ATTACHMENT TO PETITION FOR CONTESTED CASE HEARING

INTERSAL, INC., PETITIONERS

July 26, 2013

Introductory Note re Jurisdiction

This Petition For Contested Case Hearing is filed pursuant to the provisions of Article 3 of Chapter 150B
of the North Carolina General Statutes (NCAPA). The NCAPA does not authorize Respondent, or their
agents, to attempt to artificially narrow the scope of the Petitioners Contested Case Hearing rights as
granted by the relevant provisions of these statutes. Any efforts by the Respondent to limit the scope of
Petitioners contested case appeal rights are by very definition unlawful, contrary to the express
provisions of the NCAPA statute, and are contrary to the express of the North Carolina Supreme Court
affirming broad contested case appeal rights to all persons aggrieved.

Reasons that Petitioners Are Entitled to Relief

Petitioner is challenging the lawfulness and validity of Respondents actions in refusing to recognize
renewal of the September 1, 1998 Queen Annes Revenge (QAR) Memorandum of Agreement
(MOA) between Department of Cultural Resources (DCR) [Respondent], Intersal [Petitioner] and
Maritime Research Institute (MRI). Petitioner incorporates by reference the QAR MOA, as well as
Intersals letter of October 29, 2012 and MRIs letter of December 4, 2012, respectively, both previously
submitted to Respondent, exercising option to renew the QAR MOA for ten (10) years, as contained in
article 36 of the QAR MOA. Petitioner also references and incorporate by reference the May 30, 2013
letter from DCR Secretary Kluttz, informing Intersal and MRI she had concluded that it is not in the
Departments best interest to renew the QAR MOA. Petitioner strongly disputes that conclusion, and
strongly disputes Respondents assertion that they have the right to prevent or deny Petitioners exercise
of option to renew QAR MOA, or to refuse to recognize renewal once that option has been exercised.
Petitioner strongly contends that QAR MOA article 36 bestows option to renew upon Intersal and MRI,
and that the QAR MOA has in fact been renewed for an additional ten (10) years, through September 1,
2023.

As set forth in more detail in the various documents incorporated by reference, Petitioner strongly
contends that Respondent committed significant errors in: (a) Improperly denying renewal of the QAR
MOA; (b) incorrectly bypassing established QAR MOA committee structure; (c) failing to properly
inform QAR MOA and QAR Project partners of unilateral actions (d) engaging in QAR Project video
activities beyond that necessary for strictly educational uses, thereby encroaching on Petitioners QAR
Project narrative video rights as granted in the QAR MOA; (e) allowing DCR employees with QAR
Project oversight responsibilities to serve on the board of a non-profit organization with direct financial
ties to DCR and the QAR Project; (f) displaying a pattern of neglect and delay concerning permit renewal
process for Petitioners BUI584 permit, which process is specifically referenced in and affected by
provisions of the QAR MOA. Attached and incorporated into this Petition are examples of relevant
communication with the Respondent and additional material, which supports the contentions listed above
and documents the good faith efforts of the Petitioner to follow established procedure.


Without limitation, additional detail regarding Petitioners claims and concerns includes:

Failure to comply with terms of valid contract (QAR MOA). Respondents decision to
reject its QAR Project partners exercise of their option to renew the QAR MOA is
contrary to both the language and spirit of the contract. Intersal discovered QAR under
DCR permit in 1996. The QAR MOA was signed September 1, 1998. Article 37 of the
QAR MOA states: This Agreement shall be governed by the laws of North Carolina.
Article 36 of the QAR MOA states in part that the QAR MOA: Shall be effective for a
period of fifteen (15) years, and that Intersal and MRIs option to renew the QAR
MOA for an additional ten (10) years: must be exercised in writing to the Department or
its successors on or before the expiration of this Agreement. In 2012, Intersal and MRI
notified Respondent in writing of their decision to exercise the QAR MOA renewal
option, and Respondent acknowledged receipt of said notifications. Having exercised the
option, it is Petitioners contention that the QAR MOA has been renewed for an
additional ten (10) years, through September 1, 2023; and that there is no basis in law or
rule, or in administrative procedure, for refusal of Respondent to recognize QAR MOA
renewal, or to ignore the legitimacy of provisions contained in a valid and enforceable
contract which they are a party to. Petitioner strongly contends that Respondents actions
described above substantially prejudice Petitioners QAR Project narrative video rights
(QAR MOA article 16) and QAR Project artifact replica rights, (QAR MOA article 18).
Bypassing established committee structure. Article 12 of the QAR MOA established the
QAR Advisory Committee on Archaeological Operations (QAR AAC), having
planning and oversight responsibility for the shipwreck of the QAR and its artifacts.
Article 12 of the QAR MOA also names Petitioner as members of the QAR AAC.
Respondent has repeatedly bypassed the established committee structure. For example,
Respondent entered into negotiations with and engaged commercial video production
companies to film the QAR Project, without properly advising or consulting members of
the QAR AAC, or of its Media Subcommittee. In addition, Respondent has engaged in
QAR Project financial and operational planning activities with the non-profit group
Friends of the QAR (of which group the Petitioner is not a member) without including or
consulting with the QAR ACC. Petitioner contends these actions are contrary to the letter
and spirit of the QAR MOA.
Failure to properly inform Petitioner. Petitioner references and incorporates by reference
the June 21, 2013 letter to the Respondent from Intersals QAR Project video designee
Nautilus Productions. As documented therein, Respondent entered into negotiations with
two independent video production companies before the January 2012 meeting of the
QAR AAC Media Subcommittee. Respondent failed to properly inform committee
members of the scope and progress of these negotiations, or of intended 2013 video
plans, at the January 2013 Subcommittee meeting or in any following communication
leading up to spring 2013 QAR dive operations, in contradiction of established QAR
Project media policy. Nautilus Productions and Petitioner learned of Respondents
intention to include independent video companies in spring 2013 QAR Project dive
operations less than five weeks before beginning of those operations; and received
incomplete information and cooperation from Respondent related to Petitioners stated
concerns about the scope and technical details of Respondents intended video activities.
Failure of Respondent to keep its QAR MOA and QAR Project partners properly
informed in advance of their 2013 video activities denied the Petitioner the opportunity to
work cooperatively with Respondent through established committee structure, in order to
discuss concerns, define limits and identify parameters of educational filming by
independent video companies engaged by Respondent, in protection of Intersals QAR
Project narrative video rights as granted in QAR MOA article 16. Petitioner strongly
contends that the results of Respondents failure to properly inform Petitioner as
described, bypassing the QAR AAC Media subcommittees oversight of QAR Project
video activities, constitutes infringement on Petitioners QAR Project narrative video
rights as granted in QAR MOA article 16.
Video activities beyond those needed for educational purposes. During spring 2013
QAR dive operations, the independent video companies engaged by Respondent
conducted filming without pre-established parameters defining educational video
verses QAR Project narrative video. This was a direct result of Respondents failure to
engage Petitioner in dialogue through the established committee structure in advance of
filming. Without established parameters for educational themed video, the independent
video companies engaged by respondents who do not specialize in educational video
production attempted to capture the entire spectrum of project activities. Petitioner
strongly contends that this constitutes filming of the entire story or narrative of the
QAR Project, and encroaches upon Petitioners QAR Project narrative video rights as
granted in QAR MOA article 16.
DCR employees serving on the Board of a non-profit with financial ties to the QAR
Project. Petitioner references and incorporates by reference November 26, 2008 Friends
of QAR Articles of Incorporation and February 21, 2013 Friends of QAR Internal
Revenue Service 990 form, each listing Friends of QAR board members. Respondent has
engaged in QAR Project financial and operational planning outside of the QAR AAC
with Friends of the QAR, an ostensibly independent non-profit organization. The Friends
of QAR founding and current board of directors contains active DCR employees holding
oversight responsibility for the QAR Project; including Friends of QARs current
Treasurer, who is also the current Director of the NC Underwater Archaeology Branch,
the DCR agency with direct QAR Project oversight responsibilities. Petitioner has
concerns that these practices may not be in the best interest of the QAR Project.
Pattern of neglect and delay concerning Intersals BUI584 El Salvador Permit. Petitioner
references and incorporates by reference Intersals letter and e-mail of May 13, 2013, and
e-mail of June 30, 2013 to Respondent, regarding Intersals 2012 BUI584 yearly report
and 2013 BUI584 permit renewal request. Intersal has submitted (both draft and final
versions of) the 2012 BUI584 Yearly report and 2013 BUI584 permit renewal request as
required; Respondent has yet to respond to either, or to Petitioners letter requesting that
2013 renewal of the BUI584 permit be granted. The same absence of communication has
led to several delays in renewal of the BUI584 permit in recent years; including a
substantial delay in last years 2012 permit renewal process, which negatively affected
Petitioners ability to conduct operations in 2012. In QAR MOA article 33, Respondent
recognized Intersals search for vessel El Salvador, via DCR permit BUI584, as of
benefit to the historical heritage of the State; and, subject to the relevant provisions of
the North Carolina General Statutes and Administrative Code, also recognized Intersals
efforts and participation in the QAR Project as sufficient to satisfy any performance
requirements associated with renewal of Intersals BUI584 El Salvador permit.
Petitioner strongly contends that they have made good faith efforts to follow established
permit renewal procedure, and have received no notice from Respondent of failure to
follow established procedure. Petitioner also strongly contends that they have been (and
continue to be) good and productive partners for the entire 15 years of the QAR project,
which participation has been well documented in QAR Project e-mail, Intersals BUI584
Yearly reports to DCR, media reports, etc. In the absence of Respondent showing cause
to deny renewal of BUI584, Petitioner should have been granted renewal of BUI584 in
June 2013. Petitioner strongly contends that Respondents repeated failure to follow
established permit renewal procedures, or act in a timely fashion connected to BUI584
permit renewal, constitutes a pattern of neglect and delay in Respondents discharge of its
oversight responsibilities. Petitioner strongly contends that renewal of the BUI584 permit
for 2013 should be granted without delay.

Respondents stated intention to exclude Petitioner from partnership in the remainder of the QAR Project
disregards not only the language of the QAR MOA contract, but also the realities of the QAR Project. By
Respondents own estimation, no more than two-thirds of the QAR has been recovered to date. Steve
Weeks of MRI, who in 1988 negotiated QAR MOA language with then Assistant Attorney General
Charlie Murray, reports that the renewal option was specifically included in the QAR MOA to allow for
the possibility that the original fifteen (15) year period would be insufficient to complete the excavation
and conservation of QAR. This possibility has come to pass. Petitioner discovered QAR at its own
expense under state permit, have been good-faith partners in the QAR Project, and have followed permit
renewal procedure. Without showing cause, Respondents actions are unlawful and display a pattern of
arbitrary and capricious agency action directed towards Petitioner, in contradiction of QAR MOA
language recognizing the benefits of Petitioners activities to the People and State of North Carolina.

Respondents actions in refusing to recognize QAR MOA renewal, and additional actions described
above, directly and negatively affects Petitioner. For all of the reasons set forth in the attached documents,
Respondents actions: (a) constituted unlawful agency action; (b) Were based on erroneous factual
findings (c) infringed on Petitioners QAR Project narrative video rights (d) violated critically important
procedures designed to assure cooperation between QAR MOA signatories and QAR Project partners; (e)
constituted arbitrary and capricious agency action; (f) substantially prejudiced Petitioners rights, as well
as the rights of MRI and Nautilus Productions; and (g) raise questions regarding potential conflict of
interest issues. For all these reasons, Petitioner respectfully contends that Respondents actions in
refusing to recognize renewal of the QAR MOA should be overturned, and the QAR MOA declared
renewed for an additional ten (10) years, through September 1, 2023.

Petitioner reserves the right to amend and supplement the contents of this Petition based on the results of
discovery and further investigation.