Spiritwood Energy Park can’t terminate contract with ND Soybean Processors

Jenny Schlecht
Forum News Service

FARGO, N.D. — A district court judge says the Spiritwood Energy Park Association cannot immediately terminate its agreement with North Dakota Soybean Processors to build a $287 million soybean processing plant soybean-crushing plant in Spiritwood, nor can the Energy Park Association enter into a contract with any other soybean-crushing or similar facility.

East Central District Judge Tristan Van de Streek on Tuesday, Aug. 13, granted a temporary restraining order and preliminary injunction to stop the Spiritwood Energy Park Association from terminating its agreement with North Dakota Soybean Processors. The energy park had announced on July 24 it was pulling out of the deal.

In a lawsuit filed Aug. 8, against the Spiritwood Energy Park for breach of contract, North Dakota Soybean Processors says it already spent $7 million in development costs toward establishing the plant and that the Spiritwood Energy Park was the “vastly superior” option for placement of its plant because of the availability of rail, water, electric and steam power services.

The lawsuit seeks for soybean processors to be able to build the plant as planned or for the energy park to repay the $7 million soybean processors already has put into the project.

In the temporary restraining order, Van de Streek wrote that soybean processors has a “substantial probability of succeeding on the merits in this action.”

A hearing in the case is scheduled for Sept. 4 in Fargo.

The soybean processors in 2017 announced plans to build a soybean-crushing facility in the energy park, east of Jamestown, N.D. The planned soybean-crushing facility would produce 935,000 tons of soybean meal and 475 million pounds of soybean oil. The plant also would bring an estimated 60 jobs to the region. Minnesota Soybean Processors put up $60 million, and North Dakota Soybean Processors was seeking farmers as investors.

The Spiritwood Energy Park is owned by the Jamestown/Stutsman County Development Corporation and is immediately south of the Dakota Spirit AgEnergy ethanol plant. The North Dakota Soybean Processors had an agreement with the energy park to build there. In a complaint in the lawsuit, the soybean processors outlined its progress toward funding the project. Though funding had proceeded slower than expected, the group says it had the necessary funding lined up by early July.

The complaint describes a sudden change of tone from the energy park representatives in early July, with manager Connie Ova changing a planned meeting on infrastructure to a meeting on financials and saying that the energy park’s “willingness to continue the Key Terms Agreement is doubtful” unless “NDSP can demonstrate is[sic] had the necessary financing.”

At the July meeting, Scott White, interim CEO of soybean processors, informed energy park representatives that $121 million in equity commitments and $156.5 million in senior debt financing commitments had been secured for the project — enough to begin construction. After that, the meeting moved toward discussing what was needed to push the project toward closing.

“At that point, Connie Ova revealed that SEPA had not completed virtually any of the Site Work obligations it agreed to in the Key Terms Agreement,” the complaint said, listing a number of items that had not been completed as expected.

Ova, in an email, said she “cannot make a comment on pending litigation, per legal counsel.” Given the delays expected due to those items not being completed, the soybean processors offered to move closing to Sept. 30, rather than moving it up to the end of August as they had wanted. After the meeting, the soybean processors put together more financial and planning information and presented it to the energy park.

On July 24, the Spiritwood Energy Park Association board of directors, with no additional conversation with soybean processors, voted to terminate the agreement to build the plant.

However, the soybean processors group says it still wants to build.

“NDSP remains ready, willing, and able to proceed with the planned soybean-crushing facility at the Spiritwood location, and intends to aggressively protect its rights so that NDSP is able to proceed to construct what would be the only farmer-owned soybean-crushing facility in North Dakota,” a statement from the group said.

The temporary restraining order will remain in effect until further order of the court.

A location south of the Dakota Spirit AgEnergy near Spiritwood will be the future home of the North Dakota Soybean Processors plant.