Chinese company's purchase of North Dakota farmland raises national security concerns in Washington

At first glance, the largely barren, wind-swept tract of land just north of Grand Forks, North Dakota, seems to be an unlikely location for international espionage.

There's not much on the more than 300-acre patch of prime Dakota farmland right now other than dirt and tall grasses, bordered by highways and light industrial facilities on the outskirts of the city.

The nearest neighbors include a crop production company, a truck and trailer service outfit, and Patio World, which sells landscaping supplies for suburban backyards.

But when the three North Dakotans who owned the parcels of land here sold them for millions of dollars this spring, the transaction raised alarm bells as far away as Washington, D.C.

That's because the buyer of the land was a Chinese company, the Fufeng Group, based in Shandong, China, and the property is just about 20 minutes down the road from Grand Forks Air Force Base — home to some of the nation's most sensitive military drone technology.

The base is also the home of a new space networking center, which a North Dakota senator said handles "the backbone of all U.S. military communications across the globe."

Now some security experts warn the Chinese corn milling plant should be stopped, because it could offer Chinese intelligence unprecedented access to the facility.

It's an only-in-America kind of fight — pitting the property and economic rights of a community against national security warnings from high-ranking officials in the nation's capital.

Debate over the project has roiled the small community, with emotional city council hearings, local politicians at odds with one another, and neighborhood groups gearing up to block the project.

Craig Spicer, whose trucking company borders the Chinese-held land, said he's suspicious of the new company's intent. "It makes me feel nervous for my grandkids," he said. "It makes me feel nervous for my kids."

Gary Bridgeford, who sold his parcel of the farmland to the Chinese company for around $2.6 million this year, said his neighbors have vented their anger at him and planted signs opposing the project in his front yard. "I've been threatened," he said. "I've been called every name in the book for selling property."

Bridgeford said he believes the national security concerns are overblown. "How would they gain any knowledge of the base?" he asked. "It's about 12 miles away. It isn't like its next door."

"People hear the China stuff and there's concern," Bridgeford said. "But everyone has a phone in their pocket that was probably made in China. Where do you draw the line?"

The city's mayor, Brandon Bochenski, said he just wants to do business: The proposed $700 million plant would create more than 200 direct jobs and other opportunities for logistics, trucking and other support services. He's pushing for the project, but he acknowledges there are national security concerns that are beyond his ability to process as a small-town mayor.

"I mean, we're a municipality of about 60,000 people," he said. "You know, we don't have the budget to have an intelligence-gathering apparatus here. We do the best we can and rely on our partners."

Among those partners is the United States Air Force, which hasn't taken an official position on the Chinese project in its North Dakota backyard.

But inside the Air Force, an officer circulated a memo about the project in April, casting it as a national security threat to the United States and alleging that it fits a pattern of Chinese subnational espionage campaigns using commercial economic development projects to get close to Department of Defense installations. The officer, Maj. Jeremy Fox, argued that the Fufeng project is located on a narrow geographic footprint at which passive receiving equipment could intercept sensitive drone and space-based communications to and from the base.

"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," he wrote. And any such data collection "would present a costly national security risk causing grave damage to United States' strategic advantages."

Fox argued that the Air Force would have little ability to detect any electronic surveillance on drone and satellite transmissions being conducted from the Chinese property. "Passive collection of those signals would be undetectable, as the requirements to do so would merely require ordinary antennas tuned to the right collecting frequencies," he wrote. "This introduces a grave vulnerability to our Department of Defense installations and is incredibly compromising to US National Security."

Still, that's not the Air Force's official position. An Air Force spokeswoman said Fox wrote the memo on his own: "In an effort to raise awareness of what he deemed concerning with respect to the company in question moving into the Grand Forks area, Maj. Fox submitted his personal assessment of potential vulnerabilities to the Grand Forks Air Force Base Office of Special Investigations," Lea Greene, spokeswoman for the base, said in a statement.

The company at the heart of the debate argues that its project will helps Americans, not hurt them. Eric Chutorash, chief operating officer of Fufeng USA, the U.S. subsidiary of Fufeng Group, dismissed concerns the plant could be used to spy on the Air Force base.

"I can't imagine anyone that we hire that's going to even do that," Chutorash said. When asked if he could definitively say it wouldn't be used for espionage, he responded, "Absolutely."

"We're under U.S. law, I'm an American citizen, I grew up my whole life here, and I am not going to be doing any type of espionage activities or be associated with a company that does, and I know my team feels the exact same way," Chutorash said. 

But Fox is not the only official concerned about the farmland in Grand Forks.

The U.S.-China Economic and Security Review Commission cited Fox's intelligence concerns in a May 26 report, writing, "the location of the land close to the base is particularly convenient for monitoring air traffic flows in and out of the base, among other security related concerns."

Sen. Kevin Cramer, R-N.D., opposes the project, despite the economic advantages it might bring to his own constituents. He said he's suspicious of the Chinese government's intent. "I think we grossly underappreciate how effective they are at collecting information, collecting data, using it in nefarious ways," he said in an interview. "And so I'd just as soon not have the Chinese Communist Party doing business in my backyard."

Both the Democratic chairman and the Republican ranking member of the Senate Intelligence Committee also told CNBC they are opposed to the project.

"The Senate Intelligence Committee has been loudly sounding the alarm about the counterintelligence threat posed by the (People's Republic of China)," said Chairman Mark Warner, D-Va. "We should be seriously concerned about Chinese investment in locations close to sensitive sites, such as military bases around the U.S."

His Republican counterpart, Sen. Marco Rubio, of Florida, agrees. "It is dangerous, foolish, and shortsighted to allow the Chinese Communist Party and its proxies to purchase land near U.S. military installations," he told CNBC in a statement, noting that he is co-sponsoring legislation that would give the Biden administration the power to block such a purchase. "This is something we must address." 

The project is a complicated one, and the city of Grand Forks is not expected to begin building out infrastructure for it until next spring. Bochenski said he's moving ahead in good faith but is ready to shift gears if new information comes to light. "We want to do what's best for the community, we want to do what's best for the country, it's a difficult balance right now," he said.