EXHIBIT
10.12


	
  Tower One, Suite 580

  1515 Arapahoe Street

  Denver, CO 80202

  	
  NATURAL

  RESOURCE

  GROUP,

  INC.

  	
  telephone (720)
  956-5300

  facsimile (720) 956-5310

  www.NRGINC.com

  



 


November 3, 2006


Tennessee Valley Agri-Energy LLC


Attention: Mr. Bart R. McCormack


540 Little Dry Creek Road


Pulaski, Tennessee  38478


Subject:  Exhibit A.  Tennessee
Valley Agri-Energy LLC Environmental Permitting Services.


Dear Mr. McCormack:


Natural Resource Group (NRG) appreciates the
opportunity to assist Tennessee Valley Agri-Energy LLC (Tennessee Valley
Agri-Energy) in providing environmental permitting and site preparation
assistance.  Tennessee Valley Agri-Energy
will benefit from NRG’s experience and expertise providing siting and water
permitting services for over 150 ethanol projects across the country.  NRG also has the staff resources and
technical expertise to assist in timely preparation of any amendment or
supplement to a given permit as is required with respect to our environmental
analysis.  Finally, we will work with the
engineering and construction firms to ensure that permit requirements are
incorporated into the plant design and construction.


NRG understands the facility will be a 50 MMgal/year
designed facility, producing approximately 60 MMgal/year in Morgan County,
Alabama.  For reference, this estimate
has been divided into environmental permitting and other siting services.


	
  Hydrogeologic Study

  	
  $

  	
  5,000

  	
   

  



 


Generally, a 60-million gallon per year ethanol plant
will require a water supply capable of producing a flow of approximately 300 to
500 gallons per minute, depending on water quality.  NRG proposes to complete the following tasks
to verify the groundwater resources are present and available at the proposed
site:


·                  Communicating with state regulators and local
government units regarding any restrictions on water supply including well head
protection areas;


·                  Compiling drilling records for local and regional well
systems to evaluate the properties of underlying aquifers including depth,
yield and water quality;


·                  Determining
existing production well locations to assess potential well interference;


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PROVIDENCE – ANCHORAGE - CHARLOTTE













·                  Compiling
water chemistry records from local and regional production wells to determine
the cost impact of appropriating water from aquifer systems with higher
dissolved solids;


·                  Assessing nearby public water supply system records to
determine their existing demand, excess and water chemistry; and


·                  Providing a hydrogeologic overview of the site so that
a test/production well design can be completed. 
The well design will be used to obtain an engineering cost estimate from
local area well drillers to complete the well.


	
  Site Evaluation/Fatal Flaws Analysis (FFA)

  	
  $

  	
  5,500

  	
   

  



 


The FFA requires a site visit and will include
evaluation of physical data obtained from public records, existing site
reports, and we also evaluate key permitting issues.  The FFA will identify limitations that may
delay or prevent the project from being completed.  General topics assessed include:


·                  The existing facility site layout relative to
surrounding properties.  Items of focus
include, but are not limited to, regulated land use and jurisdiction,
transportation access, established easements, land use history and development
grants;


·                  Existing utilities including such issues as:  proximity to site, service, availability and
demand, and cost (where information can be readily obtained) of gas, electric,
fiber optic, telephone, sewer and public water;


·                  The site setting including wetlands, soils,
floodplain, geologic hazards, groundwater, surface water and air quality; and


·                  Significant regulatory issues including requirements
for completion of a EAW/EIS, water rights and restrictions, surface water and
air permits; contamination on site or permit violations.  Specific federal, state and local regulations
that apply to the specific project and the proposed site will be cited.


	
  Phase I Environmental Site Assessment (ESA)

  	
  $

  	
  3,000

  	
   

  



 


Our Phase I ESA will be performed in accordance with
the procedures set forth in ASTM E1527-05 (hereinafter the ASTM Standard
Practice or Practice) and complies with the requirements of the November 1,
2005, United States Protection Agency (EPA) Final Rule for conducting all
appropriate inquiries (40 CFR Part 312).


The purpose of the ASTM Practice is to define good
commercial and customary practice for conducting an ESA of a parcel of real
estate with respect to the range of contaminants within the scope of the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
and including petroleum products.  Performance
of the Practice is intended to permit a user to satisfy one of the requirements
to qualify for the innocent landowner, contiguous property owner, or bona fide
prospective purchaser limitations to CERCLA liability, that is, the practice
which constitutes “all appropriate inquiry into the previous ownership and uses
of the property consistent with good commercial and customary practice.”



 2
 









The goal of performing the Practice is to identify
Recognized Environmental Conditions, which may be associated with the site
under investigation.  The term “Recognized
Environmental Conditions” means “the presence or likely presence of any
hazardous substances or petroleum products on a property under conditions that
indicate an existing release, a past release, or a material threat of a release
of any hazardous substances or petroleum products into structures on the
property or into the ground, ground water or surface water of the
property.  The term includes hazardous
substances or petroleum products even under conditions in compliance with
laws.  The term is not intended to
include de minimis conditions that generally do
not present a material risk of harm to public health or the environment and
that generally would not be the subject of an enforcement action if brought to
the attention of appropriate governmental agencies.  Conditions determined to be de minimis are not Recognized Environmental Conditions.”


In general terms, NRG’s Phase I ESA included the
following:


·                  Conducting a visual reconnaissance of the site to
identify areas related to past or current operations that may represent
potential environmental concerns;


·                  Observing properties adjacent to the site from public
right-of-ways for obvious indications of potential environmental concern;


·                  Reviewing historical records to document the past use
of the site and surrounding area;


·                  Reviewing readily available information pertaining to
geologic and hydrogeologic conditions;


·                  Reviewing federal, state, local and tribal
environmental agency databases to identify known or threatened releases of
hazardous substances, pollutants or contaminants within ASTM-designated search
distances from the site;


·                  Reviewing previous environmental assessments; and


·                  Interviewing the site owner, select tenants, and fire
officials.


This price assumes completing the ESA in concurrence
with the FFA.  Completing the FFA and ESA
work scope will take approximately four weeks form the date of your
authorization.


	
  Army Corps of Engineers (401)

  	
   

  	
  TBD 

  



 


Results of the Fatal Flaw analysis will provide
information on the requirements for an Army Corps of Engineers (401)
Permit.  Preliminary information
indicates that there is a preexisting structure located on the Tennessee River
which will be modified as a loading facility for the ethanol plant.  Once the engineering and design information
is provided for the project, NRG will develop a cost estimate for submittal of
the appropriate Army Corps Permit.



 3
 









Summary


Table 1

Proposed Morgan County, Alabama Ethanol Facility

Environmental Siting and Permitting Work


 


	
  

  Task Description

  	
   

  	
  Cost

  	
   

  	
  Completion 

  Date

  	
   

  	
  Authorization 

  Initials

  	
   

  
	
  Hydrogeologic Study

  	
   

  	
  $

  	
  5,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Site Evaluation/Fatal
  Flaws Analysis

  	
   

  	
  $

  	
  5,500

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Phase I Environmental
  Site Assessment

  	
   

  	
  $

  	
  3,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Army Corps of Engineers
  Permit

  	
   

  	
  TBD

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Geotechnical Soils
  Screening

  	
   

  	
  Pending
  Receipt 

  of Bid from Subcontractor

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Site Survey/Topo

  	
   

  	
  Pending
  Receipt 

  of Bid from Subcontractor

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Travel Costs and
  Meetings

  	
   

  	
  Reasonable
  Travel Costs

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  13,500

  	
   

  	
  —

  	
   

  	
   

  	
   

  



 


Screening of site soils can be critical to assessing
the feasibility of site development and if significant soil amendment will be
necessary.  In addition, as noted above,
a current and accurate site survey is critical to the siting studies and for
site layout by the process and civil engineers. 
NRG has established a network of subconsultants to complete these tasks
and we would be happy to coordinate these activities as requested by Tennessee
Valley Agri-Energy.  A cost estimate will
be provided upon request, or billed on a time and materials basis as
authorized.


Please note that this proposal does not
include travel costs and follow-up correspondence beyond minor clarification
with the Alabama Department of Environmental Management (ADEM), or other state
and federal agencies, after submission of each application/document.  Travel costs, including per diem, are
dependent on scheduling and date of approval. 
A cost estimate will be provided upon request, or billed on a time and
materials basis as authorized.


If authorized to complete the work, NRG could start
the project within three weeks of approval. 
We look forward to working with you on this project.  Please indicate your acceptance of this
proposal by signing the authorization below and initialing each of the projects
in the table that you wish to have NRG complete at this time.  Initialing is not required if all tasks are
authorized.  Please forward a copy of the
signed proposal to our office.



 4
 









Sincerely,


	
  Natural Resource Group, Inc.

  	
   

  	
  Signed Authorization:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Paul R. Book

  	
   

  	
   

  	
  Bartt R. McCormack

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Paul R. Book, PhD, PG

  	
   

  	
  Mr. Bart R. McCormack

  	
   

  	
   

  
	
  Principal

  	
   

  	
  Tennessee Valley Agri-Energy LLC

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
    11/16/06

  	
   

  
								



 


	
  CC:

  	
   

  	
  Boyd Ruppelt, BBI

  
	
   

  	
   

  	
  Cheryl Pagard, NRG-Denver

  



 



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