Have a look in this document:

https://github.com/MeridiusIX/Modular-Encounters-Systems/wiki/Encounter-Guide-and-Troubleshooting

Thank you, I missed this before. I'll post the part that I believe applies to this below in case others have the same issue.

"NPCs Are Spawning With No Ownership: This is almost always the result of the NPC Faction being tampered with in some way. This can happen if an admin removes the founder from an NPC faction, if a player joins the NPC faction using admin controls, or if another script/plugin makes changes to the faction by adding/removing identities from it. None of the mods I curate make these sorts of changes. Unfortunately, I don't have an easy suggestion on how to correct many of these situations, since NPC factions are only generated once per world by the game. If you know how to edit the save file and undo any breaking changes, that is often the best way to handle it - otherwise you may have to create a new save to get NPCs spawning with correct ownership again."