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                                                                   EXHIBIT 10.29

                                                        Contract No. FY05-LI-133

This contract is between the State of North Dakota acting by and through its
Industrial Commission, hereafter called Commission and Red Trail Energy, LLC.,
hereafter called Contractor.

1.    Independent Contractor

      The Contractor, its employees, agents and representatives are not
      employees of the Commission. Nothing in this Agreement shall be deemed to
      create an employer/employee relationship between the Commission and the
      Contractor.

2.    Statement of Work

      a.    Contractor agrees to perform the work described in Exhibit A,
            entitled "Demonstrating North Dakota Lignite's Profitability in
            Energy Production and Agricultural Processing," which is attached to
            this Agreement and is made a part of it.

      b.    Contractor agrees to provide reports for the work mentioned in
            Paragraph 2a as follows

                 Status Report:  Six months after construction of ICM fluidbed
                                 boiler
                 Final Report:   Six months after ethanol production has
                                 commenced.

            The reports shall comply with 43-03-05-08 of the North Dakota
            Administrative Code. Specifically, the Final Report must include a
            single page project summary describing the purpose of the project,
            the work accomplished, the project's results, and the potential
            applications of the project. Each Report must provide documentation
            verifying the receipt of the private matching funds. The Final
            Report and the Project Summary must be submitted in hard copy and
            either Word 6.0/95 electronic format or Adobe portable document
            format.

3.    Consideration

      a.    For performing the work the Commission agrees to grant to Contractor
            an amount not to exceed $350,000 according to the following
            schedule:

<TABLE>
<S>                                                                                  <C>
Upon execution of the contract and receipt of the information required in Exhibit B  $100,000

Upon receipt and consideration of status report                                      $175,000

Upon receipt and consideration of final report                                       $ 75,000
</TABLE>

      b.    If after reviewing a report the Commission believes that the report
            is inadequate or that the Contractor is not complying with the scope
            of work or satisfactorily carrying out the work, the Commission may
            withhold all or part of a scheduled payment until the Contractor, in
            the opinion of the Commission, has remedied the deficiency(ies).

4.    Authority to Contract and Subcontract

      The Contractor shall not have the authority to contract for or on behalf
      of or incur obligations on behalf of the Commission.

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FY05-LI-133
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      The Commission acknowledges that the Contractor will be entering into
      subcontracts for the work described herein and in Exhibit A. The
      Contractor agrees to be solely responsible for the performance of any
      Subcontractor.

5.    Funds Available and Authorized

      Commission certifies at the time of the execution of this Agreement
      sufficient funds are available and authorized for expenditure to finance
      costs of this Agreement within the Commission's current appropriation or
      limitation to July 1, 2007. It is agreed that if the appropriation or
      funding to the Commission is not obtained and continued at a level
      sufficient to allow for payments to the Contractor, for the services
      identified in Paragraph 2, the obligations of each party hereunder
      terminate upon delivery of written notice to the Contractor.

6.    Termination

      This Agreement may be terminated by mutual consent of both parties in
      writing and delivered by certified mail or in person.

      Upon delivery of written notice to the Contractor, the Commission may
      immediately terminate the whole or any part of this Agreement if:

      a.    The Contractor fails to provide services described herein and in
            Exhibit A within the time specified herein or any extension thereof;
            or

      b.    The Contractor fails to perform any of the other obligations under
            this Agreement, and after receipt of written notice from the
            Commission, fails to correct such failures within thirty days or
            such longer period as the Commission may authorize.

      The rights and remedies of the Commission provided in the above clause
      related to defaults (including breach of contract) by the Contractor shall
      not be exclusive and are in addition to any other rights and remedies
      provided by law or under this Agreement. Any termination of this
      Agreement, other than for breach of contract, shall be without prejudice
      to any obligations or liabilities of either party which accrued prior to
      termination.

      If the Commission terminates this Agreement for default by the Contractor,
      the Contractor shall immediately reimburse the Commission the amount of
      all money paid by the Commission to the Contractor hereunder.

7.    Contract Management

      Notwithstanding the Contractor's responsibility for management of the work
      described herein and in Exhibit A, the administration of this Agreement
      will require maximum coordination between the Lignite Research Council,
      the Commission and the Contractor.

      COMMISSION'S TECHNICAL REPRESENTATIVE

      The Commission's Technical Representative (TR) will be designated on
      authority of the Commission to monitor all technical aspects and assist in
      administration of the Agreement. The types of actions within the purview
      of the TR's authority are to assure that the Contractor performs the
      technical requirements of the Agreement; to perform or cause to be
      performed inspections necessary in connection with the performance of the
      Agreement; to maintain both written and oral communications with the
      Contractor concerning written interpretations of the technical
      requirements of the scope of work; to monitor the Contractor's performance
      under the Agreement and notify the Commission of any deficiencies
      observed.
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FY05-LI-133
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      COMMISSION'S AUTHORIZED OFFICER

      The Commission's Authorized Officer will carry out all contractual
      administration. Communications pertaining to Agreement administration
      matters will be addressed to:

      The Industrial Commission of North Dakota
      Attention: Karlene Fine
      State Capitol 14th Floor
      600 E Boulevard Ave Dept 405
      Bismarck, North Dakota  58505-0840

      The Commission's Authorized Officer is the only person authorized to
      approve changes in any of the requirements under the Agreement.

8.    Access to Records

      The Commission, the State Auditor of the state of North Dakota, and the
      Office of the Attorney General of the State of North Dakota, and their
      duly authorized representatives, shall have access to the books,
      documents, papers and records of the Contractor relating to the work
      performed by the Contractor hereunder for the purpose of making auditing,
      examining and copying the same.

9.    Repayment of Grant and North Dakota Lignite Usage Requirement

      After the first year of operation, a portion of the funding should be
      repaid to the Lignite Research Program in annual payments of $22,000 over
      ten years. After the first year of operation, North Dakota lignite use
      shall represent a minimum of 75% of the primary fuel (on a BTU basis). If
      North Dakota lignite as the primary fuel is less than 75% of total fuel
      usage (on a BTU basis), an additional $13,000 shall be repaid for each
      year of reduced North Dakota lignite use. The Contractor shall certify
      each year for ten years after the first year of operation the amount of
      North Dakota lignite used in the operation of the project and what the
      percentage it is of total fuel usage.

10.   Compliance with Law

      The Contractor shall comply with all federal, state, and local laws and
      ordinances applicable to the work to be done under this Agreement.

11.   Indemnity and Insurance

      The Contractor shall save and hold harmless the State of North Dakota and
      the Commission, its officers, agents, employees, and members, from all
      claims, suits, or actions of whatsoever nature resulting from or arising
      out of the activities of the Contractor or its subcontractors, agents, or
      employees under this Agreement. The Contractor shall maintain liability
      insurance coverage with limits of liability equal to or greater than those
      damage limits prescribed in N. D. C. C. Section 32-12.2-02.

12.   Ownership of Work Product

      All work product of the Contractor resulting from this Agreement shall be
      governed by North Dakota Administrative Code Chapter 43-03-06.

13.   Nondiscrimination

      Contractor agrees to comply with all applicable requirements of federal
      and state civil rights and rehabilitation statutes, rules, and
      regulations.

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FY05-LI-133
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14.   Applicable Law

      This Agreement shall be governed by and construed in accordance with the
      laws of the State of North Dakota.

15.   Captions

      The Captions or headings in this Agreement are for convenience only and in
      no way define, limit, or describe the scope or intent of any provisions of
      this Agreement.

16.   Execution and Counterparts

      This Agreement may be executed in several counterparts, each of which
      shall be an original, all of which shall constitute but one and the same
      instrument.

17.   Amendments

      The terms of this Agreement shall not be waived, altered, modified,
      supplemented, or amended, in any manner whatsoever, except by written
      instrument signed by the parties.

18.   Notices

      All notices, certificates, or other communication shall be sufficiently
      given when delivered or mailed, postage prepaid, to the parties at their
      respective places of business as set forth below or at a place designated
      hereafter in writing by the parties.

      Industrial Commission of North Dakota     Red Trail Energy, L.L.C.
      State Capitol, Tenth Floor                Attention: Mick Miller
      600 E Boulevard Ave Dept 405              3682 Highway 8 South
      Bismarck, ND 58505-0840                   Richardton, ND 58652

19.   Successors in Interest

      The provisions of this Agreement shall be binding upon and shall inure to
      the benefit of the parties hereto, and their respective successors and
      assigns.

20.   Severability

      The parties agree that if any term or provision of this Agreement is
      declared by a court of competent jurisdiction to be illegal or in conflict
      with any law, the validity of the remaining terms and provisions shall not
      be affected, and the rights and obligations of the parties shall be
      construed and enforced as if the Agreement did not contain the particular
      term or provision held to be invalid.

21.   Waiver

      The failure of the state to enforce any provisions of this Agreement shall
      not constitute a waiver by the state of that or any other provision.

22.   Merger Clause

      This Agreement constitutes the entire agreement between the parties. No
      waiver, consent, modification or change of terms of this Agreement shall
      bind either party unless in writing and signed by both parties. Such
      waiver, consent, modification, change if made, shall be effective only in
      the specific instance and for the specific purpose given. There are no
      understandings, agreements, or representations, oral or written, not
      specified herein regarding this Agreement. Contractor, by the signature
      below of its authorized representative, hereby
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FY05-LI-133
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     acknowledges that the Contractor has read this Agreement, understands it,
     and agrees to be bound by its terms and conditions.

23.  Legal Notice/Disclaimer

     The following notice shall be contained in all reports intended to be
     released to the public:

     This report was prepared by Red Trail Energy, LLC pursuant to an agreement
     with the Industrial Commission of North Dakota, which partially funded the
     report. None of Red Trail Energy, LLC or any of its subcontractors, the
     Industrial Commission of North Dakota, or any person acting on behalf of
     any of them:

          (A) Makes any warranty or representation, express or implied, with
          respect to the accuracy, completeness, or usefulness of the
          information contained in this report, or that the use of any
          information, apparatus, method, or process disclosed in this report
          may not infringe privately-owned rights; or

          (B) Assumes any liabilities with respect to the use of, or for damages
          resulting from the use of, any information, apparatus, method or
          process disclosed in this report.

     Reference herein to any specific commercial product, process, or service by
     trade name, trademark, manufacturer, or otherwise, does not necessarily
     constitute or imply its endorsement, recommendation, or favoring by the
     Industrial Commission of North Dakota. The views and opinions of authors
     expressed herein do not necessarily state or reflect those of the
     Industrial Commission of North Dakota.

24   Term of Agreement. This Agreement shall be effective upon execution herein
     by the required parties indicated below and shall remain in effect for 11
     years following commencement of commercial operation of the Red Trail
     Energy, L.L.C. Project.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed intending to be bound thereby.

RED TRAIL ENERGY, L.L.C.                      NORTH DAKOTA INDUSTRIAL COMMISSION

By: /s/ Ambrose Hoff                          By: /s/ Karlene Fine
    -------------------------------               ------------------------------
    Name                                          Karlene Fine
    President                                     Executive Director
    Title

Date: May 12,2006                              Date: April 26,2006