Company Name: NiSource Inc.
Public Availability Date: March 10, 2003

Document Sections:

INQUIRY LETTER
APPENDIX
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER

[INQUIRY LETTER]

January 21, 2003

Securities and Exchange Commission

Division of Corporation Finance

Office of Chief Counsel

450 Fifth Street, N.W.

Washington, D.C. 20549

Re: Proposed Shareholder Resolution of Shaw R. Friedman

Ladies and Gentlemen:

NiSource Inc., a Delaware corporation (the "Company"), has received a proposal submitted by Shaw R. Friedman (the "Proposal") for inclusion in its proxy statement relating to its 2003 Annual Meeting of Shareholders, which is currently scheduled for May 20, 2003. The Proposal recommends that the Company "disclose, as part of its Annual Report, gross revenue and net income statements pertaining to any and all of its unregulated subsidiaries ... in addition to gross revenue and net income statements pertaining to its regulated subsidiaries."

We hereby notify the Securities and Exchange Commission (the "Commission") and Mr. Friedman of the Company's intention to exclude the Proposal from the 2003 Proxy Statement for the reasons set forth below. We request that the staff of the Division of Corporation Finance (the "Staff") confirm that it will not recommend any enforcement action to the Commission if the Company excludes the Proposal from its proxy materials. In accordance with Rule 14a-8(j) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company hereby files six copies of this letter and the Proposal and its supporting statement, which are attached to this letter as Exhibit A. One copy of this letter, with copies of all enclosures, is being simultaneously sent to Mr. Friedman.

The Company intends to omit the Proposal and Mr. Friedman's supporting statement from the Company's proxy statement in reliance upon Rule 14a-8(i)(7), because the Proposal deals with a matter relating to the ordinary business operations of the Company; and in reliance upon Rule 14a-8(i)(3), because the Proposal and supporting statement are misleading.

The Proposal

The Proposal and supporting statement read as follows:

"Proposal for inclusion in 2003 proxy material to shareholders.

Should NiSource disclose, as part of its Annual Report, gross revenue and net income statements pertaining to any and all of its unregulated subsidiaries such as SCC Services (which manages Sand Creek Country Club) and Lake Erie Land Company (which owns the Coffee Creek Land Development) in addition to gross revenue and net income statements pertaining to its regulated subsidiaries?

Brief Background statement in support of proposal (for inclusion in shareholder proxy material.)

As a holding company, NiSource has developed forty-five (45) or more unregulated subsidiaries engaged in businesses as diverse as security services, real estate development and the operation of a country club.

The Public Utility Holding Act [sic] (PUHCA) requires NiSource divest itself of non-utility assets. However, our company takes a "broad view" of what constitutes a public utility and petitioned the Securities and Exchange Commission (SEC) at the time of the Columbia Gas merger for permission to continue to retain the Lake Erie Land Company subsidiary to develop luxury homes. Yet many believe development is "stagnant" at Coffee Creek and question the viability of the project. (Times of Munster, August 4, 2002).

In addition, our company sought permission to continue to retain SCC Services, which manages Sand Creek Country Club. In a filing with the SEC, our company described Sand Creek Country Club as located in an "economically distressed area" and functionally related to the public utility business. Yet Sand Creek is widely viewed as a significant money-losing proposition for our company which is being subsidized by other profitable NiSource subsidiaries such as NIPSCO.

NiSource also sought permission to continue to retain Wellingshire, an 1100-acre luxury golf course community near Indianapolis which it acquired during the purchase of the Indianapolis Water Company.

Even though these are not "core" holdings in the traditional sense, our company sought permission from the SEC so it would not have to divest itself of these properties. (Source: NiSource SEC filing for post-effective amendment to Merger Agreement March 28, 2002).

Since each one of these properties and the various subsidiaries which own and operate them have an effect on our company's bottom line, shareholders need to be able to ascertain the revenues attributed to each subsidiary and the net income derived as well.

In an era where transparency and full disclosure are required to bolster faith in the markets and in publicly traded companies like ours, this proposal simply insures that NiSource shareholders have full and complete revenue and income statements available in the Annual Report pertaining to any and all of our company's various subsidiaries (both regulated and non-regulated). [emphasis in original]

Shareholders are urged to vote FOR this proposal."

The Proposal deals with matters relating to the Company's ordinary business operations, namely the disclosure by the company of financial information in its periodic reports, and is therefore properly excludable under Rule 14a-8(i)(7).

Pursuant to Rule 14a-8(i)(7), a registrant may omit a shareholder proposal from its proxy materials if the proposal "deals with a matter relating to the company's ordinary business operations." The reason for this position is set forth in Release No. 34-40018 (May 21, 1998); 1998 WL 25480. Allowing the Company's stockholders to consider such a proposal would be inconsistent with the Commission's statement that the underlying purpose of the ordinary business exception is "to confine the resolution of ordinary business problems to management and the board of directors since it is impracticable for shareholders to decide how to solve such problems." Release No. 34-40018, Id. at *4.

The Company's decision to exclude the Proposal is consistent with the Staff's position in a line of no-action letters holding that proposals involving financial reporting and accounting policies may be excluded as relating to a company's ordinary business operations. See Int'l Bus. Machines Corp. (January 9, 2001) (proposal seeking "transparent financial reporting of profit from real company operations" excludable as "relat[ing] to ordinary business operations (i.e., the presentation of financial statements in reports to shareholders)"); Household Int'l, Inc. (March 13, 2000) (proposal seeking to have board establish a committee to develop and enforce policies to ensure that "accounting methods and financial statements adequately reflect the risks of [the company's business]" excludable as "relating [to] its ordinary business practices (i.e., accounting methods and the presentation of financial statements in reports to shareholders)"); Conseco, Inc. (April 18, 2000) (same as Household); Johnson Controls, Inc. (October 26, 1999) (proposal requesting that company "take the necessary steps ... [to] identify the true value of shareholder equity when goodwill ... is nearly as high as the shareholder's equity" excludable as "relating to its ordinary business operations (i.e., the presentation of financial statements in reports to shareholders)"); The Chase Manhattan Bank Corp. (March 4, 1999) (proposal seeking bylaw amendment to require that the company disclose in the footnotes to the company's financial statements all of the taxes imposed on the company for the fiscal year and a breakdown of such taxes on a per share basis excludable as "relating to Chase Manhattan's ordinary business operations (i.e., disclosure in financial reports)"); LTV Corp. (November 25, 1998) (proposal requiring disclosure in notes to the company's financial statements regarding financial capacity of the Company's auditor excludable as ordinary business operations); American Stores Company (April 7, 1992) (proposal requesting disclosure in company's Annual Report of separate income statements and balance sheets for each of the company's principal operating subsidiaries excludable because such proposal "involv[es] the presentation of the disclosure in reports to shareholders and the form and content of those reports, including questions concerning the information provided that is neither required under disclosure standards established by applicable requirement, e.g. GAAP, nor generally consistent with such disclosure standards, [and] relate[s] to ordinary business operations.").

We recognize that the Staff announced a change of position in the Johnson Controls letter that "proposals requesting additional disclosures in Commission prescribed documents should not be omitted under the `ordinary business' exclusion solely because they relate to the preparation or content of documents filed with or submitted to the Commission [emphasis added]." However, the Staff specifically indicated that this was to avoid arguments based solely on form; the Staff would consider whether the subject matter of the additional disclosure sought involves a matter of ordinary business, and would allow it to be excluded if it does. Johnson Controls goes on to state that the subject of the request, the presentation of financial information, puts it within the ambit of the "ordinary business" exclusion, and the letter has been cited repeatedly for that proposition. See Int'l Bus. Machine Corp. and Household Int'l., Inc. supra.

The Company is firmly committed to transparency and completeness of its financial disclosure. However, the disclosure of the financial statements of more than forty subsidiaries would only serve to confuse investors and not advance the cause of disclosure.1 Management, in drafting Exchange Act disclosures, has made an informed judgment, with respect to a complex matter, that disclosure with respect to unregulated segments is more useful to investors than subsidiary-by-subsidiary information. Accordingly, the Company has provided segment disclosure in its Exchange Act reports showing revenues and operating income of its Merchant, Exploration & Production and Other segments, which segments contain virtually all of the Company's unregulated businesses. Were Mr. Friedman allowed to revise his proposal to request that the Company disclose financial information for its regulated businesses on the one hand and its unregulated businesses on the other hand, the Company already would be in substantial compliance through its segment reporting, and the Proposal could be excluded under Rule 14a-8(i)(10) as substantially implemented.

The Proposal and supporting statements are misleading and therefore the Proposal is properly excludable under Rule 14a-8(i)(3).

Rule 14a-8(i)(3) permits the omission of a proposal if the proposal or its supporting statements are contrary to the Commission's proxy rules and regulations, including Rule 14a-9, which prohibits materially false or misleading statements in proxy soliciting materials.

The Proposal is replete with inaccurate and misleading statements with respect to the Company and its unregulated subsidiaries. The proposal itself, by asking for gross revenues and net income for "any and all" of its unregulated subsidiaries in the annual report, states that such disclosure would be "in addition to gross revenues and net income statements pertaining to its regulated subsidiaries." This creates the false impression that the annual report to shareholders contains such a subsidiary-by-subsidiary financial breakdown for regulated subsidiaries, and that the proposal is one for parity of disclosure between regulated and unregulated subsidiaries. In fact, the annual report contains no individual subsidiary-by-subsidiary information, only segment information. This misleading impression is furthered by the last paragraph of the supporting statement.

The second paragraph of the supporting statement categorically states that the Public Utility Holding Company Act ("PUHCA") requires divestiture of non-utility assets. There is no such blanket divestiture provision in PUHCA. The Commission's order with respect to the Columbia Energy Group acquisition specifically identified businesses to be divested, primarily IWC Resources Corporation and its water utility subsidiaries ("IWCR"), and the Company has complied. The supporting statement represents that the Company takes a "broad view" of what constitutes a public utility. However, the Company has never taken the position that Lake Erie Land Company or any other unregulated subsidiary is a public utility.

The second paragraph further suggests that Lake Erie Land Company is in the business of building "luxury" homes only, when, in fact, the planned development includes a range of building types, including rental units, townhomes, commercial properties, retail properties and single family houses along a continuum of price points. Much of the Coffee Creek plan is substantially different from typical suburban and exurban "luxury" developments, due to higher population density and smaller lot sizes. The supporting statement also states that "many" believe the development is "stagnant" and question the viability of the project. The assertion is cited to a Times of Munster article. However, the observation as to viability is an unsupported statement of Mr. Friedman's opinion, not explicitly contained in the article. While the article contains the assertion that many believe the development is "stagnant," the article contains no source for such assertion. The citation is generally misleading since the article as a whole is a balanced description of Lake Erie's Coffee Creek project, with many positive and supported statements regarding national public acclaim for the project's sensitivity to environmental and community development issues.

The third paragraph creates the impression that the Company has misrepresented in a Commission filing that a country club is an "economically distressed area" and is functionally related to a public utility. The filing in question, a post-effective amendment to the Company's application on Form U-1, still pending at the Commission, indicates that the entire Lake Erie project is in an economically distressed area, i.e. Northwest Indiana. There is ample evidence in the Company's Exchange Act reports and elsewhere that Northwest Indiana has been severely impacted by the long-term decline in basic industries, such as steel. As to the functional relationship point, the Form U-1 reasons that the project as a whole provides environmental benefits, including wetlands "banking", aids the Company in fuel cell development and supports economic development in one of the Company's public utility service areas. These are all recognized and established grounds under PUHCA for a holding company to retain unregulated subsidiaries as functionally related businesses.

The third paragraph contains an unsupported statement of opinion presented as a fact, namely that Sand Creek is "widely viewed" as a "significant money-losing" proposition. The paragraph then flatly states that the Sand Creek development is being "subsidized" by Northern Indiana Public Service Company ("NIPSCO"), among other NiSource subsidiaries. Any equity funds advanced to Lake Erie have come from NiSource Inc. There are no intercompany loans from the Company or any NiSource entity outstanding to Lake Erie. Lake Erie is not a participant in the Commission regulated money pool. If Lake Erie were to join the money pool at any date in the future, an act that would require a Commission order under PUHCA, any advance received would be a loan, not a subsidy.

The fourth paragraph suggests that the Company affirmatively sought to retain its passive investment in the Wellingshire development independent of other considerations. In fact, the development was retained solely because the buyer of IWCR decided not to purchase that investment, as is clearly indicated in the Company's Form U-1.

Taken as a whole, the proposal and its supporting statement suggest that the Company is making selective disclosure of its subsidiary financial statements, is taking unwarranted, aggressive and untenable positions under PUHCA, is in the real estate business solely for the purpose of developing "luxury" properties and has asserted functional relationships of unregulated subsidiaries to public utilities in bad faithall of which are demonstrably false.

Conclusion

For the reasons listed above, the Company believes that it has a proper basis for excluding the Proposal from its 2003 proxy materials. If you have any questions or comments about the above-discussed matter, please do not hesitate to call Gary W. Pottorff, the Company's Secretary at (219) 647-4222. Kindly date stamp and return the enclosed copy of this letter in the enclosed stamped, self-addressed envelope to acknowledge receipt of this letter.

Very truly yours,

/s/

Gary W. Pottorff
Secretary

Enclosures

cc: Shaw R. Friedman
Friedman & Associates, P.C.
705 Lincolnway
LaPorte, Indiana 46350

-----FOOTNOTES-----

¹ We also note that there is a presumption in both Regulation S-X and the secondary accounting literature that separate financial statements are not as meaningful as consolidated statements. Rule 3A-02 of Regulation S-X states that "[t]here is a presumption that consolidated statements are more meaningful than separate statements...." See also Tom M. Plank & Lois R. Plank, Accounting Desk Book, The Accountant's Everyday Instant Answer Book,

² (Prentice Hall 11th ed. 2000) (stating that it is a general principle of financial statement presentation that "consolidated financial statements are presumed to be more meaningful than separate statements of the component legal entities"). This is a logical extension of the rationale for requiring consolidation in the first place, as set forth in ARB 51 (as amended by FAS 94), Rule 3A-02 of Regulation S-X and Rule 14a-3 under the Exchange Act.

[APPENDIX]

STOCKHOLDER PROPOSAL

(submitted by Shaw R. Friedman, LaPorte, Indiana - owner of 210 shares of NiSource stock with a value of $4,092.92 as of November 30, 2002. Shareholder also certifies that he has held such stock for at least one year prior to this date and that he intends to hold this stock throughout 2003.)

Proposal for inclusion in 2003 proxy material to shareholders:

"Should NiSource disclose, as part of its Annual Report, gross revenue and net income statements pertaining to any and all of its unregulated subsidiaries such as SCC Services (which manages Sand Creek Country Club) and Lake Erie Land Company (which owns the Coffee Creek Land Development) in addition to gross revenue and net income statements pertaining to its regulated subsidiaries?"

Brief Background statement in support of proposal (for inclusion in shareholder proxy material.)

"As a holding company, NiSource has developed forty-five (45) or more unregulated subsidiaries engaged in businesses as diverse as security services, real estate development and the operation of a country club.

The Public Utility Holding Act (PUHCA) requires NiSource divest itself of non-utility assets. However, our company takes a "broad view" of what constitutes a public utility and petitioned the Securities and Exchange Commission (SEC) at the time of the Columbia Gas merger for permission to continue to retain the Lake Erie Land Company subsidiary to develop luxury homes. Yet many believe development is "stagnant" at Coffee Creek and question the viability of the project. (Times of Munster, August 4, 2002).

In addition, our company sought permission to continue to retain SCC Services, which manages Sand Creek Country Club. In a filing with the SEC, our company described Sand Creek Country Club as located in an "economically distressed area" and functionally related to the public utility business. Yet Sand Creek is widely viewed as a significant money-losing proposition for our company which is being subsidized by other profitable NiSource subsidiaries such as NIPSCO.

NiSource also sought permission to continue to retain Wellingshire, an 1100-acre luxury golf course community near Indianapolis which it acquired during the purchase of the Indianapolis Water Company.

Even though these are not "core" holdings in the traditional sense, our company sought permission from the SEC so it would not have to divest itself of these properties. (Source: NiSource SEC filing for post-effective amendment to Merger Agreement, March 28, 2002).

Since each one of these properties and the various subsidiaries which own and operate them have an effect on our company's bottom line, shareholders need to be able to ascertain the revenues attributed to each subsidiary and the net income derived as well.

In an era where transparency and full disclosure are required to bolster faith in the markets and in publicly traded companies like ours, this proposal simply insures that NiSource shareholders have full and complete revenue and income statements available in the Annual Report pertaining to any and all of our company's various subsidiaries (both regulated and non-regulated).

Shareholders are urged to vote FOR this proposal."

[INQUIRY LETTER]

December 12, 2002

Via Certified Mail

Mr. Gary W. Pottorf
Secretary
NiSource, Inc.
801 E. 86th Avenue
Merrillville, IN 46410

Re: Shareholder Resolution

Dear Mr. Pottorf,

I left you a voice message recently to attempt to make contact with you to advise that the enclosed would be forthcoming. I did inform Attorney Pete Hatton today of the fact that it was being sent.

Enclosed, you will find a shareholder resolution and background statement which I would request be placed in the proxy materials in preparation for the annual meeting.

Should you have any questions on same, please do not hesitate to contact me.

Very truly yours,

/s/

Shaw R. Friedman

SRF/lk

enclosure (1)

[INQUIRY LETTER]

March 3, 2003

Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: Proposed Shareholder Resolution of Shaw R. Friedman

Ladies and Gentlemen:

This letter is being sent to you in response to the letter dated February 20, 2003 that NiSource Inc. (the "Company") received from Shaw R. Friedman. Although Mr. Friedman's February 20, 2003 letter purports to respond to the Company's January 21, 2003 letter notifying the Commission of the Company's intention to exclude Mr. Friedman's proposal from the Company's 2003 Proxy Statement, Mr. Friedman's letter fails to address the substance of the Company's argument that his proposal should be excluded under the Rule 14a-8(i)(7) as relating to the Company's ordinary business operations. Rather, Mr. Friedman's letter is nothing more than an attempt to misdirect and mislead the Staff. Moreover, we question whether a response sent nearly a month after our letter meets the requirement in Rule 14a-8(k) of being submitted "as soon as possible."

Mr. Friedman's February 20, 2003 letter contains a number of inaccurate statements, but the Company feels compelled to call to the Staff's attention Mr. Friedman's particularly offensive attempt to link the possible misappropriation of funds from a local union pension plan to the Company. Mr. Friedman states in his letter, without support, that Coffee Creek development "is apparently the subject of investigation by the U.S. Department of Labor and a federal grand jury." The Company has not been notified that it is a "subject" of the investigationwhich merely means that it is a person "whose conduct is within the scope of the grand jury's investigation" and we therefore wonder on what Mr. Friedman bases his statement. More to the point, however, the Company has been unequivocally informed by the U.S. Attorney's Office that it is not a "target" of the investigation. There has been no allegation of any wrongdoing on the part of the Company by the government or even by the pressa fact made abundantly clear in the very articles cited by Mr. Friedman.

Mr. Friedman challenges the Company's positionthat his proposal is excludable as relating to the ordinary business operations of the Companyby arguing that, because the U.S. Department of Labor and a federal grand jury are investigating the possible misappropriation of funds from a local union pension plan to purchase property in the Coffee Creek development, the financial activities of Lake Erie Land (and presumably Coffee Creek) cannot be considered "day to day business matters." This argument is fundamentally flawed and without merit. The investigation is of a union pension plan and how its money was spent. That someone may have used pension plan funds improperly to purchase land has nothing whatsoever to do with whether the seller of that land was or was not acting in the ordinary course of its business, much less with how the seller of the land presents its financial information. The existence of any such investigation is entirely irrelevant to whether, under the Commission's rules and applicable precedent, the presentation of financial information is an ordinary business operation and therefore not a proper subject matter for a shareholder proposal. As noted above, any suggestion that any alleged wrongdoing by someone with access to the pension plan funds should in some way be attributed to or indicative of the conduct or practices of the Company and its subsidiaries is contrary to the fact that the Company has been expressly advised that it is not a target of any investigation.

We also note that the controversy involving Peter Manous and Lake Erie that Mr. Friedman brings to the attention of the Staff indirectly involves Mr. Friedman. The side bar to the article from the February 14, 2003 issue of the Indianapolis Star provided by Mr. Friedman refers to an article entitled "Democrats Consider Possible Successors" in the same issue. We have attached a copy of that article, which indicates that Mr. Friedman was a leading candidate to replace Peter Manous as head of the Indiana State Democratic Party. While we believe that the grounds previously raised to exclude Mr. Friedman's proposal are more than sufficient, in the event the Staff is considering requiring the inclusion of the proposal, we believe it is appropriate for the Staff to make inquiries of Mr. Friedman to confirm that he is not advancing a personal claim or grievance against the Company (or possibly Mr. Manous) that is designed to result in a benefit to, or further a personal interest of, Mr. Friedman, which is not shared by the other shareholders at large. If it were, Mr. Friedman's proposal could also be subject to exclusion under Rule 14a-8(i)(4).

If you have any questions please do not hesitate to call me at (219) 647-4222. Please date stamp and return the enclosed copy of this letter in the enclosed stamped, self-addressed envelope to acknowledge receipt of this letter.

Very truly yours,

/s/

Gary W. Pottorff

Enclosures

cc: Shaw R. Friedman
Friedman & Associates, P.C.
705 Lincolnway
LaPorte, Indiana 46350

[INQUIRY LETTER]

February 20, 2003

Via Overnight Delivery

Division of Corporation Finance
Office of Chief Counsel
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: Proposed Shareholder Resolution of Shaw R. Friedman

Dear Members of the Division,

This letter shall serve as my response to the January 21, 2003 correspondence of Mr. Gary W. Pottorf, Secretary of NiSource, which sought a no-action letter from your division in response to my proposed shareholder resolution which was sent to the company by certified mail on December 12, 2002 (See enclosed.)

The company has asserted objections under both Rule 14a-8(i)(7) claiming that the resolution and supporting statement deal with a "a matter relating to the company's ordinary business operations" and Rule 14a-8(i)(3) claiming that aspects of my resolution and supporting statement "are misleading."

I would note that my resolution and supporting statement in essence seek full disclosure for shareholders of gross revenue and net income for various non-regulated subsidiaries of the company and specifically cites to Lake Erie Land Company and its subsidiary, Coffee Creek Land Development. As your division will note from the enclosed media accounts, the Coffee Creek Land Development (also referenced in my supporting statement) is apparently the subject of investigation by the U.S. Department of Labor and a federal grand jury. I would submit that the financial activities of Lake Erie Land Company are apparently anything but "ordinary business operations" and deserve special scrutiny by shareholders. Your division has made clear in interpreting the "ordinary business" exclusion that it will make a case-by-case determination of what qualifies for the exclusion. I would argue that if federal U.S. Department of Labor investigators have found it necessary to take evidence regarding revenue and income streams at Lake Erie/Coffee Creek to a federal grand jury, then clearly these are not matters which are "day to day business matters" best confined to "management and the board of directors" of the company. (Final Rule 87-25-97)

Furthermore, while the company takes exception to various assertions of mine in the supporting statement regarding the viability of Coffee Creek Land Development, clearly such development and its funding sources/viability has attracted the attention of federal investigators and a federal grand jury. Obviously, the means by which the company can answer whether a given subsidiary is a financial drain or burden on the parent company is to disclose such information as indicated in my resolution and supporting statement.

The company claims in its submission to your division that it is "firmly committed to transparency and completeness of financial disclosure," yet adamantly opposes setting forth the most rudimentary disclosure of revenue and income of each of its unregulated subsidiaries in its annual report.

Coming just a few days after the swearing-in of your new Chairman Mr. Donaldson who pledged to make the markets "more transparent and friendlier to all investors, particularly small investors," this resolution and supporting statement is certainly consistent with that stated ethic. I cannot imagine that with a federal grand jury apparently probing the financial activities of one of the subsidiaries I cite in my supporting materials that your division should see fit to grant this company the no-action letter it seeks.

I respectfully request you deny the company their petition for a no-action letter and thereby permit my resolution and supporting statement to go before the shareholders of NiSource.

Very truly yours,

/s/

Shaw R. Friedman

SRF/lk

enclosures (4)

cc: Mr. William H. Donaldson, Chairman
Securities and Exchange Commission

Mr. Gary W. Pottorf, Secretary
NiSource, Inc.

[STAFF REPLY LETTER]

March 10, 2003

Response of the Office of Chief Counsel Division of Corporation Finance

Re: NiSource Inc.

Incoming letter dated January 21, 2003

The proposal relates to disclosing the gross revenue and net income statements of NiSource's unregulated subsidiaries in its annual report.

There appears to be some basis for your view that NiSource may exclude the proposal under rule 14a-8(i)(7), as relating to its ordinary business operations (i.e., presentation of financial information). Accordingly, we will not recommend enforcement action to the Commission if NiSource omits the proposal from its proxy materials in reliance on rule 14a-8(i)(7). In reaching this position, we have not found it necessary to address the alternative basis for omission upon which NiSource relies.

Sincerely,

/s/

Jennifer Bowes
Attorney-Advisor