The Alchem Limited plant first opened in 1985 to make ethanol from corn. It closed in 2007 and was later sold at auction.
An Iowa-based energy investment group planned to buy the plant a year ago and use it to turn sugar beets into the alternative fuel. But the project never got off the ground.
Grafton City Administrator Nick Ziegelmann says that the community was hoping the plant would become operational again and restore the 30 jobs that were lost.
Another ethanol plant in northeastern North Dakota, the former ADM Corn Processing plant in Walhalla, closed last year.