lawsuit at a sensitive time for Obama -- the final weeks of the presidential campaign, during which his rival Mitt Romney criticized him for being too soft on China.

“We are suing the president because we do not accept his finding that we are a national security threat. It is not true,” Ralls CEO and Liang’s deputy Wu Jialiang said at the time, according to the Christian Science Monitor.

The lawsuit highlights the question of whether Obama’s national security decisions should be subject to challenge in the courts. When Obama killed the Oregon deal, it was the first time in more than 20 years that a president had cited national security to squash an agreement with a foreign buyer, according to the Wall Street Journal.

It’s unlikely Ralls will win the suit, but it draws attention to the U.S. government’s relationship with Chinese businesses. Some Chinese companies have claimed America’s foreign investment rules discriminate against them. For example, the U.S. imposed major tariffs on Chinese solar panel makers in October, after finding that the companies were damaging the U.S. solar panel industry by flooding the market with cheap products subsidized by the Chinese government.

The European Union is also probing Chinese solar panel makers, after European manufacturers complained the companies were flooding the market with cheap, subsidized goods.



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