Spiritwood Energy Park can terminate soybean crush plant agreement
FARGO, N.D. -- A district court judge has refused to leave in place an injunction prohibiting Spiritwood Energy Park Association from terminating a contract with North Dakota Soybean Processors to build a $287 million soybean processing plant soy...
FARGO, N.D. - A district court judge has refused to leave in place an injunction prohibiting Spiritwood Energy Park Association from terminating a contract with North Dakota Soybean Processors to build a $287 million soybean processing plant soybean-crushing plant in Spiritwood.
East District Judge Stephannie Stiel on Thursday, Sept. 12, ruled from the bench at the Cass County Courthouse that NDSP was “unlikely to prevail on the merits” of the case. Stiel said there is a “great public interest” in building a soybean-crushing plant in Spiritwood.
“But the law does not allow or require these parties to continue to negotiate for this under the circumstances, especially in light of the speculative nature of the harms that have been presented,” Stiel said.
“We very much appreciate the Court’s ruling today as both a matter of law and as a matter of common sense. Our goal remains unchanged: to build and to bring to life North Dakota's first soybean processing facility that will create new jobs and new economic opportunities for North Dakota farmers,” Connie Ova, CEO of the Jamestown/Stutsman Development Corp. and SEPA, said in a statement.
Representatives of North Dakota Soybean Processors Association declined to comment.
The ruling removes a temporary restraining order granted on Tuesday, Aug. 13. While the injunction no longer is in place, the case will move toward a possible trial on whether SEPA breached its contract with NDSP. NDSP has sought to either be allowed to build per the contract with SEPA or for SEPA to pay the $7 million NDSP incurred in the planning phase.
NDSP, a subsidiary of Minnesota Soybean Processors, in 2017 announced plans to build a soybean-crushing facility at Spiritwood. Funding was slower than expected for the project. SEPA announced on July 24, 2019, it was pulling out of the deal by invoking a “convenience clause” in the contract between the entities.
NDSP’s attorneys argued that SEPA, which is a joint operation of the Jamestown/Stutsman Development Corp. and Great River Energy, effectively “waived” the clause by not bringing it up after a March 31, 2018, deadline. SEPA’s attorneys, however, said there was no sunset on the clause and that even by July 2019, NDSP had not completed work on two documents that would have effectively removed SEPA’s ability to invoke the clause.
Steven Wells, one of the attorneys for NDSP, said in court that NDSP had raised and secured financing for the project in July.
“It came slower than anyone anticipated,” he conceded in court Thursday.
SEPA, he said, had not finished its “site work” obligations, including acquiring additional property adjacent to the existing Spiritwood Energy Park.
Wells said SEPA’s decision to terminate the contract had “no explanation,” and he believes the decision to terminate was made after SEPA had begun negotiating with “Company X” to build a soybean-crushing plant at Spiritwood. Wells said NDSP believes “Company X” is Archer Daniels Midland; SEPA attorneys did not dispute that, and court documents in the case also refer to ADM.
“They had already decided to go with ADM,” Wells said.
However, a timeline laid out by SEPA attorney Bryant Tchida showed that SEPA had been open about waiting until funding had been secured to finish site work and about talking to other companies.
Tchida’s timeline explained how NDSP had missed several funding deadlines and had not begun negotiating with Great River Energy about things like wastewater and steam. Tchida brought up public meetings in which officials from Great River Energy and state government had raised concerns about NDSP’s business practices and the viability of their plan.
Tchida said farmer and North Dakota state Rep. Craig Headland, R-Montpelier, at an April 11, 2019, meeting said he was planning to pull his investment in the plant and believed other farmers would do the same. Lt. Gov. Brent Sanford at the same meeting expressed concerns about the project’s viability, Tchida said. Also discussed at the meeting was another company’s interest in building at SEPA.
“Everybody knows another entity is interested in this site,” Tchida said, disputing that NDSP was unaware of that.
Shortly after the meeting, NDSP fired its CEO, Scott Austin. But, Tchida said, NDSP still did not negotiate with Great River Energy and there still were concerns about financing.
Tchida said NDSP was aware SEPA was considering terminating the contract by way of the “convenience clause” and did not dispute it was an option until after the fact. NDSP could have completed the necessary documents with SEPA to have ended the possibility of contract termination.
“NDSP controlled its own destiny,” Tchida said.