Intersal OAH Attachment (a).pdf

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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 Respondentsactions 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). Petitionerincorporates by reference the QAR MOA, as well as

Intersals letter of October 29, 2012 and MRIs letter of December 4, 2012, respectively, bothpreviously

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 interestto renew the QAR MOA. Petitioner strongly disputes that conclusion, and

strongly disputes Respondentsassertion 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 onPetitioners 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.


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

Failure to comply with terms of valid contract (QAR MOA). Respondentsdecision 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 underDCR 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 Respondentsactions

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 productioncompanies 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


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recognized Intersals search for vesselEl 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 BUI584El Salvadorpermit.

Petitioner strongly contends that they have made good faith efforts to follow establishedpermit 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 Respondentsrepeated 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 ofarbitrary 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,

Respondentsactions: (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.

Documents

Intersal OAH Attachment (a).pdf