Federal regulators have concluded they don't have the proper jurisdiction to conduct a review of a planned $2.4 billion Chinese battery part manufacturing plant in Big Rapids, Michigan, the company said in a Tuesday statement in which they committed to moving forward with the project.
The U.S. Treasury Department, according to the statement, told Gotion Inc. that the company's purchase of land in the Big Rapids area is "not a covered real estate transaction and is not a covered transaction under the Defense Production Act of 1950."
"We voluntarily submitted all the needed documents to the U.S. Department of Treasury Committee on Foreign Investment in the U.S. to be transparent and accountable and received the response that it is not a covered transaction," said Chuck Thelen, vice president of North American Manufacturing for Gotion Inc.
Gotion announced in early April, amid concerns about the company's ties to China, that it had voluntarily submitted information to the Committee on Foreign Investment in the United States, a federal review panel tasked with investigating potential national security risks. At least two other government bodies at the time said they had requested the same review.
CFIUS, which reviews foreign investments for national security risks, has repeatedly declined comment when asked to confirm whether a request was made for a review of the Big Rapids project. The agency did not immediately respond to a request for comment Tuesday.
Gotion did not immediately provide The Detroit News with a copy of the Department of Treasury's letter.
Jim Chapman, the supervisor of Green Township, where the project would be located, said he also has not received a copy of the Treasury Department's communication on the project. Chapman, who remains a staunch supporter of the project, said he was told the federal agency would not allow for the release of the communication.
U.S. Rep. John Moolenaar, a Caledonia Republican who in February requested a CFIUS review of large financial investments in Michigan "particularly those by Chinese companies and their subsidiaries," had not received a substantive reply from the Department of Treasury on the request as of Tuesday, his office said.
"Today's announcement from Gotion is not an approval from CFIUS, but another example of the broken CFIUS process where the government claims deals are outside its jurisdiction," Moolenaar said in a statement in which he criticized the company for not voluntarily disclosing the materials it submitted to CFIUS.
Foreign investments that are covered by CFIUS include mergers, acquisitions or takeovers "that could result in foreign control of any United States business" or control of critical infrastructure that could affect national security. After a CFIUS review, the president of the United States can suspend or block a business transaction if there's evidence it threatened national security.
Thelen told lawmakers in April that the CFIUS panel had already conducted and signed off on a battery parts project Gotion had planned in an undisclosed southern state.
"We expect a similar review period and outcome" for the Big Rapids project, Thelen said at the time.
In April, the Democratic-controlled Legislature approved about $175 million in taxpayer incentives for Gotion through the Strategic Outreach and Attraction Reserve fund.
The company announced plans in October for a $2.4 billion electric vehicle battery parts facility in Green Township, on the outskirts of Big Rapids, to a largely enthusiastic response from the community. But local residents and Republicans began voicing concerns in the weeks after about the company's ties to China.
The project is expected to create about 2,300 jobs and receive more than $800 million in incentives and tax breaks, including about $636 million in tax abatements over 30 years and the $175 million in SOAR funding approved in April.
Gotion is not the first foreign investment that's attracted national scrutiny only to have federal regulators take a pass on a security review.
CFIUS in December concluded it didn't have jurisdiction to review a Chinese-owned corn mill project in Grand Forks, N.D., the Wall Street Journal reported.
Separately, an Air Force official said the project planned by Fufeng USA presented a national security risk because it was close to an Air Force base, prompting the city's mayor to vow Grand Forks would block building permits and other permissions for the project.
