New government report raises security, Air Force concerns on Fufeng

GRAND FORKS — A U.S. government report published late last month raises security concerns about Fufeng Group’s interest in a new corn-milling plant in Grand Forks.

The report, published May 26 by the U.S.-China Economic and Security Review Commission, runs for more than two dozen pages and details the agricultural relationship between the United States and China. It highlights several security concerns, including that Fufeng Group’s future location would be roughly 12 miles from Grand Forks Air Force Base.

The report cites Air Force Maj. Jeremy Fox, who said in a separate memo of his own that “some of the most sensitive elements of Grand Forks exist with the digital uplinks and downlinks inherent with unmanned air systems and their interaction with space based assets,” adding that “if proximal access were given to our adversaries, and their collections were directed at us, it would present a costly national security risk causing grave damage to (the) United States’ strategic advantages.”

The U.S.-China Economic and Security Review Commission was created in 2000 to keep close tabs on trade ties with China and their significance for national security. While its report does not allege wrongdoing by Fufeng — and does not appear to raise any new, previously unreported concerns about the company — it represents one of the highest-profile sets of concerns raised about the plant since its announcement last year.

It’s also become an important part of the debate about Grand Forks’ future — provided to city leaders by Grand Forks Air Force Base’s public affairs office, City Administrator Todd Feland said. The document has also circulated widely among local opponents of the project.

Notably, the U.S.-China Commission report states that the mill site’s distance from Grand Forks Air Force Base qualifies it for review by the Committee on Foreign Investment in the United States. In early May, city officials had previously said that submitting the deal to CFIUS was a matter under discussion, and that they were seeking a third-party legal opinion on the matter.

This week, Feland said the city is still waiting for that third-party legal review to conclude.

Feland downplayed the report’s concerns and expressed some skepticism about its sources. He said the city had been provided Maj. Fox’s memo — cited in the report — by a project opponent, and that it was unclear if the memo is genuine. A copy of the memo, which Feland provided to the Herald, notes that it was “completed on personal time and in no way reflects the official opinions” of the Air Force or Space Force.

Feland also wondered at the U.S.-China Commission report’s citation of Ross Kennedy, a supply chain expert and Ohio-based critic of the project. An interview with Kennedy appears to be one of the principal sources for the report’s security claims about Fufeng. (City Council President Dana Sande has questioned whether he is a paid operative; Kennedy has denied this).

“I’m not saying it is or it isn’t” a credible source, Feland said of the U.S.-China Commission's report. “... I see it as a quasi-governmental report. But I don't see it coming from a federal agency. And then when I see the major reference on national security — an alleged major in the U.S. Air Force. … It just makes me curious.”

Feland said the report will be discussed at Monday's City Council meeting, where city leaders also are expected to weigh the annexation of Fufeng's future site — a contentious vote for the plant's potential neighbors.

Though some Grand Forks residents have worried about the potential plant’s traffic or odor, Fufeng Group’s links to China have been the loudest part of the debate over the company’s arrival. Fufeng is based in China and its chairman has government ties in the country.

City leaders have insisted that they’re doing their due diligence — speaking with Air Force and FBI officials about the matter. Notably, after a closed-door briefing with the FBI, Mayor Brandon Bochenski said there were “no immediate concerns” raised about Fufeng Group.

And at City Hall, taking on concerns about China has for some leaders become a frustrating exercise in proving a negative. China is an American rival, but there is no direct evidence that Fufeng will engage in wrongdoing once the plant opens. That’s become a tiresome point for some leaders who think critics are grasping at straws. City Council member Bret Weber colorfully compared theories about espionage to “Hogan’s Heroes,” the 1960s television sitcom about World War II POWs who foiled Nazi plans from their cells.

“This will be American workers buying American corn, selling mainly to American companies,” Weber said. “… The idea that the entire security of the future of the United States is hinging on the decision of seven council members from a city of less than 100,000 — if that were the case, we’d have a whole lot more to worry about than the development of a plant.”

Eric Chutorash, COO of the American subsidiary negotiating to build the new Fufeng plant, on Thursday did not fulfill a request for comment. But he has previously denied that the plant would be used for espionage purposes.

“I know we’re not going to be asked to be collecting any intelligence on Grand Forks Air Force Base,” Chutorash told the Herald in March. “I can’t stress it any more than that. (But) me personally, I wouldn’t provide it. I don’t believe the team being built there would provide it. … Our HR director, commercial director and sales team and engineer, they're from here – they're not people transferred from China. The workers in the plant will be Americans. I can't imagine that anybody in the facility would participate in that.”

The rest of the government report details agricultural connections between the U.S. and China, noting that China’s investments abroad help provide for its food needs at home — where a lack of farmable land, pollution, flooding and other factors have capped food security. One investment the report details at length is a Chinese company’s acquisition of Smithfield Foods, which props up Chinese food stability while keeping hog farm pollution abroad. It warned of “undue leverage over U.S. supply chains.”

RELATED: Grand Forks’ Fufeng deal — expected to bring hundreds of jobs — runs up against anxieties over China

The Herald investigated concerns about China and its agricultural interests in January. Frayne Olson, an agricultural economist at NDSU, said he wasn’t too concerned about Chinese investments — both in buying land and buying agribusinesses.

“We also had some of these same kinds of concerns and issues when the Japanese started buying not only some U.S. agricultural processing facilities, but also got into joint ventures with U.S. (agriculture) firms,” he said. “You look at Nissan and Toyota … they have manufacturing plants here in the U.S., and there’s definitely economic activity because of that.”

EDITOR'S NOTE: This report has been updated to clarify separate references to a report by the U.S.-China Commission and a separate memo, written by Maj. Fox, cited within the commission’s report.