Red River Biorefinery in legal fight with operator

Golden shovels and hard hats are in place for the Red River Biorefinery groundbreaking ceremony Wednesday afternoon in rural Grand Forks. Nick Nelson / Grand Forks Herald
Golden shovels and hard hats are in place for the Red River Biorefinery groundbreaking ceremony Wednesday afternoon in rural Grand Forks. Nick Nelson / Grand Forks Herald
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The owners of Red River Biorefinery — the Grand Forks ethanol and alcohol plant near Gateway Drive — are locked in a legal fight with a contractor.

The case begins with a contract between North American Energy Services, a Washington state-based plant operator, and the owners of Red River Biorefinery. In May, Red River sent a terse letter claiming a long list of issues with NAES services, including failing to quickly hire permanent, qualified staff and to show expertise in the facility’s operation. Red River sued over the matter in June, seeking damages and a quick transition to a new operator.

In its response, NAES attorneys denied those allegations, and claimed that before Red River sent its May letter outlining problems with service, plant owners had asked to end their contract and had said they’d contracted a new operator.

“During a telephone call with representatives from NAES and (a potential new plant operator) on May 13, Red River … confirmed that its desire to terminate the agreement was not due to NAES’s performance or default,” attorneys for NAES wrote. “NAES explained … that the agreement did not include a termination for convenience clause.”

A summer of legal filings has brought both companies to the brink of a trial, with a final pretrial conference scheduled for Nov. 30 at a Fargo federal courthouse. And as the case now stands, both groups are arguing the other breached their contract and are seeking damages.


Red River attorneys briefly discussed commenting for this story with the Herald via email, but ultimately did not. NAES attorneys did not respond to emailed requests for comment.

The news caps a difficult year at the refinery, which has pivoted its business as the coronavirus pandemic radically remakes its business plans. While leaders had first planned to turn agricultural waste into ethanol fuel, managing member Keshav Rajpal wrote in a letter to city leaders that big economic shifts have sent the company scrambling to new suppliers — and into the hand sanitizer market.

Startup has been rocky, with unusually difficult wastewater discharges flowing out to Grand Forks’ wastewater treatment plant. At times, the result has been a lingering odor in the city of Grand Forks, increased wear on the wastewater plant and surcharges for Red River Biorefinery expected to total more than $1 million.

But the legal fight and the pandemic hasn’t scuttled the plant yet. Teresa Warne, vice president of finance with American Crystal Sugar — one of Red River’s most important clients — said Red River is fulfilling its obligations to receive its beet tailings, which are an important part of its production processes.

"We continue to work with the biorefinery, and our contract allows for them to have a ramp-up period,” Warne said, though she declined to say precisely how long that period lasts. “They are taking our tailings right now, and they have well into the fall until they have to reach the capacity of all of our tailings."

Related Topics: AGRICULTURE
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