Fufeng Group deal in Grand Forks could get high-level federal security review
A lawyer said she thinks CFIUS will find the matter is not in its jurisdiction. She also said that CFIUS already seems to have begun asking questions about the project, too.
GRAND FORKS — A U.S. government group that reviews foreign business investments has expressed interest in Fufeng Group’s arrival in Grand Forks, a lawyer working with the city told top leaders on Tuesday — and she recommended that the city work with Fufeng to offer the group a close look.
The recommendation came from Bridget Reineking, a Washington, D.C.-based attorney who specializes in the operations of the Committee on Foreign Investments in the United States. It’s a high-level federal group that vets national security concerns that come with certain foreign business deals on American soil.
The process that Reineking recommended would lead to a voluntary submission from Fufeng leaders that CFIUS look at real estate transactions with Fufeng made on the north side of Grand Forks. After a 30-day review, the committee would release the results, and Fufeng Group could share them with the city.
Reineking said that will kick off a process that could result in a process that finds no jurisdiction, no concerns, or something else. In response to a question about a “worst-case scenario,” in which CFIUS pursues serious concerns about Fufeng, Reineking said a monthslong review process could unfold.
Reineking said she thinks CFIUS will find the matter is not in its jurisdiction. She also said that CFIUS already seems to have begun asking questions about the project, too.
“A major part of the work that we did is to assess whether there could actually be national security concerns implicated by the land property acquisition,” Reineking said.
“And we think ultimately (there) could be. And to put a fine point on it, after we did our fact diligence, and landed on that answer, CFIUS itself confirmed it for us,” she added, by asking questions about the project to the city. “That’s when we confirmed our recommendation: you should encourage Fufeng to make a filing. Our understanding is that Fufeng has been very cooperative, and they do intend to make a filing.”
City Administrator Todd Feland said there won’t need to be a council vote on requesting Fufeng submit itself for CFIUS review; city staff will handle the matter. A spokesperson for Eric Chutorash, the COO of Fufeng’s American subsidiary, did not respond to a late-evening request for comment.
CFIUS has played an outsized, background role in ongoing negotiations to bring a new corn-milling plant from Fufeng Group to Grand Forks that trace back to last year. Fufeng Group is based in China, and its American subsidiary’s ties abroad have sparked concerns about its proximity to Grand Forks Air Force Base and Cavalier Space Force Station. What role could it play, critics wonder, in Chinese espionage plans? For months, a review from CFIUS has looked like a way the city might put the question to rest, especially given its sweeping access to high-level intelligence information.
In the meantime, suspicions about the project have been difficult to vet. Much of the discussion about the plant has been speculation — from the Fufeng chairman’s ties to the Chinese Communist Party (an unremarkable detail of a prominent businessman’s resume, Chinese-U.S. business consultant James McGregor told the Herald) to its decision to locate on the upper fringes of American corn production (a relatively normal practice, NDSU agricultural economist Frayne Olson said , given corn mills’ ability to induce their own markets).
An Air Force memo circulated in mid-June didn’t make things any clearer. Nevada-based Maj. Jeremy Fox wrote about strong espionage concerns, but didn’t appear to have actually conducted a meaningful investigation into the matter — seeming to flub basic detail and context on its proximity to resources and a City Council member’s alleged conflict of interest. Col. Timothy Curry, commander at Grand Forks Air Force base, said that some of the memo’s ideas are plausible.
“Some are less,” he said. “And at this time, I still do not have any leadership relaying a clear security threat.”
Chatter about the plant has only grown, though. In recent days, CNBC published a report that quoted senior members of the Senate Intelligence Committee — chairman Mark Warner, D-Va., and Sen. Marc Rubio, R-Fla. — offering criticism of the project.
“The Senate Intelligence Committee has been loudly sounding the alarm about the counterintelligence threat posed by the (China),” Warner told CNBC. “We should be seriously concerned about Chinese investment in locations close to sensitive sites, such as military bases around the U.S.”
Rubio voiced similar concerns, and CNBC reported that he is “co-sponsoring legislation that would give the Biden administration power to block” a Chinese land purchase near a military base.
But a CFIUS review could give the city its clearest picture yet of what Fufeng’s China connections could mean — resolving a roiling debate in Grand Forks that has led to months of tension between project backers and opponents.
“If they’re interested in taking a look at it, they should, for the sake of national security,” City Council member Dana Sande said. “... If they had taken a stand some time ago, that would have been fine, too.”
Editor's note: This story has been updated to reflect that Eric Chutorash is the COO of Fufeng’s American subsidiary.