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

         

      

    

    
      
        
           

        

      

      
        
        

        
          

        

      

      
        
        

      

      

        May
          9,
          2007

      

       

    

    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.

              


      

    

     

    
      
        
        

      

      
        Page
          2

        
          

        

      

      
        
        

      

    

    

      May
        9,
        2007

    

     

    
      
        	
              	·	
                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 17thday
      of May 2007 

    


    SOUTHERN
      IOWA BIOENERGY

     

    
      	 	 	 	 
	By      
              /s/ William T. Higdon	 	 	
            
	
              
                
Signature 

            	 	 	
            



     

    
      
        
        

      

      
        Page
          3

        
          

        

      

      
        
        

      

      

        May
          9,
          2007

      

       

    

    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.

     

    
      
        
        

      

      
        Page
          4