t} bf} 34-. vii?? NATIONAL euacav TECHNOLOBY Alhany.0it - - Pittsburgh. PA as?" January 9. 2012 North American Power Group. LTD ATTN: Mike Ruffatto 8480 E. Orchard Road Suite 4000 Greenwood Village, CO 801 11?5027 Subject: Financial Assistance Award No. DE-FEOQO1997 titled "Recovery Act - Two Elk Energy Park Carbon Site Characterization Study.? Dear Mr. Ruffatto: On December 8. 2009. the National Energy Technology. Laboratory (NETL) provided your organization with a fully-executed award for the project identi?ed in the above Subject line. To date. there have been several requests for additional documentation in support of the project's status and associated costs. After receipt and review of the additional documentation. it appears that many of the invoiced charges may be unallowabie project costs pursuant to 10 CFR 600.317. which may be a serious misuse and mismanagement of award funds and a material failure to comply with the terms and conditions on the award. Based on an apparent material failure to comply with the terms and conditions of the award. in accordance with 10 CFR the Contracting Officer is unilaterally suspending this award. and no further payments will be made under this award. pending resolution of these issues. An amendment has been issued that suspends the award activities (except reporting) associated with the Statement of Project Objectives. effective January 9. 201 2. The official amendment can be accessed at contact the DOE Project Officer. Andrea McNemar at or DOE Award Administrator. Raelynn Honkus at Raelynn.Honkus@neti.goe.gov with any this letter or the suspension amendment. Your cooperation in resolving these issues is appreciated. Regards. Karim J. Byn?t: Supervisor and Contracting Officer Acquisition and Assistance Division CC: Andrea McNemar Traci Rodosta John Nancy Toppeita Sean Natalie Appetta Paul Detwlier Denise Riggi 826 Cochrans Mill Road: Phisburgh. PA 15236 - Fax {412} 3%?51 3? - mmneildoe. NATIONAL ENE . VT CH OLDUY Albany.? - Morgantowu.wv - Pittsburgh, PA February 1, 2012 Via Email and Certified Mail North American Power Group, LTD Michael J. Ruffatto, President 8480 E. Orchard Road Suite 4000 Greenwood Village, CO 801 11-5027 Subject: Financial Assistance Award No. DE-FE0001997 titled "Recovery Act Two Elk Energy Park Carbon Site Characterization Study." Dear Mr. Ruffatlo: Effective January 9, 2012, the Department of Energy, National Energy Technology Laboratory (DOE, NETL) suspended the above referenced Award due to apparent serious mismanagement or misuse of funds and material non-compliance. Notice of the suspension Was provided to North American Power Group, LTD (NAPG) by letter dated January 9, 2012. sent via e-mail and certified mail, return receipt requested. A copy of the notice of suspension is attached. As indicated in the notice of suspension. it appears that you have invoiced and received payment from DOE for unallowable and otherwise questionable costs pursuant to 10 CFR 600,317. This potential misuse of funds calls into question whether you are in compliance with the terms and conditions of the Award, including those related to performance of the objectives of the project. In order to lift the suspension, you must take corrective action to address all potentially unallowable costs and comply with all terms and conditions of the Award. Prior to suspension of the award, NETL asked NAPG for additional backup documentation to support a number of questioned costs in the invoices you submitted during the October 2010 - September 2011 time frame. In December 2011. you mailed a number of hard copy folders, labeled by month. with information that did not adequately address DOE's concerns. DOE also previously requested that you provide all daily drilling reports, standard or advance well logs, and any other documentation you have related to drilling costs you invoiced and were paid for under the Award. DOE has, to date, not received any documentation to support your recorded drilling costs. Corrective action must, therefore, include (1) all such daily drilling reports. standard or advance well logs, and other decumentation related to reported drilling costs and associated work, and (2) additional documentation and explanation for other costs previously invoiced from October 2010 - September 2011. The following is a nonexclusive list of additional documentation needed on specific invoiced items: 1. detailed breakdowns. separating DOE and non-Federal cost sharing costs, for the invoices submitted in the folders you previously sent for the months of February, March, April. and May of 2011; 2. written clarification and justification for North American Land and Livestock charges for "Land Use and Rts," which were submitted as a supporting Invoice in your February 2011 folder; 325 Cochrans Mill Road; Pittsburgh, PA 15233 ?aoiynn.nonkus@noll.doe.gcv 0" 3. copies of the "presentations" charged for by Tetra Tech. as reflected in the invoices contained In your January. February. March. April and September of 2011 folders; 4. explanation of how Tetra Tech's "socioeconomic reports.? as submitted In your folders for May. June. July. August. and September of 2011. support completidn of the objectives of the Award; 5. ekpianatlon of what or who is. as submitted in your August 2011 folder; and. 6. explanation of the work completed by TZA Water Engineers more than 90 days prior to the start of the Award. as re?ected by invoices submitted in your October 2010 and September 2011 folders. Please be aware that costs charged to the project that were incurred greater than 90 days before the project start date are generally considered unallowable. Such charges appeared not only in the invoices you submitted for TZA Water Engineers. listed above. but in others as well. dating back to 1994. Additionally. costs charged under the Award that do not appear to be associated with the project will likely be unallowable. unless your corrective action can provide acceptable written justification for them. interest. legal fees. and property taxes. which are also generally considered unallowable costs. were charged under the Award as wall and will be found unallowable unless acceptable justi?cation is provided. Corrective action should therefore include any additional supporting documentation orjustiflcatlon for the invoices previously submitted to NETL. if you are unable to take corrective action within thirty calendar days from the date of this letter. then you must. within the same thirty-day time frame. provide a complete and detailed Corrective Action Plan (CAP) to the undersigned Contracting Of?cer. The CAP must identify with specificity a timeline for you to provide information. the location of the Information. the identity of those with the information. and any additional documentation NAPG will provide to NETL to address all matters referenced in this letter. Failure to respond may result in remedies for non-compliance being imposed in accordance with 10 CFR 600 Part 352. which may include the disallowance of costs. termination. or other remedies that may be legally available. The suspension is currently for 90 days. All issues must be adequately addressed before the suspension may be lifted. NETL will review your corrective action and any submitted CAP to determine whether they are acceptable. Additionally. NETL would like to schedule weekly status calls with NAPG in order to discuss questions. comments. and concerns. You will be contacted by the Contract Specialist in order to schedule the meetings. if you have any comments or concerns pertaining to this letter. please feel free to contact DOE's Project Officer Andrea McNamar at Andrea.McNamar@neti.doe.oov or DOE's Contract Specialist. Raeiynn Honkus at Raeivnn.Honkus@netl.doe.qov. Sincerely. tie/Jitng Martin J. Byrne Supervisor and Contracting Officer Acquisition and Assistance Division CC: Andrea McNemar North American Power Group, Ltd. 8480 East Orchard Road Bngiewood, Colorado 801 i 1 Telephone: (303) 796-3600 Facsimile: (303) 773-046l March 8, 20i2 Mr. Martin J. Bymes Supervisor Contracting Of?cer Acquisition and Assistance Division National Energy Technology Laboratory 626 Cochrans Mill Road, Pittsburgh, PA 15236 Via Electronic Mail Overnight. Delivery Subject: Financial Assistance Award No. DE-FE0001997 titled ?Recovery Act-Two Elk Energy Park Carbon Site Characterization Study" Dear Mr, Byrnes: This is in response to your letter of February 1,2012, as supplemented by Ms. Honkus?s subsequent e-mails, including those of February '23, 2012 and March 7, 2012. We stand ready to provide DOE with such additional infomtation that you may request and that we have available to us. in answer to your questions: 1. Attached are detailed breakdowns separating DOE and non-Federal cost sharing costs for the invoices and supporting information submitted in the folders previously provided to NEIL, including the months of February, March, April and May, 201 l. 2. Attached is a written clari?cation and justi?cation for Nonh American Land Livestock?s ?Land Use Rights?, originally submitted as a supporting invoice in February 2011, but deleted according to information provided NETL in December 2011. This was budgeted and re?ected as an in-kind contribution. 3. Attached are copies of of the presentations prepared by TetraTech, as re?ected in the January, February, March. April 81. September 20! 1 folders. These consist of a power point presentation and a report. The report contains over l4megabites of infonnation. This may be too large to pass through your evmail server. To ensure that you receive it, both a hard copy and a copy on a are being sent to you together with this letter via owmight delivery. 4. The socioeconomic information focuses on the geographic project area and requires gathering updated data conceming population, demographics, population estimates and forecasts, economic conditions, employment characteristics and industry, income characteristics, government revenues, future economic conditions, housing, schools, health care, public safety, municipal services, transportation and addresses potential impacts, including overall employment needs, wages, direct community impacts, indirect bene?ts and tax implications. it also provides information about and addresses the ?carrying? capacity of the area without the impact of the project and with the impact of the project in an effort to provide the industrial Siting Division and the industrial Siting Council with an assessment of project impacts and benefits, and further to provide them 6. 7. information from which to better identify and address any mitigation measures. Additionally, it provides"! them an information base from which they in turn can provide information about and address public questions concerning the project. is short for the Wyoming Department of Envimnmental Quality-industrial Siting Division (?180" . which reports to the Wyoming Industrial Siting Information consenting both can be found at In general, the industrial Siting Come? and Division involve themselves in projects either over certain capital investment limits (currently ~51 85 million) or having other matters of interest to the local communities in the area in which the project is located. The Two Elk project and all matters associated with it are subject to their regulatory and permit requirements. The ISD and ISO. in part. not as a direct contact point and project information source for local communities concerning these same projects. . TZA Water Engineers and Its activities are described in the attached proposed Corrective Action Plan. Attached is a pmpOsed Corrective Action Plan for your review and consideration. We believe that we have provided the information requested by NETL as we understand your requests. However, please let me know if yo need or would like additional information Sit It: 1, Michael .l.I ff 0 President CC: Ms.Raelynn Honkus Ms.Andrea McNemar rs? Albuny.0lt - Morgantown.WV - Pittsburgh. PA 2h r'e? - NATID AL new? real-m Lee a =11 YLA euros? I (Jlrr' r: March 21, 2012' Via E-mall North American Power Group, LTD ATTN: Michael J. Rufiatto, President 8480 E. Orchard Road Suite 4000 Greenwood Village, CO 80111-5027 Subject: Financial Assistance Award No. DE-FE0001997 titled "Recovery Act - Two Elk Energy Park Carbon Site Characterization Study." - Dear Mr. Ruffatto: I am in receipt of North American Power Group's (NAPG) March 8, 2012 response to the National Energy Laboratory's (NETL) request for corrective action In the above matter. As the Contracting Officer for the above-referenced Award. I reviewed the documents, Corrective Action Plan (CAP), and additional information NAPG submitted, and determined that they are insufficient and that NAPG remains materially non-compliant with the Terms and Conditions of the award. The following information is still needed: 1. Daily drilling reports, standard or advance well logs, and other documentation related to reported drilling costs and associated work. 2. Explanation of why costs were charged to the project that were incurred greater than 90 days before the project start date; and how NAPG plans to correct these costs. 3. Explanation of why costs were charged to the project for Interest, legal fees, and property taxes: and how NAPG plans to correct these costs. 4. Explanation of costs associated with the Wyoming Power Plant and "air permit litigation.? and how these costs relate to the project. Please be advised that this documentation (including Item must be submitted no later than March 28, 2012. An extension will Egg be granted. Failure to provide the requested information by March 28, 2012 may result in the Imposition of remedies for non-compliance under 10 CFR 600.352 which include'the dlsallowance of costs and termination. - if you have any comments or concerns pertaining to this letter, please feel free to contact DOE's Project Officer Dawn Deel at Dawn.Deelr@ngtl.dge.gov or DOE's Contract Specialist, Raelynn Honkus at Sincerely, Martin J. Byrnegs, Supervisor and Contracting Officer Acquisition and Assistance Division CC: Andrea McNemar 620 Cochrans Mill Road: Pittsburgh, PA 15236 Raeiynn.honkus@netl.cioegov a . W.netl.doe.gov North American Power Group, 8480 East Orchard Road, Ste 4000 Greenwood Village, CO 80111 Telephone 303-796-8600 Facsimile 303-773-0461 March 26, 2012 Andrea McNemar, NETL Project Of?cer US. Department of Energy National Energy Technology Laboratory PO. Box 880 Mailstop POBD Morgantown, WV 26507-0880 Re: Continuation Application and Funding and No-Cost Two Elk Energy Park Site Characterization Project Project 1997 (North American Power Group, Ltd.) Dear Andrea: Please accept this letter as our continuation application for Budget Period Number 3 (March 2012- Mareh 3 l, 20l3) for the above-referenced project, if and to the extent necessary. Work to date has been described in the attached Quarterly Report fer the period ending December 31, 2012. Separately, a revised Project Management Plan was submitted for DOE-NETL approval on December 2, 20! l. NAPG has been responding to inquiries and information requests by As part of the proposed revision to the Project management Plan awaiting NETL approval, NAPG also proposed to drill the deep characterization well during Budget Period 2. We are awaiting direction from on how to proceed. However, presuming Continuation and NETL approval, NAPG requests a Non-Cost extension of time in which to complete this well. Preliminary Conclusions and Findings It is premature to draw absolute conclusions from the data and information at this point in the project. However, data evaluated to date indicates that multiple formations exist under the site, many of which appear to have porosity, permeability and appropriate seal and other geological characteristics necessary to act as carbon dioxide sequestration repositories in accordance with DOE guidelines and Wyoming state laws, and regulations. A cooperative working relationship has been established with Wyoming regulators to ensure that project work and sequestration related issues continue to progress smoothly. Forthcoming Budget Period-Plans and Funding Budget Period 2 and Budget Period 3 are expected to be conducted according to the proposed project management plan (updated) previously submitted to No additional ?lnds fI'om those set fonh in the period 2 budget. are being sought, not will there be a reduction in budget expenditures. Please let me know if?you need additional infonnation Sincerely, Michael J. Ruffalto President cc: Raelynn Honkus North American Power Group, Ltd. 8480 East Orchard Road Greenwood Village, Colorado 80l ll Telephone: (303) 796-8600 Facsimile: (303)773-0461 March 28, 2012 Mr. Martin J. Bymes Supervisor Contracting Of?cer Acquisition and Assistance Division National Energy Technology Laboratory 626 Coehrans Mill Road, Pittsburgh, PA 15236 Via Electronic Mail Overnight Delivery Subject: Financial Assistance Award No. titled ?Recovery Act?Two Elk Energy Park Carbon Site Characterization Study? Dear Mr. Byrnes: This is in response to your letter of March 21. 2012. We stand ready to provide DOE with such additional information that you may request and that we have available to us. We are trying to provide you the information you requested and a satisfactory Corrective Action Plan and overall approach to completing this Project. In December 20] l, at direction, we proposed a new Project Management Plan. The thrust of the plan remains the same. NAPG would complete the DOE Characterization Study and particularly, the deep characterization well, without any additional costasharing ?'om NETL other than committed in the twa awards. There is approximately $2.1 million remaining of NETL cost-share in Budget Period 3. That would remain sole commitment. We have proposed to NETL that the Project would contract with Scblumberger Carbon Services to drill the deep characterization well and have requested a no-cost extension to allow that to be done during the beginning of Budget Period 3, based on drilling rig availability. With permission and approval, we plan to do so. in answer to your questions: 1. Attached please ?nd the following information a. Two Elk Generation Partners Project Mantral for Construction and Testing of Three Dual Purpose Wells b. General Terms and Conditions c. Wyoming State Engineers Of?ce-Regulations Instruction-Part Ill-Water Well Minimum Construction Standards d. Bidders Questions and Answers and Bid Form Water System Drilling Bid preposal Technical infomration-Liner hanger proposed by Water System Drilling Wyoming State Engineer?s Of?ce-Permits Technical Speci?cations Notice of Award Agreement between Contractor Owner Water System Drilling Cemeniing Procedure l. Wyoruing Oil Gas Commission Completed well applications 2. Costs previously charged to the project were identi?ed and discussed in my letter of March 8, 20! 2. We believe that all such activities have a direct bearing on the success of the project and project objectives of promoting the commercialization of carbon sequestration projects and supporting C02 storage opportunities li'om industrial sources in the PRB area of Wyoming, Montana and the Dakotas. We believe these were properly discounted against their original cost. However, to the extent NETL disagrees, we would prepose to correct any such ?disallowed? costs by crediting any such amount against costs to be incurred in Budget Period 3 in drilling the deep characterization well. 3. We do not believe any interest charges were included in NETL charges, but will review the materials more carefully. Legal fees and taxes were discussed in more detail in the Corrective Action Plan attached to my letter of March 8. 20i2. In general, taxes are based on economic activity within the State, of which the Project activities were the principal, if not sole, activities taking place during the time periods in question. Taxes were apportioned between NAPG and NETL and were not solely the responsibility of NETL. Legal fees also were discussed in the same attachment to the March 8, 2012 letter. In general, these included a combination of contrachtal, regulatory and other matters. Other matters included litigation. The permits issued by the State of Wyoming under which all site activity, including the NETL Project, was being conducted, were challenged by the Sierra Club and others. NAPG was required to defend its site activities to prevent the loss of these permits and the resulting immediate cessation of all on-site activities. Again. these were apportioned between NETL and NAPG. However, to the extent NETL disagrees, we would propose to correct any such ?disallowed? costs by crediting any such amount against costs to be incurred in Budget Period 3 in drilling the deep characterization well. Again, we believe that all such activities have a direct bearing on the success of the project and project objectives of promoting the commercialization of carbon sequestration projects and supporting C02 storage opportunities from industrial sources in the PRB area of Wyoming, Montana and the Dakotas. 4. The term ?Wyoming Power Plant" is a generic description sometimes used by vendors, suppliers, consultants or other parties in referring to Two Elk. l?m not certain which document which you might be referring to. Litigation expenses are described in number 3 above and in more detail in the attachments to my letter of March 8, 2012. erFm As you may know, yesterday EPA Director Jackson published a Proposed Carbon Pollution Standard for New Power Plants. iongandard. Our 'on-going activities to date including those above have resulted in Two Elk being speci?cally identi?ed as one of approximately 15 ?transitional? power generation facility under the proposed rule. See page lot) of the Proposed Rule. 2Q327pronosa ??il We believe that we have provided the information requested by NETL as we understand your requests. However, please let me know if'you need or would like additional information. Please accept my apologies regarding this matter. In retrospect, it appears a number of these matters could have been clari?ed in a more timely manner had the issues been raised at the time of initial billing and a lot of these avoided. With permission and approval, we are ready to complete the project. As stated abotre, NETL will not be responsible for any greater cost-sharing than the amount committed, which remains at in excess elm! million for Budget Period 3. As 1 indicated above, should NETL require us to ?correct? any cost. the ?corrected? amount will be. credited against costs to be incurred in completing the Project. beginning with the costs to drill the deep characterization well. Si erely. Preside CC: Ms.Rae?lymi l-lonkus Ms.Andrea McNemar it I 3 E's? narrower. stream rscHuoLocv manure? Albany. OH - MoroamownMV - Pittsburgh. PA April 5. 2012 Via Email and Certified Mail North American Power Group. LTD ATTN: Michael J. Ruffatto, President 8480 E. Orchard Road Suite 4000 Greenwood Village, CO 80111-5027 Subject: Financial Assistance Award No. DE-FE0001997 titled "Recovery Act Two Elk Energy Park Carbon Site Characterization Study.? Dear Mr. Ruffatto: This letter acknowledges receipt of North American Power Group's (NAPG) March 28, 2012 response to the National Energy Laboratory's (NETL) request for additional information. As the Contracting Officer for the above~referenced Award, have reviewed the Continuation Application and additional information NAPG submitted, and determined that they are Insufficient. Therefore, NAPG will not be authorized to continue into Budget Period 3. Based on the project information received to-date, it has been determined that NAPG has not met the requirements for continuation, as outlined in the "Continuation Application and Funding Award Under 10 CFR 600" clause contained in the above- referenced Award Terms and Conditions. Specifically. this clause states the following: "Continuation Funding. Continuation funding is contingent on (1) availability of funds; (2) substantial progress towards meeting the objectives of your approved application: (3) submittal of required reports; or (4) compliance with the terms and conditions of the award.? NAPG failed to make substantial progress towards meeting the objectives of your approved application, as required under the Award. Further, NAPG failed to meet the objectives as outlined In the approved Statement of Project Objectives (SCPO). No verification of completed Work was provided relating to the collection of new data, drilling and completion of three shallower wells, and one deep well characterization well, modeling of non-preexisting data, development of best practices. and program assessment. NETL repeatedly requested this information of NAPG and to date. none was provided. Additionally. documentation is lacking in support of engagement activities and planning and management. NAPG failed to comply with the terms and conditions of the award. As previously communicated. NETL has serious concerns about the potential misuse of funds by NAPG and material non- compliance with the terms and conditions of the award. To date. the documents submitted by NAPG to correct the non?compliance are considered insufficient. Therefore, It is determined that NAPG is non-compliant in that NAPG invoiced and received payment from DOE for unaiiowabte and otherwise questionable costs pursuant to 10 CFR 600.317. Also, the continuation application was not received in a timely manner, resulting in further non-compliance. In accordance with the "Continuation Application Funding" clause. continuation applications are required to be submitted at least 90 clays before the end of the budget period. Based on this. the continuation application should have been received by NETL no later than January 2, 2012. NETL received continuation application on March 2012. 526 Cochrans Mill Road; Pittsburgh, PA 15235 Rsetynn.honkus?neildoagov - - After review of the invoice documentation provided by NAPG. NETL has found the following costs to be unaliowable: COST CATEGORY DOE SHARE Travel $528.19 Holland 8 Hart $3,165.50 Supplies $301.58 TZA $34,973.20 North American Land and $5,534,604.50 Live-stock TOTAL $5,573,572.97 NETL has found the following costs to be allowable: COST CATEGORY DOE Travel $10,563.80 Stanford $226,779.87 Montana ?tate University $249,826.18 Media Works $9,050 North American Land 8 $47,602 Livestock (For Earth Work) FedEx $21.39 Kushner. Smith, Joanou 8 $12,000 Gregson Schlumbergi $63,589.32 Supplies $150.00 Colton Tower $50,679 The New Push $2,182.05 Pulsonix $965 Thistle $28,171 $222.71 Jones Land $1.730 Seismic Exchange $59,853.04 Premiere $249.82 TOTAL $763,635.18 NETL has found the following costs to be questionable and requires the submission of additional information from NAPG to determine whether such costs are allowable: . COST CATEGORY DOE SHARE Personnel $1,092,914.86 Fringe Benefits $148,834.15 Powder River $47,278.23 Indirect Charges $252,591.73 TOTAL $1,541,618.97 Of the questionable costs stated above, NETL will review-and consider costs associated with the following actions for allowability and reasonableness: - Quarterly Progress and Financial reports; - American Recovery and Reinvestment Act reporting; 0 Personnel costs associated with Project Management of Stanford and Montana State University; - - Fringe benefits and indirect costs related to the personnel costs for the protect management and oversight of Stanford and Montana State; - Powder River: Additional documentation as to the purpose of this vendor, and a break-down of their costs. It is the responsibility of NAPG to provide the hours and costs associated with these tasks to NETL for review and approval. if documentation i not received in regards to these tasks by April 2012. all costs will be considered to be unallowable. and NETL will also seek reimbursement of these costs. Be advised that NAPG is responsible for submitting all final reports in accordance with the Reporting Requirements Checklist. It is the responsibility of NAPG to provide documentation of the hours associated with preparing the final reports. NETL will review these costs for reasonableness, and recognize the appropriate costs associated with preparing these deiiverables as allowable. NAPG is responsible for reimbursing NETL for all costs that are considered unallowable. and for which payment has been received. Once the questionable costs are reviewed. ETL will provide NAPG with a final determination of the casts that need to be reimbursed to the Government. if you have any comments or concerns pertaining to this letter, please feel free to contact Project Of?cer Andrea McNemar at Andrea.McNemar@netl.doe.gov or DOE's Contract Specialist. Raelynn Honkus at Raelynn.Honkus@neti.doegov. Sincerely. Martin J. Biting; Supervisor and Contracting Of?cer Acquisition and Assistance Division CC: Andrea McNemar North American Power Group, 8480 East Orchard Road, Ste 4000 Greenwood Village, Colorado 80111 Telephone: (303) 796-8600 Facsimile: (303) 773-0461 April 20. 2012 Mr. Martin Byrnes Supervisor Contracting Of?cer National Energy technology Laboratory 626 Cochrans Mill Road Pittsburgh, PA 15236 Subject: Financial Assistance Award No DE-FE0001997 Dear Mr. Bymes: Further to your letter of April 5, 2012, enclosed please ?nd information concerning: 1. Personnel information 2. Fringe bene?ts 3. Indirect Charges 4. Powder River In addition to the information you re nested, I also have included costs for the period October 2011-March 2012 when we were una ie to electronically submit this information to NETL. NAPG personnel costs for the period April 1?April 20. 2012 in responding to NETL inquires will be submitted on Monday April 23, 2012. Please note that Fringe bene?ts and Indirect charges were computed based upon a fonnula submitted to and approved by This information is also attached. Powder River Energy Corporation invoice is for relocation of a power line. Michael J. Ruffatto wlencl. cc: RaeLynn Honkus Andrea McNemar Albany,0li - Morgantownmv Pittsburghmii . ":11 A At. an to re l-l moor manure? June 25, 2012 Via E-mail and Certified Mail North American Power Group, LTD ATTN: Michael J. Ruffatto, President 8480 E. Orchard Road Suite 4000 Greenwood Village. CO 80111-5027 Subject: Financial Assistance Award No. titled "Recovery Act Two Elk Energy Park Carbon Site Characterization Studly." Dear Mr. Ruffatto: This letter serves as a final determination of total unallowable costs which North American Power Group (NAPG) charged under the subject award and must now reimburse to the Government. As previously communicated to you in my correspondence of April 5, 2012, was Initially found to be unallowable. After review of all documents submitted by NAPG to date, NETL has made a final determination that NAPG charged and was paid for unailowabie costs totaling NAPG must therefore reimburse the Government for unallowable costs in the amount of $5,719,281.92, by no later than July 31, 2012. A certi?ed check for the total funds to be reimbursed to the Government shall be made payable to the U.S. Department of Energy and sent to the following address no later than July 31, 2012: U.S. Department of Energy Attn: Jason Paupa MIS 921-227 626 Cochrans Mill Road P.O. Box 10940 Pittsburgh, PA 15236 Include Award Number DE-FE0001997 on the check. Failure to make payment may result in additional action. Please also be reminded of the notification provided to you in my correspondence of April 5. 2012, that NAPG is not authorized to continue into Budget Period 3. Therefore, all final reports are due at this time. Final reports include: 0 Patent Certificate - Property Certificate - Final Report - Final Financial Status Report Additional information on reports can be found on the Reporting Requirements Checkiist. The Final Scientifici?Technical Report must be submitted to no iaterthan June 29, 2012. The Patent Certificate, Property Certificate, and Final Financial Status Report must be Submiimd t0 FITS (W, no later than June 29, 2012. 626 Coctirans Mill Road", Pittsburgh. PA 15236 Martin?yrnes?nelldoegov - wvn'r.netl.doe.gov 2 If you have any questions pertaining to this letter. please Contact myself at (412) 386-4486 or Natalie Appetta. Director. Legal Division, at (412) 386-6072 or natalie.appetta@netl.doe.gov. Sincerely, msQ/W Supervisor and Contracting Of?cer Acquisition and Assistance Division CC: Andrea McNemar narrow. susvov TECHNOLOGY Laser-now. Albany.0it - Morganmwn,WV 0 Pittsburgh. 17A July 3, 2012 Via E-mall and Certified Mail North American Power Group, LTD ATTN: Michael J. Rufiatto, President 8480 E. Orchard Road Suite 4000 - Greenwood Village. CO 80111-5027 Subject: Financial Assistance Award No. DE-FE0001997 titled "Recovery Act ~Two Elk Energy Park Carbon Site Characterization Study." Dear Mr. Ruffatto: have received your request to extend the deadline from July 31, 2012 to October 30. 2012 for payment of disallowed costs due the National Energy Technology Laboratory (NETL) under the subject award. In order to consider your request. please provide the following information as soon as possible. or no laler than Wednesday, July 11. 2012: 1. The reason(s) for the North American Power Group's (NAPG) request for an 1 extension until October 30, 2012; 2. The source of the funds that NAPG intends to use as repayment due NETL under the subject award, and indication that those funds will be available by October 30, 2012; 3. Any underlying documentation to support the response to Item #2 showing the source and availability of funds; and 4. Whether NAPG is able to make a down payment toward the total amount due now or within at least two weeks and continue to make payments until the full amount would be due on October 30, 2012-. should NETL agree to extend the deadline. Once I receive your response to each of the above. I will be able to further consider your request and provide a response. Sincerely. Martin J. Byrne? 25 Supervisor and Contracting Officer Acquisition and Assistance Division CC: Andrea McNemar 025 Cochrans Mill Ftoad; Pittsburgh, PA 15236 Raelynn.honltust?netldoepov ?eager 3 it? -. - ILI. DIPAIYMINT NATIONAL INEEOY TECHNOLOGY LABOVATOQY ENERGY Albany.0ii . Morganlown,WV - Pittsburgh. PA 3.3ngJuly 23. 2012 Via E-mail and Certified Mail North American Power Group. LTD ATTN: Michael J. Ruffatto. President 8480 E. Orchard Road Suite 4000 Greenwood Village. CO 80111-5027 Subject: Financial Assistance Award No. titled ?Recovery Act Two Elk Energy Park Carbon Site Characterization Study." Dear Mr. Ruffatto: I have reviewed the North American Power Group's (NAPG) request to extend the deadline in which to reimburse the Department of Energy (DOE) $5.719,281.92, as well as correspondence and information provided July 11, 2012 and July 13. 2012. in support of the request. Based on my review, I approve NAPG's request and with this letter. extend the deadline to October 31. 2012, subject to the following conditions: 1. NAPG will make a payment of $1 .000.000 (1 million dollars) no later than August 31. 2012; 2. NAPG will make a second payment of at least $1 .000.000 (1 million dollars), no later than September 30, 2012; and 3. NAPG will pay the remaining balance due, up to $5,719,281.92, no later than October 31, 2012. For all payments. NAPG shall send a codified check made payable to: U.S. Department of Energy Attn: Jason Paupa MIS 921~227 626 Cochrans Mill Road P.O. Box 10940 Pittsburgh. PA 15236 include Award Number on all certified checks. Failure to make payment may result in additional action. Sincerely. Martin J. Byrnes?/ Supervisor and Contrac ing Officer Acquisition and Assistance Division CC: Andrea McNemar 626 Cochrans Mill Road: PA 15236 niius@neti.doe.qov mwmelldoagoi North American Power Group, Ltd. 8480 East Orchard Road Greenwood Village. Colorado 8011 1 Telephone: (303) 796-8600 Facsimile: (303) 773-046l Oct 29. 2012 Mr. Martin J. Bymes Supervisor Contracting Of?cer Acquisition and Assistance Division National Energy Techn010gy Laboratory 626 Cochrans Mill Road, Pittsburgh, PA 15236 Via Electronic Mail Ovcmight Delivery Subject: Financial Assistance Award No. 997 titled ?Recovery Act-Two Elk Energy Park Carbon Site Characterization Study" Dear Mr. Byrnes: We have made two provisional payments to NETL, each in the amount of $l .0 million in accordance with your letter of July 23, 2012. The closing and sale of certain of our assets to meet the ?nal payment request and fully settle this matter has been delayed. As a result, we will not be able to complete our third provisional payment that you had asked to be made by October 31, 2012. Additionally, we received a comprehensive subpoena from the Office of Inspector General of the Department of Energy earlier this month, indicating that the Department has Opened a separate investigation into the concerns you indicated would be resolved by repayment to the Department. As part of response to that subpoena. we will necessarily be engaging legal counsel to evaluate the issues associated with the investigation and may not be in a position to make further payments until those issues are resolved. Thank you for your courtesies in this matter. CC: MsRaelynn Honkus Ms.Andrea McNemar