City ends standstill, terminating development agreement with Fufeng

GRAND FORKS — A standstill agreement with Fufeng Group, which sought to build a wet corn mill in Grand Forks, has been terminated and is no longer effective, the city announced late Thursday afternoon.

The decision effectively puts an end to the development agreement between the city and the Chinese-owned entity. The standstill had been in effect since last month.

Word of the termination came in a release sent to the media. The release said the “city has delivered to Fufeng USA Inc. a notice of termination of the development agreement and the city has made a demand as beneficiary on the letter of credit with MUFG bank covering the city’s expenses related to the corn mill due diligence.”

City Administrator Todd Feland said the bank has seven business days to respond.

“We sent the information to the bank and now we’ll have to wait for a response from the bank,” Feland told the Herald. “So we’ll be following up with the bank here in a couple of days regarding our demand on the letter of credit.”

In February, City Council members voted 5-0 to end the Fufeng project after the Department of the U.S. Air Force declared the proposed mill a threat to national security due to its ownership ties to China.

The following month, the council then agreed to enter into a standstill agreement related to the termination of the development agreement with Fufeng. At the time, City Attorney Dan Gaustad told council members the standstill agreement would allow for the city and Fufeng to determine if an agreement and termination could be reached.

Thursday, the termination became official.

“The city has concluded … the construction of the city infrastructure has become inadvisable or impracticable, through no fault of the city, and therefore the condition described in Section 8.1.10 (of the agreement) has not been, and cannot be, satisfied,” the city wrote in the letter to Fufeng USA COO Eric Chutorash.

Also, the city wrote, “as a result of Fufeng’s project designation as a significant national security threat and a significant operational risk to the Air Force, other conditions under the development agreement will not, and cannot, be satisfied.” It then cited a number of other sections of the agreement.

Thursday, Feland said the city has not heard from Chutorash in regard to the termination. The letter was sent to both Chutorash and Fufeng’s attorney.