NOTICE OF VIOLATION

Via Certified Mail# Via Certified Mail#

To: Larry W. Singleton, President Richard L. Mintz, Registered Agent

New Energy Corp. New Energy Corp.

3201 West Calvert Street 202 South Michigan Street

South Bend, IN 46680 South Bend, IN 46601

Via Certified Mail#

New Energy Company of Indiana, LP

c/o New Energy Corp., General Partner

3201 West Calvert Street

South Bend, IN 46680

Cause No. 2000-9526-A

Designated representatives of the Indiana Department of Environmental Management (IDEM) have reviewed records related to the Title V permit application submitted by New Energy Corp. "NEC", for its fuel-grade ethanol production facility located at 3201 West Calvert Street in South Bend, Indiana.

Pursuant to 325 IAC 2-1-8 (currently 326 IAC 2-3), any new or modified major stationary source, located in an area designated as nonattainment for ozone, which has potential emissions of one hundred (100) or more tons per year of Volatile Organic Compounds (VOCs) is subject to the requirements of this rule. The requirements of this rule include but are not limited to the installation of additional emission controls to limit VOC emissions and a requirement to obtain emission offsets. According to documentation submitted by NEC to IDEM in September 1997, NEC constructed and subsequently commenced operation of the aforementioned fuel grade ethanol production facility, which has potential and actual VOC emissions greater than 100 tons per year, without complying with the requirements of 325 IAC 2-1-8 (currently 326 IAC 2-3), a violation of said rule.

In accordance with IC 13-30-3-3, the Commissioner is required to notify you in writing that the Commissioner believes a violation exists and offer you 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.

If settlement is not reached within sixty (60) days of your receipt of this Notice, the Commissioner may issue an Order pursuant to IC 13-30-3-4, containing the actions you must take 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 of any violation.

Entering into an Agreed Order will prevent the issuance of an 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 timely 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 give you the opportunity to present any mitigating factors that may be relevant to the violations. In addition, as provided in IC 13-30-3-3, you may enter into an Agreed Order without admitting that the violation occurred.

To discuss this matter further, please contact Matthew Stuckey at 317/233-1134 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 to you for review and signature.

For the Commissioner:

Date: _______________ Signed on August 11, 2000

Felicia A. Robinson

Assistant Commissioner

Office of Enforcement

cc: Jean Bauer, US EPA Region 5

St. Joseph County Health Department

Aaron Schmoll, Office of Legal Counsel

Matthew Stuckey, Office of Enforcement

Rick Reynolds, Northern Regional Office

Terry Coleman, Northern Regional Office

OAM Public File

Enforcement File