STATE OF INDIANA ) BEFORE THE INDIANA DEPARTMENT

) SS: OF ENVIRONMENTAL MANAGEMENT

COUNTY OF MARION )

COMMISSIONER OF THE DEPARTMENT )

OF ENVIRONMENTAL MANAGEMENT, )

)

Complainant, )

)

v. ) Case No. 2001-10783-A

)

ELI LILLY AND COMPANY, )

)

Respondent. )

AGREED ORDER

The Complainant and the Respondent desire to settle and compromise this action without hearing or adjudication of any issue of fact or law, and consent to the entry of the following Findings of Fact and Order. Pursuant to IC 13-30-3-3, entry into the terms of this Agreed Order does not constitute an admission of any violation contained herein. Respondent's entry into this Agreed Order shall not constitute a waiver of any defense, legal or equitable, which Respondent may have in any future administrative or judicial proceeding, except a proceeding to enforce this order.

I. FINDINGS OF FACT

1. Complainant is the Commissioner ("Complainant") of the Indiana Department of Environmental Management, a department of the State of Indiana created by IC 13-13-1-1.

2. Respondent is Eli Lilly and Company ("Respondent"), which owns and operates Clinton Laboratories, a manufacturing, research and development facility located at 10500 South State Road 63 in Clinton, Vermillion County, Indiana ("Site").

3. The Indiana Department of Environmental Management ("IDEM") has jurisdiction over the parties and the subject matter of this action.

4. Pursuant to IC 13-30-3-3, IDEM issued a Notice of Violation via Certified Mail to:

Sidney Taurel, President Rebecca O. Kendall, Registered Agent

Eli Lilly and Company Eli Lilly and Company

Lilly Corporate Center Lilly Corporate Center

Indianapolis, IN 46285 Indianapolis, IN 46285

• A review of quarterly monitoring reports submitted by the Respondent, was conducted by a representative of IDEM's Office of Air Quality ("OAQ"). The following violations were in existence or observed at the time of this review:



• Pursuant to Permit No. 165-2846, operating condition 4, all conditions of the Experimental Use Order issued to Eli Lilly and Company ("Lilly") on November 27, 1995, shall become part of said permit, with the exception of conditions A, B, E.7, and H. Condition D of this Experimental Use Order requires, in relevant part, that the permittee equip the regenerative thermal oxidizers ("RTO") at this source with continuous emission rate monitoring systems ("CERMS") that measure and record the emissions of carbon monoxide from the RTOs as mass per unit time. According to the quarterly reports, for the carbon monoxide CERMS associated with RTO 1, this monitor was not generating valid data for 6% of the fourth quarter of 2000 and 8.67% of the second quarter of 2001. Therefore, Respondent was found to be in violation of Permit No. 165-2846, operating condition 4, and more specifically Condition D of the Experimental Use Order.



• Pursuant to Permit No. 165-2846, operating condition 4, all conditions of the Experimental Use Order issued to Eli Lilly and Company ("Lilly") on November 27, 1995, shall become part of said permit, with the exception of conditions A, B, E.7, and H. Condition D of this Experimental Use Order requires, in relevant part, that the permittee equip the regenerative thermal oxidizers ("RTO") at this source with continuous emission rate monitoring systems ("CERMS") that measure and record the emissions of nitrogen oxides from the RTOs as mass per unit time. According to the quarterly reports, for the nitrogen oxides CERMS associated with RTO 1, this monitor was not generating valid data for 6.92% of the first quarter of 2002. Therefore, Respondent was found to be in violation of Permit No. 165-2846, operating condition 4, and more specifically Condition D of the Experimental Use Order.

6. Respondent has replaced the carbon monoxide and nitrogen oxide CERMS on both RTO 1 and RTO 2.

• In recognition of the settlement reached, Respondent waives any right to administrative and judicial review of this Agreed Order.

II. ORDER

1. This Agreed Order shall be effective ("Effective Date") when it is approved by the Complainant or her delegate, and has been received by the Respondent. This Agreed Order shall have no force or effect until the Effective Date.

2. Respondent shall comply with all terms and conditions of Construction Permit No. 165-2846.

3. Respondent is assessed a civil penalty of Seventeen Thousand Dollars ($17,000). Said penalty amount shall be due and payable to the Environmental Management Special Fund within 30 days of the Effective Date of this Agreed Order.

4. Civil penalties are payable by check to the Environmental Management Special Fund. Checks shall include the Case Number of this action and shall be mailed to:

Cashier

Indiana Department of Environmental Management

100 N. Senate Avenue

P. O. Box 7060

Indianapolis, IN 46207-7060

5. In the event that the civil penalty required by Order paragraph 3, is not paid within thirty (30) days of the Effective Date of this Agreed Order, Respondent shall pay interest on the unpaid balance at the rate established by IC 24-4.6-1-101. The interest shall continue to accrue until the civil penalty is paid in full.

6. This Agreed Order shall apply to and be binding upon the Respondent, its successors and assigns. The Respondent's signatories to this Agreed Order certify that they are fully authorized to execute this document and legally bind the parties they represent. No change in ownership, corporate, or partnership status of the Respondent shall in any way alter its status or responsibilities under this Agreed Order.

7. In the event that any terms of the Agreed Order are found to be invalid, the remaining terms shall remain in full force and effect and shall be construed and enforced as if the Agreed Order did not contain the invalid terms.

8. The Respondent shall provide a copy of this Agreed Order, if in force, to any subsequent owners or successors before ownership rights are transferred. Respondent shall ensure that all contractors, firms and other persons performing work under this Agreed Order comply with the terms of this Agreed Order.

9. This Agreed Order shall remain in effect until Respondent has complied with the terms and conditions of Order paragraph 3.

TECHNICAL RECOMMENDATION: RESPONDENT:

Department of Environmental Management Eli Lilly and Company

By: _________________________ By: _________________________

David P. McIver

Chief, Air Section Printed: ______________________

Office of Enforcement

Title: ________________________

Date: ________________________ Date: ________________________

COUNSEL FOR COMPLAINANT: COUNSEL FOR RESPONDENT:

Department of Environmental Management

By: _________________________ By: ________________________

Office of Legal Counsel

Date: _______________________ Date: ______________________

APPROVED AND ADOPTED BY THE INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT THIS _____ DAY OF ____________________, 20__.

For the Commissioner:

(Signed on 11/13/02)

___________________________

Felicia A. Robinson

Deputy Commissioner

for Legal Affairs