Notice of Violation

NOTICE OF VIOLATION

Via Certified Mail# _______________ Via Certified Mail# _______________

To: Gary L. Neale, President Nina M. Rausch

NiSource Inc. Registered Agent for NiSource Inc.

801 East 86^th Avenue 5265 Hohman Avenue

Merrillville, Indiana 46410 Hammond, Indiana 46320

Case No. 2001-11099-H

Based on an investigation by designated representatives of the Indiana Department of Environmental Management (IDEM) on November 27 and December 14, 2001, NiSource Inc., U.S. EPA ID number IND 000 715 375, located at Wabash Street at the Lake in Michigan City, LaPorte County, Indiana, was in violation of the following environmental statutes and rules:

A. Pursuant to 329 IAC 10-4-2, no person shall cause or allow the storage, containment, processing, or disposal of solid waste in a manner which creates a threat to human health or the environment, including the creating of a fire hazard, vector attraction, air or water pollution, or other contamination. This facility allowed regulated solid waste to be disposed at Steel Wheels BMX located at 702 North Hobart Road, Hobart, Indiana.

B. Pursuant to 329 IAC 10-3-1(13), other uses of solid waste may be approved by the commissioner if the commissioner determines them to be legitimate uses that do not pose a threat to public health and environment. The facility failed to request approval from the commissioner for reuse of fly ash at Steel Wheels BMX located at 702 North Hobart Road, Hobart, Indiana.

C. Pursuant to IC 13-30-2-1(3), a person may not deposit any contaminants upon the land in a place and manner that creates or would create a pollution hazard that violates or would violate a rule adopted by one (1) of the boards. This facility allowed regulated solid waste to be deposited at Steel Wheels BMX located at 702 North Hobart Road, Hobart, Indiana.

Notice of Violation 2001-11099-H

NiSource Inc.

Page 2

D. Pursuant to IC 13-30-2-1(4), a person may not deposit or cause or allow the deposit of any contaminants or solid waste upon the land, except through the use of sanitary landfills, incineration, composting, garbage grinding, or another method acceptable to the solid waste management board. This facility allowed regulated solid waste to be deposited at Steel Wheels BMX located at 702 North Hobart Road, Hobart, Indiana.

In accordance with IC 13-30-3-3, the Commissioner is required to notify an alleged violator in writing that a violation may exist and offer an opportunity to enter into an Agreed Order providing for the actions required to correct the violations and for the payment of a civil penalty. The Commissioner is not required to extend this offer for more than sixty (60) days.

Entering into an Agreed Order will prevent the issuance of a Notice and Order of the Commissioner under IC 13-30-3-4, or the filing of a civil court action under IC 13-14-2-6. IDEM encourages settlement by Agreed Order, thereby saving time and resources. Timely settlement by Agreed Order may result in a reduced civil penalty. Settlement discussions will also allow the opportunity to present any mitigating factors that may be relevant to the violations. In addition, as provided in IC 13-30-3-3, an alleged violator may enter into an Agreed Order without admitting that the violation occurred.

If settlement is not reached within sixty (60) days of receipt of this Notice of Violation, the Commissioner may issue a Notice and Order containing the actions that must be taken to achieve compliance, the required time frames, and an appropriate civil penalty. Pursuant to IC 13-30-4-1, the Commissioner may assess penalties of up to $25,000 per day for each violation.

To discuss this matter further, please contact Jennifer Reno at (317) 233-6336 within fifteen (15) days after receipt of this Notice to request a conference. If settlement is reached, an Agreed Order will be prepared and sent for review and signature.

For the Commissioner:

Date: _______________ _Signed on 2/13/02_____

Felicia A. Robinson

Deputy Commissioner

for Legal Affairs

cc: Jennifer Reno, OE

Michael Byron, OLC

Scott Ormsby, NWRO

Adriane Blaesing, NWRO

1B2 Public File