Fufeng debate: A look back as the controversy about a proposed Grand Forks corn mill reaches eight months

GRAND FORKS — Eight months ago, city leaders gathered at the Grand Forks Herald’s downtown offices to make what they considered a thrilling announcement: a huge corn-milling plant was planning to come to Grand Forks soon, offering hundreds of jobs for the local economy.

But what started as an opportunity — and a potential crowning achievement of Mayor Brandon Bochenski — has since become one of the most polarizing projects in modern Grand Forks history. It’s a debate that has gotten so intense that the city is facing multiple lawsuits over the company’s arrival, and Grand Forks police and FBI visited the home of a leading project critic, concerned about recent social media posts after others have made apparent threats at City Council meetings.

The company is Fufeng Group, and its proposal is to construct a corn-milling plant on the city’s northern edge, bringing more than 200 agribusiness jobs to the community and potentially hundreds more induced jobs to the community. Fufeng’s American subsidiary has already purchased land for its arrival, and city leaders are in continuous talks to bring it to the city.

The project, if completed, would represent an enormous investment in Grand Forks’ economy — if it can withstand all the scrutiny.

Here’s a closer look at the debate about the plant over recent months:

Concerns about Fufeng’s ties to China have dogged the project since its announcement in November 2021. In short: critics of the project are worried that the new factory could be a source of espionage on nearby Grand Forks Air Force Base, or even Cavalier Space Force Station.

Critics point to a broad set of concerns — that Fufeng Group’s chairman has connections with the communist government, that nearby Air Force installations are a valuable intelligence target, and that the proposed corn milling plant is unusually far north, outside of traditional corn country.

Several federal leaders have objected to the project, including North Dakota’s own Republican Sen. Kevin Cramer, as well as Senate Intelligence Committee leaders Marco Rubio, R-Fla., and Mark Warner, D-Va.

“I think we grossly underappreciate how effective they (China) are at collecting information, collecting data, using it in nefarious ways,” Cramer told CNBC this month.

But so far, there’s no evidence that Fufeng will engage in espionage. An Air Force memo, written unsolicited by an Air Force major in Nevada, warns about an espionage risk, but does not appear to have relied on significant research or interviews.

The memo wonders why the project is so far north — something NDSU agricultural economist Frayne Olson said looks more or less usual as corn consumers expand and induce their own nearby markets. City Hall leaders said they were confused why the memo said a natural gas pipeline supporting the project is 75 miles away, instead of 13 miles. At one point, the memo says it’s “unknown” how “integrated” Fufeng’s use of UND’s Center for Innovation is — like if it’s using the “agricultural wet lab.”

Amy Whitney, the director of the Center for Innovation, spoke to the Herald within 24 hours of a message.

“They're not using it because it's not their space that they're licensed for,” she said of the wet lab. “They are licensed for office space, and that is it.”

Notably, Grand Forks Air Force Base commander Col. Timothy Curry downplayed the memo when it began circulating, telling city leaders in a June 9 email that said the memo merely was only a set of “ideas.”

“Some are plausible, some are less,” he wrote. “And at this time, I still do not have any leadership relaying a clear security threat” (He has since referred questions to federal leaders and law enforcement).

Eric Chutorash, COO of the Fufeng Group, has repeatedly said the plant will not be involved in espionage.

There are some concerns about China that are beyond a debate about espionage, though. Some critics worry about doing business with a company that hails from a country with an abysmal human rights record. Chutorash has repeatedly said Fufeng Group has no Chinese government ownership — and points to a recent third-party review that says there is no forced labor in one Fufeng’s facilities that is in a region where forced labor has been a notable concern (The Wall Street Journal reports these reviews have become harder to accurately conduct lately, though).

It’s also unclear how much more tightly the project binds the local economy to a foreign power. China is already a leading consumer of North Dakota crops; but a plant’s arrival in Grand Forks could make the city’s economy that much more sensitive to the effects of another trade war.

RELATED: U.S. government bulletin raises alarm on Chinese influence, investments

At least on national security, the project could get more clarity soon. City Hall leaders soon expect Fufeng to voluntarily submit to a review process by the Committee on Foreign Investment in the United States, or CFIUS, which will help determine if there are any security threats associated with the project.

A lawyer hired by the city suspects that, in coming weeks, the committee will find that it doesn’t have jurisdiction over Fufeng’s land purchases in Grand Forks.

Bringing a massive new corn mill to the city will probably change the city’s north end significantly. Case in point: If it’s built, Fufeng’s new plant will consume about 6.6 million gallons of water each day.

Grand Forks’ historical average is only about 7.6 million gallons — meaning the plant could nearly double the city’s water consumption. Where is that going to come from?

The short answer: river water.

But some residents worry that, after unusually dry weather in 2021 — when residents were asked to water their lawns less — adding so much demand to the water system could be a big problem. After all, there’s only so much water running past Grand Forks in the Red River.

City leaders say, though, that those worries rely on apples-and-oranges logic. Grand Forks told residents to ease up watering their lawns in 2021 because demand on the local water treatment plant was getting high. Fufeng will directly draw on nearby river water — bypassing the water treatment plant and going straight to the source. It won’t affect demand load on the plant, the city says.

That hasn’t satisfied people who are worried about the amount of water in the river itself, which ran noticeably lower last year. If there’s a major, once-in-a-century drought, what then?

RELATED: Grand Forks leaders insist that even in drought, there will be enough water to support Fufeng Group

“We’re talking about a lot of water that will be needed for the plant, and if we have a ’30s-style drought, we have issues,” City Council member Ken Vein said earlier this year.

Project backers point to water reserves in Lake Ashtabula, north of Valley City, as well as continued work on the Red River Valley Water Supply Project, an anti-drought pipeline linking eastern North Dakota to the Missouri River. It could be completed within the next decade.

City drought plans also prioritize residential over industrial needs (which has since helped put Vein at ease).

“Grand Forks is first in line for that water” at Lake Ashtabula, said Shawn Gaddie, a consulting engineer with AE2S. “That's the whole point of water rights.”

But besides water concerns, the city still also has to address worries about odor that neighbors of the plant still harbor. City leaders, after visits to communities with similar corn milling plants, described a “corn flakes” smell from plant processes.

It’s unclear, though, if that would be the only smell from Fufeng. The project’s neighbors are still worried, and City Administrator Todd Feland, when asked this week if he could guarantee no odors other than cornflakes, said the city is still in the midst of studying the issue. He did say there would not be “significant” odors for nearby property owners.

“I don't want to sit here today and say no one will ever smell anything. I mean, I don't think that's fair to say,” Chutorash said earlier this year . “(But) that's the goal we're going to strive to.”

And the area will likely see an enormous boost in traffic, with heavy trucks and trains arriving to and departing from the new plant regularly.

The city is expected to review engineering studies on some of the biggest issues facing the plant before the end of the year. City leaders have said the result will help them resolve any issues or potentially even exit the deal with Fufeng.

Grand Forks leaders faced a petition drive earlier this year that would have put the Fufeng issue to a public vote — referring the development agreement and a few other early items directly to the city’s residents. It might have been a way to settle a debate that’s roiled Grand Forks for months.

But it’s been mired in legal wrangling since the spring. The petition easily gained enough valid signatures to force a vote — nearly 5,000 — but was disqualified by City Hall for a list of formatting problems, like improper labeling and a failure to clearly state the matter up for a potential vote.

That’s put the city under intense pressure as critics of the project have demanded their say. Now, roughly eight months since the project was announced, there’s still a large contingent of critics who feel shoved aside by Grand Forks leaders.

“Petitioners seek to exercise a fundamental right held sacred in this state: the right of the people to vote on the government actions that significantly impact their lives,” lawyers for petitioners wrote in court documents this year. “The city auditor for the city of Grand Forks impermissibly robbed the petitioners of this critical right by unlawfully rejecting their referendum petition.”

The city has maintained that there were serious problems with the petitions though — that the vote itself can’t be referred to voters, that the petition itself is messy and unclear on the issues, and more.

“While the petitioners’ request for a (court order) must fail for any of these reasons, it clearly fails for all of them,” attorneys for the city said.

There are two matters that have bounced around before various judges to land before Ramsey County’s Judge Donovan Foughty — including an administrative appeal of the decision to reject the petitions and a suit seeking a court order to reverse that decision. Both cases were brought by a leading petitioner, Ben Grzadzielewski, and a Grand Forks group advocating for the vote.

Leaders are also handling a newer lawsuit from Dennis Kadlec, a property owner on land that’s been annexed within Grand Forks as City Hall prepares for Fufeng’s arrival. He’s been a regular critic

News of Fufeng’s arrival was greeted with enormous fanfare from city leaders, who see in the project the potential for transformative change in Grand Forks — hundreds of millions of dollars in new development, plus hundreds of new jobs in the community.

The North Dakota Corn Growers Association, posting on social media in early November, expressed excitement about the new plant in Grand Forks. And in the days after the plant was announced, Jean Henning, the state Corn Utilization Council director, pointed out that a huge local buyer could mean a lot of stability for local growers.

“This facility in Grand Forks is going to be huge, especially for that area — the farmers in that area,” said Henning. “That’s going to provide a direct market for those farmers to sell to.”

But some experts have tapped the brakes on all that optimism. Local leaders’ prediction of a 40 cents-per-bushel bump in prices probably won’t last, said Frayne Olson, an agricultural economist with NDSU, pointing out that price will probably be somewhere like 10 to 20 cents per bushel over their current level after several years.

That’s still an increase, but a more muted one.

“Over time, you’re going to see the corn price decrease because there are going to be more farmers growing corn,” said Olson. “That’s what we usually see around ethanol plants.”

Impacts on the local economy are also hard to judge. While the plant will come with more than 200 new jobs, it’s estimated to induce roughly 500 more in a huge boost to the local economy. But exactly how those numbers work out remains to be seen — especially as a tight labor market and inflation roil the economy. UND economist David Flynn noted late last year that this could all make big economic change slow to happen.

“Let’s be realistic,” he said. “Between now and doors opening, the company might change their plans. There’s just a lot of moving pieces when it comes to things like those job estimates.”