May
      9,
      2007


    


    Mr.
      Bill
      Higdon

    Southern
      Iowa BioEnergy

    115
      S.
      Linden Street

    Lamoni,
      Iowa 50140

    

      
        	
                Subject:

              	
                Proposal
                  to Provide Professional Services

              
	 	
                Bio-Diesel
                  Plant Construction - Environmental Permitting
                  Assistance

              


      

    

     

    Dear
      Mr.
      Higdon:

    


    Thank
      you
      for the opportunity to submit a proposal to assist with environmental issues
      associated with the construction of a new bio-diesel plant in Osceola,
      Iowa.

    


    This
      proposal is for assistance with environmental permitting and compliance issues
      associated with the initial construction and operation of a 30,000,000-gallon
      bio-diesel facility. The anticipated services will include:

    


    
      	·  	
              Obtain
                required environmental pre-construction permits for the proposed
                facility.
                The anticipated permits include:

            


    

     

    
      	
            	·	
              Air
                Quality Permits - TEC has assumed that Prevention of Significant
                Deterioration (PSD) regulations will not apply. We anticipate that
                NSPS
                requirements associated with boilers, tanks, and equipment leaks
                will
                apply. 

            


    

    


    In
      addition, if the proposed facility has the potential to emit more than 10 tons
      of a hazardous air pollutant (classified as a major HAP facility), a number
      of
      air quality regulations will affect the construction and operation of the
      facility. If this is true, one or more NESHAP requirements will apply, including
      Subparts FFFF (Miscellaneous Organic NESHAPS) and DDDDD (Boiler NESHAP). TEC
      is
      familiar with these Subparts. We can also provide dispersion modeling analysis
      if requested by IDNR.

     

    
      Environmental
        Engineering, Permitting and Compliance
        Services 

      
        

      

      4950
        Pleasant Street ● West Des Moines, Iowa 50266-1783 ● Tel: 515-225-4303 ● Fax:
        515-225-4193

      http://www.tecenv.com

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
            	
            	
              
                TEC
                  can also prepare applicable Air Quality Operating Permits applications
                  (under Title V regulations assuming that the facility is major
                  for HAPs).
                  NOTE: the balance of this proposal assumed that the facility is
                  MINOR for
                  HAPS. The cost and complexity of the environmental regulations
                  will be
                  significantly reduced if the facility is minor for
                  HAPs.

              

            


    

    
      	 	 	 


    

    
      	 	·	Water Quality Pre-Construction Permits
              - NPDES
              discharge permits, storm water construction permits along with the
              associated pollution prevention plan are required prior to
              construction.


    

    
      	 	 	 


    

    
      	 	·	Wetlands Jurisdictional
              Review


    

    
      	 	 	 


    

    
      	 	·	AST Fire Code
              Review


    

    


    
      	·  	
              Develop
                environmental regulatory plans or documents prior to the facility
                start-up. These include:

            


    

     

    
      	
            	·	
              
                Spill
                  Prevention Control and Countermeasures Plans
                  (SPCC)

              

            


      	 	 	 


      	
            	·	
              
                Fire
                  Marshall AST Registration

              

            


      	 	 	 


      	 	·	Storm Water Operating Permits and Pollution
              Prevention Plans (if applicable for these
              facilities)


      	 	 	 


      	 	·	NPDES Discharge Permits (if
              required)


      	 	 	 


      	 	·	NSPS initial notification and related
              activities


    

     

    
      	·  	
              Assist
                with post-start up requirements. Plan and budget will be submitted
                prior
                to start up. It is anticipated that these services will
                include:

            


    

     

    
      	
            	·	
              
                Set
                  up monitoring and recordkeeping requirements as required by applicable
                  permits including Tier II and Form R reporting, if
                  needed.

              

            


    

    
      	 	 	 


    

    
      	
            	·	
              
                Assist
                  with stack testing
                  requirements.

              

            


    

    
      	 	 	 


    

    
      	 	·	Storm Water
              reporting.


    

    
      	 	 	 


    

    
      	 	·	NPDES discharge
              reporting.


    

    
      	 	 	 


    

    
      	 	·	Wastewater discharge analysis and
              reporting.


    

    
      	 	 	 


    

    
      	
            	·	
              
                Solid
                  waste disposal assistance.

              

            


    

    
      	 	 	 


    

    
      	
            	·	
              
                Alternative
                  fuels registration.

              

            


    

     

    
      
        
        

      

      
        Page2

        
          

        

      

      
        
        

      

    

     

    
      	 	·	Low sulfur fuel
              registration.


    

    
      	 	 	 


    

    
      	 	·	2007 Renewable Fuels Standards
              (RFS).


    

    
      	 	 	 


    

    
      	 	·	RCRA registration and reports. 


      	 	 	 


      	 	·	Assist with ongoing NSPS compliance
              such as
              Leak Detection and Repair (LDAR) program, annual stack testing, annual
              compliance reporting, etc.


    

     

    The
      following table summarizes estimated costs for each regulatory area. TEC will
      bill for actual costs based on the attached billing rate schedule.

    

      
        	
                Air
                  Quality Permitting

              	 	
                $

              	
                10,000

              	 
	
                Storm
                  Water Construction Permit and SWPP

              	 	
                $

              	
                2,500

              	 
	
                Wetlands
                  Jurisdictional Review

              	 	
                $

              	
                1,000

              	 
	
                AST
                  Fire Code Review

              	 	
                $

              	
                1,000

              	 
	
                SPCC
                  Plan

              	 	
                $

              	
                2,500

              	 
	
                Fire
                  Marshall AST Registration

              	 	
                $

              	
                1,000

              	 
	
                Storm
                  Water Operating Permit and SWPP

              	 	
                $

              	
                3,500

              	 
	
                NPDES
                  Permitting

              	 	
                $

              	
                7,500

              	 
	
                NSPS
                  Initial Notification Issues

              	 	
                $

              	
                500

              	 
	
                Set
                  up facility monitoring, recordkeeping and compliance
                  checklist

              	 	
                $

              	
                3,500

              	 
	
                On-going
                  LDAR assistance, if required

              	 	 	 	 
	
                (annual,
                  less monitoring)

              	 	
                $

              	
                5,000

              	 
	Stack
                Testing	
                 Based
                  on permits

              	 
	 	 	 	 	 


      

    

    *
      travel,
      if required, would be billed on a time and material basis

    


    Should
      you have any questions or require further information, please don’t hesitate to
      call.

     

    
      	
              Sincerely,

            	 	 	 
	 	 	 	 
	
              /s/
                David W. Thompson, Sr.

            	 	 	
            
	
              

              David
                W. Thompson, Sr., P.E.

              President

            	 	 	
            


    

    



      Accepted
        this 17th
        day
        of May 2007


    


    SOUTHERN
      IOWA BIOENERGY


      
        	 	 	 	 
	
                By      
                  /s/ William T. Higdon

                
                  

                

                Signature 

              	 	 	
              





    
      
        
        

      

      
        Page3

        
          

        

      

      
        
        

      

    

          

    THOMPSON
      ENVIRONEMTNAL CONSULTING, INC.

    


    HOURLY
      BILLING RATES

    Effective
      through 12/31/2007

    

      
        	
                Clerical

              	 	
                $

              	
                61.00/hr

              	 
	 	 	 	 	 
	
                Project
                  Technician

              	 	
                $

              	
                78.00

              	 
	 	 	 	 	 
	
                Engineer

              	 	
                $

              	
                87.00

              	 
	 	 	 	 	 
	
                Project
                  Engineer

              	 	
                $

              	
                92.00

              	 
	 	 	 	 	 
	
                Project
                  Manager

              	 	
                $

              	
                99.00

              	 
	 	 	 	 	 
	
                Vice
                  President

              	 	
                $

              	
                107.00

              	 
	 	 	 	 	 
	
                President

              	 	
                $

              	
                112.00

              	 
	 	 	 	 	 
	
                Reimbursable
                  Expenses

              	 	 	 	 
	 	 	 	 	 
	
                Travel
                  by Engineer’s Vehicle

              	 	
                $

              	
                0.70

              	 per
                mile
	 	 	 	 	 
	
                Duplicating

              	 	
                $

              	
                0.10

              	 per
                copy
	 	 	 	 	 
	
                Outside
                  Sub-Consultants

              	
                 Cost
                  plus 10

              	
                %

              


      

    

    


    Other
      costs incurred on the Project such as commercial travel, lodging, subsistence,
      and printing shall be at cost.

    


    The
      amount of any excise tax, value added tax, or sales tax that may be imposed
      shall be added to the compensation rate above.

     

    
      
        
        

      

      
        Page4