Exhibit 10.12


 


SERVICE AGREEMENT


BETWEEN


RTP ENVIRONMENTAL ASSOCIATES, INC.


AND


ETHANOL GRAIN PROCESSORS


 


THIS AGREEMENT is entered into between RTP
ENVIRONMENTAL ASSOCIATES, INC. hereinafter called “Consultant”, and ETHANOL
GRAIN PROCESSORS hereinafter called “Client”. 
In consideration of the covenants herein contained and upon subject to
the mutual terms and conditions set forth herein, the parties hereto agree as
follows:


 


1.                                       SCOPE OF WORK - Consultant shall provide
environmental consulting services for ETHANOL GRAIN PROCESSORS as outlined in
RTP ENVIRONMENTAL ASSOCIATES, INC.’s letter proposal to Mr. Alvin Escue dated
July 9, 2004.


 


2.                                       PAYMENT - For performance of the Services
provided and as outlined in RTP ENVIRONMENTAL ASSOCIATES, INC.’s letter proposal
dated July 9, 2004, Consultant shall invoice the Client according to the
attached Schedule of Charges and Client shall pay Consultant at 400 Post
Avenue, Westbury, New York 11590 at the time specified herein.  Terms for payment are net 30 days with 1.5%
per month service charge on balances past due 30 days or more.


 


3.                                       RESPONSIBILITY OF CONSULTANT - Consultant
shall perform the Services as an independent contractor in accordance with its
own methods, terms of this Agreement, and applicable laws and regulations.
Consultant’s liability arising out of or in connection with the Services shall
be limited to performing at its own expense Services which are (1) deficient
because of Consultant’s failure to perform said Services in accordance with
normal professional standards for performing services of a similar nature, and
(2) reported in writing to Consultant within a reasonable time, not to exceed
thirty (30) days from the completion of the Services in accordance with Article
5. Where Client’s project requires public agency approval, Consultant will
attempt to assist in facilitating approval. 
However, Consultant does not assume responsibility for securing approval
by such agency.


 


Because of the nature of the
work involved in this proposal, the Client shall indemnify and save and hold
harmless from and against any damage, liability, loss, cost or claim, whether
occasioned by RTP ENVIRONMENTAL ASSOCIATES, INC., its officers, employees and
agents or any other person or persons arising out of, resulting from or related
to, the performance of the work provided for in this agreement; provided,
however, that Client shall not be obligated hereunder to indemnify, save and
hold harmless Consultant, its officers, employees or agents against any damage,
liability, loss, cost, or claim which arises out of or in connection with the
intentional wrongful acts of, or the active negligence of, Consultant, or its
officers, employees or agents.


 


4.                                       ASSIGNMENT AND SUBCONTRACTING - This
Agreement shall not be assigned by either party without the prior written
approval of the other.  Consultant may,
subcontract portions of the services to a qualified subcontractor with prior
approval of Client.  Consultant agrees
that Client will incur no duplication of costs as a result of any such subcontract.


 

















 


5.                                       COMPLETION AND ACCEPTANCE - Upon completion
of the Services by Consultant, Client shall promptly provide Consultant with a
written listing of any Services not completed. 
Any Services not listed by Client as incomplete in a listing delivered
to Consultant within thirty (30) days of completion of said Services shall be
deemed complete and accepted.  With
respect to Services listed by Client as incomplete, Consultant shall complete
such Services and the above acceptance procedure shall be repeated.


 


6.                                       TERMINATION - Client may terminate, with or
without cause, upon thirty (30) days written notice to Consultant. Absent
Consultant’s breach of this Agreement, Consultant shall be paid for Services
rendered to the date of termination. Consultant may suspend or terminate this
Agreement upon seven days written notice to Client in the event of substantial
failure by Client to perform in accordance with the terms of this Agreement
including, but not limited to, nonpayment of amounts owing to Consultant
through no fault of Consultant or an unreasonable delay caused by Client or its
agents.


 


7.                                       DELAY; FORCE MAJEURE - Should performance of
the Consultant’s services be materially hampered by causes beyond its
reasonable control, a Force Majeure results. 
Force Majeure includes, but is not restricted to, acts of contractors
(other than Consultant’s contractors), fires, floods, labor disturbances, and
unusually severe weather.


 


If a Force Majeure occurs,
Consultant will be granted a time extension based upon the effect of the Force
Majeure upon Consultant’s performance. 
The parties will also agree upon terms and conditions, including
additional compensation, for continuation or termination of this Agreement.  If no agreement is reached, a Force Majeure
which continues for 120 days from the event of Force Majeure gives Consultant
the option to terminate its obligations under this Agreement in accordance with
Article 6.


 


8.                                       GOVERNING LAW - This Agreement is to be
governed by and construed in accordance with the laws of New York, any action
at law or judicial proceeding instituted for the breach of this Agreement shall
be resolved only in the State or Federal courts of the County of Nassau, State
of New York.


 


9.                                       AMENDMENTS - Any amendment to this Agreement
shall be in writing and signed by Consultant and Client.  In the event that any of the provisions of
this Agreement are held to be unenforceable or invalid by any court of
competent jurisdiction, the parties shall negotiate an equitable adjustment to
the provisions with a view toward affecting the purpose of this Agreement.  In the event that any of the provisions of
this Agreement are held to be unenforceable or invalid by any court of
competent jurisdiction, the parties shall negotiate an Agreement.  In such a case, the validity and
enforceability of the remaining provisions, or portions or applications
thereof, shall not be affected thereby.


 

















 


10.                                 TESTIMONY - Should Consultant, its directors,
officers or employees be required to testify or to submit information to any
judicial or administrative hearing concerning matters in accordance with the
Cost Schedule then in effect.  Should
Consultant be required by a third party to testify at such a hearing,
Consultant shall notify Client as to the date and time of such hearing.  Client agrees to save and hold harmless
Consultant from and against all costs incurred as a result of a judicial or
administrative hearing concerning the services provided for herein.


 


11.                                 TIME TO BAR TO LEGAL ACTION


 


A.  Period:  All legal actions, including claims for
indemnity, by either party against the other for failure to perform or to
perform properly under this Agreement or any legal action however denominated
essentially based upon such breach shall be barred 2 years from commencement of
the period defined in B.


 


B.  Commencement of Period:  The period commences when the claimant knew
or should have known of its claim.  But,
in any event, the period commences for:


 


1.                                       Client claims when Consultant’s performance
is substantially complete; and


 


2.                                       Consultant claims when final payment by
Client has been made.


 


 


12.                                 ENTIRE AGREEMENT - In the event any services
provided for herein are authorized by the client to be performed or caused to
be performed by Consultant prior to the effective date of this Agreement, such
Services shall be deemed to have been performed under this Agreement.  This Agreement, including all attachments
incorporated herein by reference, constitutes the entire Agreement between the
parties.  Any oral agreements, understandings,
proposals, purchase orders or negotiations are intended to be integrated herein
and to be superseded by the terms and conditions of this Agreement.


 


 


AUTHORIZATION TO PROCEED:


 


 


	
  ETHANOL GRAIN PROCESSORS

  	
  RTP ENVIRONMENTAL ASSOCIATES,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
    /s/ Alvin D.
  Escue

  	
   

  	
  By:

  	
   

  	
    /s/ Kenneth J.
  Skipka

  
	
  Title:

  	
   

  	
    General
  Manager

  	
   

  	
  Title:

  	
   

  	
    Principal

  
	
  Date:

  	
   

  	
    7-26-04

  	
   

  	
  Date:

  	
   

  	
    7-30-04

  
									



 

















 


SCHEDULE OF CHARGES - 2004


ETHANOL GRAIN PROCESSORS


 


PERSONNEL CHARGES


 


	
  Title

  	
   

  	
  Billing Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Principal/Project
  Manager

  	
   

  	
  $

  	
  160/hr

  	
   

  
	
  Senior
  Scientist/Engineer

  	
   

  	
  $

  	
  110/hr

  	
   

  
	
  Scientist/Engineer

  	
   

  	
  $

  	
  90/hr

  	
   

  
	
  Assistant
  Scientist/Technician

  	
   

  	
  $

  	
  80/hr

  	
   

  
	
  Word
  Processor/Draftsman

  	
   

  	
  $

  	
  60/hr

  	
   

  



 


Expert Testimony rates
quoted separately.


 


OTHER CHARGES


 


	
  Reproduction (per sheet)

  	
   

  	
  $

  	
   00.15

  	
   

  
	
  Facsimile transmissions
  (per sheet)

  	
   

  	
  $

  	
   01.00

  	
   

  
	
  Automobile (per mile)

  	
   

  	
  $

  	
   00.37

  	
   

  



 


Outside services, equipment and facilities
not furnished directly by RTP ENVIRONMENTAL ASSOCIATES, INC., will be billed at
cost plus 10%.  Services may include, but
are not limited to the following:


 


	
  Rental of equipment and
  vehicles,

  
	
  Outside laboratory
  testing,

  
	
  Special fees, permits,
  insurance, etc.,

  
	
  Transportation on public
  carriers,

  
	
  Printing and photographic
  reproduction,

  
	
  Subconsultants to RTP
  Environmental Associates, Inc.,

  
	
  Meals and lodging and

  
	
  Shipping, telephone &
  other materials.

  



 


Payment Terms:  Net thirty (30) days. Thereafter, one and one-half
percent (1 2%) interest per month on the unpaid balance
will be charged.


 

















 


	
  

  	
  RTP ENVIRONMENTAL ASSOCIATES, INC.®

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AIR • WATER • SOLID WASTE CONSULTANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  400 Post Avenue

  	
   

  	
   

  
	
  Westbury, New York 11590

  	
   

  	
   

  	
  (516)
  333-4526

  
	
  (www.rtpenv.com)

  	
   

  	
  fax

  	
  (516)
  333-4571

  



 


VIA
FACSIMILE


 


 


December 16, 2005


 


Mr. Jim Patterson


Ethanol Grain Processors


P.O. Box 95


Obion, Tennessee  38240


 


	
  RE:

  	
   

  	
  Updated
  Budgets for Environmental Consulting Services

  
	
   

  	
   

  	
  Ethanol
  Plant Development, Obion, TN

  



 


Dear Mr. Patterson:


 


As per our recent
conversations, RTP is pleased to provide you with an update for environmental
permitting and compliance activities associated with Ethanol Grain Processors
(EGP) ethanol plant development at the Obion, Tennessee project site.  RTP initiated activities associated with
environmental permitting, however, because of several project design modifications
there have been a few iterations with respect to permitting activities for the
site have occurred.


 


Initially, the ethanol
manufacturing design was based on a natural gas-fired facility with a
production rate of 50 million gallons per year. 
A draft permit application was prepared for the facility by RTP.  Then EGP requested that RTP alter the
facility to reflect a coal-fired design at a 50 million gallon per year
production rate.  As such, a new draft
permit application was prepared by RTP. 
EGP has now reorganized and decided to build a 100 million gallon per
year, natural gas-fired facility.  As
such, RTP will prepare a new air application package to obtain the necessary
air permits for the facility and update other pertinent application information.


 


With respect to our cost
estimates associated with environmental consulting services for the ethanol
plant development, there are two approved contracts.  The first (dated July 2004) includes the
necessary project activities to authorize construction of the plant within the
State of Tennessee for an estimated total of $35,500 (T&M).  To date, RTP has initiated some activities,
noted above, and EGP has paid approximately $23,500.  However, the need to prepare a new air


 

















 


application package as well as updates
to water and stormwater activities to reflect the new project design, will
require an additional $20,000 (T&M). 
As such, the cost for environmental consulting services to get the plant
ready for construction is now estimated at $43,500.  A second cost estimate (dated March 2005) was
provided to EGP to include consulting services necessary to reach initial plant
operations.  The upper range of this cost
estimate was $63,500 (T&M).  In
total, the estimated overall project budget for ethanol plant development is
now $107,000 (T&M).


 


Please review the proposed
costs and provide a copy of the signed authorization to proceed.  As always, if you should have any questions
or would like to discuss these matters further, please do not hesitate to contact
me.


 


Sincerely,


RTP
ENVIRONMENTAL ASSOCIATES, INC.





 


Jessica A. Karras-Bailey


Senior Environmental Scientist


 


 


AUTHORIZATION TO PROCEED:


 


	
  ETHANOL GRAIN PROCESSORS

  	
  RTP ENVIRONMENTAL ASSOCIATES,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
  Name:

  	
   

  	
  James K. Patterson

  	
   

  	
  Name

  	
   

  	
  Kenneth J. Skipka

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  



 


2

















 


	
  

  	
  RTP ENVIRONMENTAL ASSOCIATES, INC.®

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AIR • WATER • SOLID WASTE CONSULTANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  400 Post Avenue

  	
   

  	
   

  
	
  Westbury, New York 11590

  	
   

  	
   

  	
  (516)
  333-4526

  
	
  (www.rtpenv.com)

  	
   

  	
  fax

  	
  (516)
  333-4571

  



 


March 17, 2005


 


Mr. Alvin Escue


Ethanol
Grain Processors


P.O. Box 837


Milan,
Tennessee  38358


 


	
  RE:

  	
   

  	
  Proposal
  for Additional Environmental Permitting Support

  
	
   

  	
   

  	
  50 MM Gallon/Year Ethanol Plant, Obion, Tennessee

  



 


Dear Al:


 


As per your request, RTP
Environmental Associates, Inc. (RTP) is pleased to provide this letter proposal
and cost estimate for consideration by Ethanol Grain Processors (EGP) in
accordance with your verbal request for additional environmental permitting
assistance.  As per our conversations,
RTP is providing this proposal to assist your efforts with obtaining necessary
State and Federal permits to allow the construction and operation of the proposed
ethanol plant near Obion, Tennessee.  In
general, the scope of work is based on our discussions as well as RTP’s
extensive permitting experience.  This
proposal has been prepared as requested as a cost estimate by task and a total
project cost.  Some of the tasks (where
noted) are part of our original project budget, others are part of this
proposal, unless otherwise noted.


 


This letter is provided
to summarize Tennessee permits, registrations, and documents typically
associated with ethanol plants.  As you
know, the focus is on environmental permitting requirements at the State and
Federal level.  The necessary actions are
provided in three sections, prior to construction, prior to start-up, and after
start-up, to facilitate your needs.  In
addition, I have added a brief summary, as necessary, to explain each
task/activity.  Abbreviations contained
herein include the following:


 


Prior to
Construction


 


•                  Preliminary Site
Information: EGP requested that RTP obtain preliminary site information to
assist in the evaluation of two potential project sites.  These activities included a review of
available information regarding wetlands, soils, waterways, as well as other
pertinent information (covered as part of July 2004 contract).


 

















 


•                  Air Permit from
NDEQ: An air permit must be obtained from the Tennessee Department of
Environment and Conservation (TDEC) prior to the installation/construction of a
new air emission source (covered as part of July 2004 contract).


 


•                  Construction NOI
Submitted to TDEC: A Notice of Intent must be submitted to TDEC at prior to
pre-construction dirt work can commence. 
As part of the NOI a Storm Water Pollution Prevention Plan (SWPPP) must
be completed and on-site in accordance with the TDEC general permit prior
pre-construction dirt work (covered as part of July 2004 contract).


 


•                  Initiation of
NPDES permitting:  TDEC will require a
NPDES permit for the discharge of utility waters, including non-contact cooling
tower blowdown, Reverse-Osmosis (RO) discharges, and softeners, as applicable.  RTP included some limited, initial activities
to include obtaining site water quality information, nearby stream water
quantity and quality information, and to gather other necessary information
related to process design, etc. (July 2004 contract).  However, the bulk of NPDES permitting will be
covered under separate contract (see below).


 


•                  Industrial Well:
An industrial well permit or registration is typically required to allow for
the development of the facility production well.  Based on information provided by EGP, it is
our understanding that water for production and other plant activities will be
provided by the local public water supply; as such these permits are not part
of the scope of work.


 


•                  NPDES Site
Review Request: Recent conversations with TDEC indicate that they will require
EGP to submit a site review request with respect to water issues related to the
proposed ethanol manufacturing plant. 
The site review request must include information regarding necessary
NPDES permits for the facility including but not limited to: SWPPP for
Construction, direct discharge of utility water, stream disturbances (including
crossings, discharge, etc.), SWPPP for Industrial Activities, hydrostatic
testing, etc.  As such, RTP will prepare
the necessary information to obtain the TDEC site review and schedule the
necessary site visits on behalf of EGP. 
RTP has also included a site visit for NPDES issues.  These additional activities are included in
this March 2005 cost estimate for additional environmental services.  It should be noted that RTP has assumed that
ICM/Fagen will provide the necessary water quality calculations associated with
discharge and supporting design information for the applications.  Further, we anticipate that the local civil
engineer (as retained by EGP) will provide necessary Tennessee P.E. design and
certification for stream crossings and structural discharges (i.e.: piping,
headwalls, stability controls, etc.).


 


3

















 


Prior to
Start-up


 


•                  NPDES direct
discharge permit: Prior to discharge, the facility must obtain a permit from
the TDEC to allow non-contact cooling water and other utility water discharges
from the facility.  The permit
application will incorporate information obtained as part of the TDEC site
review process.


 


•                  Aboveground
Storage Tank (AST) Registrations/Permits: Ethanol plants typically include
large aboveground storage tanks (ASTs) to support facility operations.  Typically, State registrations and/or permits
are required for such vessels.


 


•                  Industrial NOI
submitted to TDEC: A Notice of Intent (NOI) must be submitted to TDEC prior to
facility start-up.  As part of the
industrial NOI a Storm Water Pollution Prevention Plan (SWPPP) must be
completed and on-site in accordance with the TDEC general permit prior the
commencement of facility operations. 
This is separate from the construction SWPPP and must be completed to
account for manufacturing activities.


 


•                  SPCC: At this
time, the preparation of a Spill Prevention, Control, and Countermeasure (SPCC)
Plan is required prior to facility start-up. 
As such, RTP has included the preparation of an SPCC in accordance with
applicable Federal requirements for the facility.


 


•                  RMP: A Risk
Management Plan must be prepared and submitted to the USEPA.  Typically an RMP is required for on-site
storage of denaturant and ammonia.  An
RMP must be submitted before any appreciable quantity of either is stored
on-site.  This activity does not include
preparation of process safety management (PSM) plans or professional
engineering (PE) oversight, review, or certification.


 


•                  Hydrostatic
Testing: It is our understanding that the facility will conduct hydrostatic
testing for the on-site storage tanks. 
Therefore, a hydrostatic testing permit must be obtained from the TDEC.


 


•                  Septic System:
TDEC will require that a permit for the disposal sanitary wastes from the
facility be obtained prior to installation of the septic system(s).  However, it is typical that these activities,
including design and soil testing, must be done by a P.E.  As such, RTP anticipates that EGP will
contract with their local P.E. to obtain such local approvals.


 


•                  ATF permit: A
permit from the ATF must be obtained to allow for the production of
ethanol.  Although this is not
specifically an environmental permit, there are forms in the application that
require environmental information.  As
per your request, RTP will assist EGP with the preparation of the ATF
application and related activities.


 


4

















 


•                  PWS: If the
facility has more than 25 full-time employees it will be necessary to obtain a
non-community, non-transient Public Water Supply (PWS) permit from the State of
Tennessee.  Based on information provided
by EGP, it is our understanding that water for production and other plant
activities will be provided by the local public water supply and, as such,
these permits are not part of this scope of work.


 


After
Start-up


 


•                  Air Operating
Permit: TDEC requires that facilities obtain operating permits to cover
operations.  According to available
information, this application is required by TDEC within 30 days of full
operating capacity.  RTP will complete
this permit for EGP certification.


 


•                  Air Compliance:
It is expected that TDEC will require stack testing of various sources at the
facility once construction is complete. 
As such, RTP has included activities to assist EGP select a qualified
vendor, review the stack testing protocols and stack testing results, as well
as provide agency liaison services between EGP, the vendor and TDEC.


 


•                  Tier II/III: The
facility will be required to submit an inventory of chemical storage to
Federal, State, and Local Tier agencies. 
This inventory is called a Tier II/III and covers hazardous and
extremely hazardous materials.  RTP has
included activities to assist EGP with the completion of this task.


 


•                  CESQG: It may be
necessary for the facility to register as a CESQG (Conditionally Exempt Small
Quantity Generator) to comply with the hazardous waste generation and disposal
regulations.  In some instances, it may
be necessary to register as a SQG (Small Quantity Generator) due to higher
hazardous waste generation than the previous category. RTP expects the facility
to fall under the CESQG category and has included some limited time to assist
EGP initiate compliance activities associated with these regulations


 


•                  TRI: After the
first year of operation, it is expected that the facility will need to complete
and submit a Toxic Release Inventory (TRI) to the USEPA.  TRIs are due on or before July 1st
for the preceding calendar year.  Due to
the length of time before TRI may be required, if at all, these activities are
not specifically included in the scope of work.


 


•                  PWS: It is
expected that the PWS permit will require on-going operating requirements,
including periodic testing of on-site water to protect the health and well
being of facility employees.  Based on
information provided by EGP, it is our understanding that water for production
and other plant activities will be provided by the local public water supply;
as such these permits are not specifically part of the scope of work.


 


5

















 


•                  NPDES:
Typically, the NPDES permit for utility water discharges require on-going
monitoring of such discharges.  Often,
quarterly reports are required to submit information on weekly and monthly
sampling activities and are usually submitted on a DMR (Discharge Monitoring
Report) completed by the facility.  Due
to the fact that requirements, if any, are unavailable and will be based on
TDEC permits.  As such, activities of
this nature are not specifically considered part of the scope of work.


 


•                  Annual Emissions
Inventory Questionnaire (EIQ): Typically, each State requires that each air
emissions source submit an EIQ for the previous calendar year.  Due to the length of time before EIQ may be
required, if at all, these specific activities are outside of the scope of
work.


 


RTP normally performs these types of projects on a time and
material basis.  Our estimated project
budget for completing the work outlined above additional environmental
permitting and compliance activities, as described herein, is estimated at
$54,000 to $63,500.  This includes labor
and other direct expenses applicable only to those tasks noted in the
scope-of-work.  RTP agrees not to exceed
the budget without prior approval from EGP. 
Please note, any permitting fees associated with Federal, State or local
applications have not been included in the budget and are the responsibility of
EGP.


 


RTP is prepared to assist EGP
with activities in an effort to provide a complete permitting package to the
TDEC on a mutually agreeable schedule. Therefore, RTP will work closely with
EGP to conform to project requirements as necessary, allowing the schedule to be
modified to meet any specific project needs as necessary.  Activities will be complete in accordance
with a mutually agreeable schedule, upon receipt of the necessary site-specific
design information.


 


Project costs are based on our
experience permitting other ethanol plants and our recent conversations.  The major assumptions are that the proposed
ethanol plant will be classified as a “conditional major source” for air
quality permitting and that general permits are acceptable for storm
water.  In addition, this proposal
assumes that EGP, ICM/Fagen, will provide necessary P.E. review and/or
certifications and that design information will be provided in a timely
manner.  As noted, the cost estimate is
for those activities specifically described herein.  If EGP would like RTP to assist with
additional activities or provide any services not specifically included in this
scope of work, RTP will gladly provide a revised proposal and cost estimate.


 


Further, RTP believes it will
be beneficial to attend the TDEC site review as part of project development
activities.  It may also be necessary to
visit the site during or just after construction activities.  As such, travel and attendance for two (2)
trips to Tennessee have been included in the expense budget.  These trips are in addition to the trip
described in our July 2004 proposal to meet with TDEC representatives as part
of air permitting activities.


 


6

















 


Thank you
for this opportunity to provide this proposal and cost quotation for additional
ethanol plant permitting assistance to Ethanol Grain Processors.  I firmly believe that RTP is extremely well qualified to assist EGP in securing
the required environmental permits and approvals for the proposed facility.


 


I have
enclosed a contract for authorization to proceed with the above scope-of-work
as well as a schedule of charges for your consideration.  If acceptable, please sign and date the
authorization and return a copy for our files. 
Of course, if you have any questions or need additional
information, please let me know, you may
contact me at 516/333-4526 or by e-mail at bailey@rtpenv.com.  Thank you for considering for additional
environmental services.


 


Sincerely yours,


RTP
ENVIRONMENTAL ASSOCIATES, INC.





 


Jessica A. Karras-Bailey


Senior
Environmental Scientist


 


 


w/Enclosures


 


7

















 


Table 1


 


Additional Environmental Permitting Activities for the


Ethanol Grain Processors, LLC Ethanol Plant


Obion, Tennessee


 


 


	
  Air Quality

  	
   

  	
  $14,000 to $15,000

  	
   

  
	
  Start-up and NSPS Notifications

  	
   

  	
   

  	
   

  
	
  Operating Permit (w/in 30 days of full
  operations)

  	
   

  	
   

  	
   

  
	
  Compliance Assistance for facility start-up

  	
   

  	
   

  	
   

  
	
  Stack Testing - Vendor Selection

  	
   

  	
   

  	
   

  
	
  Stack Testing - Protocol Review &
  Agency Submission

  	
   

  	
   

  	
   

  
	
  Stack Testing - Testing Review and Agency
  Submission

  	
   

  	
   

  	
   

  
	
  Stack Testing - Agency Follow-up and
  Compliance Assistance

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  RMP

  	
   

  	
  $2,500 to $3,500

  	
   

  
	
  Worst-case modeling

  	
   

  	
   

  	
   

  
	
  Alternative Scenario modeling

  	
   

  	
   

  	
   

  
	
  Technical Report and Regulatory Review

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  AST

  	
   

  	
  $1,000 to $1,500

  	
   

  
	
  State Permit/Registration for on-site tanks

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BATF

  	
   

  	
  $2,000 to $3,000

  	
   

  
	
  Permitting for Alcohol Production

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  NPDES

  	
   

  	
  $16,000 to $17,000

  	
   

  
	
  Preparation of NPDES Site Review Request
  for TDEC review

  	
   

  	
   

  	
   

  
	
  Site Visit - Attendance at Meeting for TDEC
  Site Review

  	
   

  	
   

  	
   

  
	
  NPDES Permitting w/assistance from Fagen
  and ICM

  	
   

  	
   

  	
   

  
	
  Aquatic Resource Alteration Permit, per
  Site Review

  	
   

  	
   

  	
   

  
	
  Section 404 permit from USACOE, if
  necessary

  	
   

  	
   

  	
   

  
	
  Hydrostatic Testing Permit Application

  	
   

  	
   

  	
   

  
	
  TDEC Permit Review and Negotiations

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SWPPP

  	
   

  	
  $4,500 to $5,500

  	
   

  
	
  Preparation of Industrial Plan

  	
   

  	
   

  	
   

  
	
  NOI Preparation and Submission

  	
   

  	
   

  	
   

  
	
  Industrial Facility Implementation
  Assistance

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SPCC

  	
   

  	
  $5,000 to $6,000

  	
   

  
	
  Site Information and Regulatory Review

  	
   

  	
   

  	
   

  
	
  Plan Preparation

  	
   

  	
   

  	
   

  
	
  Facility Implementation Assistance

  	
   

  	
   

  	
   

  



 

















 


	
  Tier II/III

  	
   

  	
  $500 to $1,000

  	
   

  
	
  Assistance with respect to applications for
  on-site storage, etc.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CESQG

  	
   

  	
  $1,000 to $1,500

  	
   

  
	
  Assistance with regulatory requirements and
  recordkeeping

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Site
  Visit

  	
   

  	
  $2,000 to $3,000

  	
   

  
	
  TO be completed during construction or
  intial operations

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Estimated
  Expenses

  	
   

  	
  $5,500 to $6,500

  	
   

  
	
  Travel, Communications, etc.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL ESTIMATED RANGE

  	
   

  	
  $54,000 to $63,500

  	
   

  



 

















 


	
  

  	
  RTP ENVIRONMENTAL ASSOCIATES, INC.®

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AIR • WATER • SOLID WASTE CONSULTANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  400 Post Avenue

  	
   

  	
   

  
	
  Westbury, New York 11590

  	
   

  	
   

  	
  (516)
  333-4526

  
	
  (www.rtpenv.com)

  	
   

  	
  fax

  	
  (516)
  333-4571

  



 


July 9, 2004


 


Mr. Alvin Escue


Ethanol
Grain Processors


P.O. Box 837


Milan,
Tennessee  38358


 


	
  RE:

  	
   

  	
  Proposed Ethanol Plant, Tennessee

  
	
   

  	
   

  	
  Proposal
  for Environmental Permitting Support

  



 


Dear Al:


 


RTP Environmental Associates,
Inc. (RTP) is pleased to provide this letter proposal and cost estimate for consideration
by Ethanol Grain Processors (EGP) in accordance with your verbal request for
environmental permitting assistance.  As
per our conversations, RTP is providing this proposal to assist your efforts
with preparing an environmental permitting application for a proposed ethanol
plant.  RTP is aware that the site may be
located in either the State of Tennessee or the State of Kentucky.  However, for the purposes of this proposal,
we have chosen to discuss permitting associated with plant development within
western Tennessee.  It should be noted
that similar permitting activities would be required if the plant site is
chosen within Kentucky.  If necessary RTP
can provide a revised proposal in the event a plant site is chosen outside of
Tennessee.  In general, the scope of work
is based on our discussions as well as RTP’s extensive permitting
experience.  This proposal has been
prepared as requested as a cost estimate by task and a total project cost.


 


RTP has a New York regional
office in Westbury, New York and seven (7) other regional offices across the
United States, including 3 regional offices and 2 branch offices in the
Southeast.  The Westbury office is
managed by Kenneth J. Skipka, a Certified Consulting Meteorologist (CCM) with
over thirty-five (35) years of experience in environmental consulting.  He will be assisted by myself having provided
environmental consulting services to over 20 ethanol facilities, and other
staff as necessary to complete assigned tasks. 
The specific tasks associated with the project are outlined below.  The following Scope-of-Work was developed by
RTP to describe the activities necessary to complete environmental permitting
activities associated with ethanol plant project development and the initial
phases of construction.  The scope is
divided into a series of tasks.


 

















 


SCOPE-OF-WORK


 


The Tennessee Department of Environment and Conservation
(TDEC) will require several permit applications as part of obtaining the
necessary approvals for development of the ethanol manufacturing facility.  In addition, it would be prudent to obtain
additional information regarding the proposed site prior to and in conjunction
with permit application preparation and submissions.  As discussed, this proposal has been prepared
in an effort to follow the proposed timeline for beginning ethanol plant
construction in late spring of 2005. 
Start-up is expected to follow about 1 year after the initiation of
plant construction.  In an effort to
expedite EGP’s efforts, RTP will assist the permitting process by working
closely with EGP and ICM/Fagen representatives on the tasks outlined
below.  Of course, if additional
activities are required, RTP will provide the necessary support on a Time and
Materials basis.  Since the proposed site
location is still not finalized, RTP will work closely with EGP and complete
the more general portions of the environmental permit applications and site
development activities first, to the greatest extent possible.


 


Preliminary Site Assessment


 


As noted
above, RTP suggests that several activities associated with obtaining pertinent
site specific data be initiated as soon as possible.  It would be prudent to obtain information
with respect to land use and potential types of environmental permits and/or clearances that may be involved
in locating an industrial development project in Tennessee.  RTP will assist with obtaining necessary information to
determine potential constraints associated with the project site.  This preliminary information will be
beneficial to both site development decisions as well as future permitting
application needs.  It should be noted
that RTP expects all preliminary site information to be obtained remotely
(without a trip to the project site).


 


Specifically, RTP will work
to obtain preliminary information related to archaeological or historical
sites, cemeteries/gravesites, CERCLA or Superfund and RCRA sites, dams,
impoundments or retention ponds, geologic conditions and existing soils,
location of community wellhead protection areas, aquifer characteristics,
nearby sensitive receptors, fish, wildlife and ecologically
sensitive resources, stream flows and floodplains, and wetlands.  In the event that one or more of these issues
indicates the need for additional information or investigation, RTP will notify
EGP immediately and will discuss necessary mitigation activities and
options.  Since it is difficult to know
at this time if any of these constraints will or will not be associated with
the project site, a cost estimate has not been provided beyond obtaining and
analyzing the preliminary data.  In the
event information is obtained that warrants additional activities, RTP will
provide EGP with a revised proposal to accomplish additional tasks, as
necessary.


 


2

















 


Air Permit Application
Activities


 


The State of Tennessee requires
the submission and approval of an air construction permit application prior to
the initiation of construction activities of an air emissions source.  The construction and operation of such
sources are regulated under the Tennessee Division of Air
Pollution Control (APC).  According to
permitting information obtained from the APC website, TDEC will require two (2)
air permits for the ethanol plant.  The
first is associated with construction and the second with operation.  This proposal covers environmental consulting
services for the development and submission of an air permit application
package necessary for construction of the proposed ethanol plant.


 


RTP will prepare the necessary permit
application forms and supporting documentation required by the TDEC.  These activities will also include the
preparation of emissions calculations in support of the air application.  The work scope described below assumes that
the proposed ethanol plant will be regulated as a synthetic minor source by
TDEC; which means that the facility will control emissions to less than the
major source thresholds (100 tons per year (tpy) of any criteria pollutant and
10 tpy of any single HAP or 25 tpy of all HAPs).


 


The air application package must include a
completed set of TDEC standardized forms. 
The information required as part of completing the forms is expected to
be provided by the selected design team, ICM, Inc. and Fagen, Inc.  RTP will work closely with EGP and the
ICM/Fagen design team to obtain the necessary technical information.  In addition, RTP will provide regulatory
compliance suggestions/options to the project team, as necessary, in an effort
to expedite the permitting process and include necessary environmental controls
early in the project planning stages.


 


RTP will also prepare emissions calculations,
based on our industry and regulatory experience, for the proposed site specific
equipment.  These calculations will
include emissions estimates for the following pollutants, nitrogen oxides (NOx),
sulfur dioxide (SO2), particulates (PM), carbon monoxide (CO),
volatile organic compounds (VOCs) as well as Hazardous Air Pollutants
(HAPs).  Again, these estimates will be
based on technical information provided by the ICM/Fagen design team as part of
documenting site specific equipment and activities.


 


We have contacted the TDEC regarding air
dispersion modeling requirements as part of obtaining an air permit.  According to Mr. Travis Blake, TDEC, air
dispersion modeling is not typically required for synthetic minor sources
located in attainment areas.  He did note
that there have been synthetic minor source permits that have required modeling
due to Hydrogen chloride (HCl) or hydrogen fluoride (HF) emissions.  As such, RTP has not included air dispersion
modeling as part of this proposal.


 


3

















 


RTP will complete a draft air
construction permit application with necessary supporting documentation for
project team review.  Once the project
team review is complete, RTP will submit the air construction permit
application package to the TDEC APC Division for review and issuance. Based on
information provided by the TDEC website, minor air permits take 3 to 4 months
once received and deemed completed by the agency.  As noted previously, plant construction
activities can not be initiated until a permit is issued by the agency.


 


RTP has also included some time
to provide assistance to the EGP with the review and negotiation of permitting
conditions and terms.  These activities
are expected to be minimal, but a necessary part of the permitting
process.  In addition, RTP will prepare a
permit compliance summary for EGP’s use. 
This summary will provide the major action items associated with the
permit and is intended to assist EGP’s efforts with implementation of permit
compliance activities.


 


Storm Water Permit Application
Activities


 


The requirements for storm
water permits are outlined in the Tennessee water quality regulations.  Storm water permits for construction
activities are usually issued by TDEC under a general permit.  The general permit requires implementation of
a Storm Water Pollution Prevention Plan (SWPPP), which must incorporate any
required pollution control measures.


 


A review of the TDEC General
Storm Water permit associated with construction activities indicates that an
application must be submitted to obtain coverage.  In addition, as a condition of application
approval and authorization issuance, a Storm Water Pollution Prevention Plan
(SWPPP) must be complete prior to submitting an application.


 


RTP will prepare a SWPPP and
necessary Storm Water Application for the proposed project site.  The storm water permit application will
require site-specific information concerning the location and physical
characteristics of the site and surrounding areas.  In addition, facility design information is
necessary for preparation and implementation of a SWPPP.  RTP will work closely with the engineering
design team to assemble all of the required information for the permit
application and SWPPP.  RTP staff plan to
focus on the technical and regulatory aspects of the application, which allows
the design team to focus on the physical and design information required. RTP
will take the lead role in assembling the application into a format acceptable
to the agency.


 


It should be noted that SWPPPs
often require on-site inspections and employee training.  RTP has not included these activities as part
of our cost estimate since it is more cost effective for on-site operators or
contractors to complete such activities.


 


Typically
at an ethanol plant, two storm water permits are required for facility
development; one to cover construction activities and another to cover industrial
(manufacturing) activities once operations commence.  This proposal and cost estimate covers
applicable storm water permitting


 


4

















 


requirements
for construction activities only.  RTP
can assist EGP with the storm water permit associated with industrial
operations at a later time.  It is
expected that a General Storm Water Permit will satisfy applicable requirements
for ethanol plant construction.


 


Initiation
of NPDES Utility Water Discharge Permitting


 


National
Pollution Discharge Elimination System (NPDES) permits allow the discharge of
process, non-contact or utility waters, or other industrial discharges.  Although these permits are not required until
the facility starts operation, RTP believes it is important to start the NPDES
permit process as soon as possible.  The
basis for this recommendation is related to our past ethanol plant
experience.  Since this permit is
necessary upon start-up, it is often not initiated until after plant
construction begins.  However, waiting
until construction begins can lead to delays in obtaining the permit from the
agency as well as increases in project development costs.  It is prudent to initiate NPDES permitting
activities to provide the greatest amount of flexibility to site development
while considering project costs.  
According to the TDEC website, NPDES permitting can take 310 days or
longer once the agency deems the application complete.


 


As part
of this cost estimate, RTP has included the initial activities associated with
NPDES permitting.  RTP will work with the
ICM/Fagen design team and selected water pollution control vendor to obtain the
necessary technical information to assist site development activities.  RTP will assist EGP to obtain preliminary
water information.  In addition, RTP will
provide EGP and the ICM/Fagen design team with regulatory compliance
information early in project development in an effort to mitigate, to the
greatest extent possible, costly design changes or stringent regulatory controls.  Please note that at this time it is difficult
to anticipate all of the necessary costs associated with the preparation of the
final NPDES permit and associated supporting documentation.  As such, RTP will provide EGP with a revised
cost estimate once more site specific data is available.


 


Agency
Meeting and Site Visit


 


It is
RTP’s understanding that the EGP ethanol plant will be the first ICM/Fagen dry
mill ethanol plant constructed in the State of Tennessee.  Therefore, we have included in this proposal
attendance at an agency meeting.  It is
envisioned that meeting would be set up as a pre-application meeting, to
familiarize the agency with project particulars and to flush out regulatory
requirements in an effort to streamline the permitting process.  In addition, RTP has included time to travel
to the proposed project site, document site conditions, and obtain additional
site specific information.  The site
visit will be scheduled prior to the agency meeting in an effort to provide the
TDEC with additional information.  The
meetings will be attended by the Project Manager and includes travel and
expenses from the Westbury, NY office.


 


5

















 


Miscellaneous Project
Assistance


 


RTP has included additional
support to EGP on an as needed basis to cover minor issues not otherwise
addressed in this proposal and budget. 
This is a minor line item in the budget and reserves a total of 16
hours.  More time can be added, if
necessary on a Time and Materials Basis. 
These miscellaneous items could include activities associated with
environmental site constraints, preparing/reviewing regulatory interpretations,
and/or other unknown or unanticipated items.


 


ADDITIONAL REGULATORY
COMPLIANCE ACTIVITIES


 


As we discussed, there are many
regulatory requirements associated with the construction and operation of an
ethanol plant.  The Scope-of-Work
outlined above will provide EGP with the necessary information and
environmental permits to initiate construction. 
However, in an effort to be complete and provide EGP with additional
information, I have prepared the following summary for your review.  The following text describes additional
permitting and environmental compliance activities that are typically
associated with an ethanol plant, but that are not necessarily “critical path”
for the initiation of plant construction.


 


As noted in the proposal, an
operating permit for an emission source must be obtained.  This permit will allow and regulate the
manufacturing activities associated with the ethanol plant associated with air
emissions.  In addition, it anticipated
that stack testing will be a requirement of the air permit and will be required
within 6 months or less of plant start-up. 
Ethanol plants are typically subject to 40 CFR 112(r), Risk Management
Plans (RMP) as well as Process Safety Management (PSM) under OSHA.  A Leak Detection and Repair (LDAR) program
will also be required as part of facility operations.


 


Other permitting requirements
will include the preparation of a SWPPP associated with industrial activities
and a Spill Prevention Control and Countermeasure (SPCC) Plan.  Often aboveground storage tank (AST)
registrations are required as part of tank construction and operation.  AST testing will require that EGP obtain a
hydrostatic testing water discharge permit. 
The plant will also need to complete Tier II/III reporting, Toxic
Release Inventories (TRI) and emissions inventories in the future.


 


RTP would be pleased to provide
additional proposals and cost estimates associated with these or other
activities upon request.  However, it is
suggested that we initiate the activities noted in the current scope-of-work
and once additional project particulars are defined, consider additional
environmental consulting services.


 


6

















 


PROJECT
TEAM AND CAPABILITIES


 


The project team will consist
of a project manager and various environmental scientists/engineers.  Ms. Jessica Karras-Bailey will be the project
manager and will be responsible for client, agency and consultant
interactions/correspondences, providing guidance to staff and coordinating all
efforts with the project team.  Ms.
Bailey has over ten (10) years of environmental consulting experience,
including permitting activities associated with over twenty (20) ethanol plants
across the United States.  Mr. Kenneth
Skipka, CCM and principal of the Westbury office will provide guidance to Ms.
Bailey and the project team as necessary. 
As noted, Mr. Skipka has over thirty-five (35) years of experience in
environmental consulting, including direct project experience in
Tennessee.  Additional staff will provide
technical support for the various other tasks required including obtaining site
specific data, compilation of information, and preparing the final draft air
construction permit application and SWPPP Plan.


 


COSTS
AND SCHEDULES


 


RTP normally performs these types of projects on a time and
material basis.  Our estimated project
budget for completing the work outlined above for the proposed Ethanol Grain
Processor’s ethanol plant is $31,900 for labor and $3,600 for estimated
expenses.  This includes labor and other
direct expenses applicable only to those tasks noted in the scope-of-work.  RTP agrees not to exceed the budget without
prior approval from EGP.  Please note,
any permitting fees associated with Federal, State or local applications have
not been included in the budget and are the responsibility of EGP.


 


RTP is prepared to assist EGP
with activities in an effort to provide a complete permitting package to the
TDEC on a mutually agreeable schedule. Therefore, RTP will work closely with
EGP to conform to project requirements as necessary, allowing the schedule to
be modified to meet any specific project needs as necessary.  Storm water activities will be complete in
accordance with a mutually agreeable schedule, upon receipt of the necessary
site-specific design information.


 


Project costs are based on our
experience permitting other ethanol plants and our recent conversations.  The major assumptions are that the proposed
ethanol plant will be classified as a “synthetic minor source” for air quality
permitting and that a general permit is acceptable for storm water.  Also, RTP believes it will be beneficial to
hold a pre-application meeting with the TDEC as part of project development
activities.  As such, travel and
attendance for one (1) trip to Tennessee has been included in the budget.


 


Thank you
for this opportunity to provide a proposal and cost quotation for ethanol plant
permitting assistance to Ethanol Grain Processors.  I firmly believe that RTP is extremely well qualified to assist EGP in securing
the required environmental permits and approvals for the proposed
facility.  Work will begin
immediately upon authorization to proceed. 
We look forward to hearing from


 


7

















 


you and if selected, working
with the project team toward the successful completion of this project.


 


I have
enclosed a contract for authorization to proceed with the above scope-of-work
as well as a schedule of charges for your consideration.  If acceptable, please sign and date the
authorization and return a copy for our files. 
Since we have not had an established relationship with your firm, it is
our policy to request a $5,000 retainer up front to cover our initial costs.


 


If there are any questions
regarding this proposal, you may contact me at 516/333-4526 or by e-mail at bailey@rtpenv.com.  Thank you for considering RTP for this work.


 


Sincerely yours,


RTP ENVIRONMENTAL
ASSOCIATES, INC.


 





 


Jessica A. Karras-Bailey


Senior
Environmental Scientist


 


 


w/Enclosures


 


8