02-06 North American Emerald Mine File Pt. 13

ROBINSON BRADSHAW & HINSON
CHARLOTTE OFFICE _ DIRECT DIAL: 704.377.81 1 2
DIRECT FAX: VELLE@ BH.0 2
JREVELLE(�RBH.COM
October 17, 2005
Ms. Anita LeVeaux
N.C. Department of Justice
Environmental Division
9001 Mail Service Center
Raleigh, NC 27699
Re: WM.. Fred Walker, Jr. v. N.C. Dept. of Environment and Natural Resources, Case
No. 04-EHR-2162
Dear Anita:
Enclosed are three original Settlement Agreements executed by Dorothy Watkins and
Fred Walker. We look forward to receiving one fully executed original from you.
Please let me know if you have any questions.
Sincerely,
14Z4
Jennifer F. Revelle
JFR/dh
Enclosures
cc: Mr. William W. Toole
C-931345vl 18484.00011
RECEIVED
OCT 2 4 2005
N.C. ATTORNEY GENERAL
Environmental Division
Attorneys at Law
Charlotte Office: 101 North Tryon Street, Suite 1900, Charlotte, NC 28246 Ph: 704.377.2536 Fx: 704.378,4000
South Carolina Office: 140 East Main Street, Suite 420, P.O. Drawer 12070, Rock Hill, SC 29731 Ph: 803.325.2900 Fx: 803.325.2929

STATE OF NORTH CAROLINA
COUNTY OF ALEXANDER
Wm. Fred Walker, and
D&M Emeralds, Inc.
Petitioners,
V.
N.C. Department of Environment and
Natural Resources,
Respondent.
IN THE OFFICE OF
ADMINISTRATIVE HEARINGS
04 EHR 2162 .
SETTLEMENT AGREEMENT
Wm. Fred Walker and D& M Emeralds, Inc. ('Petitioners"), North American Emerald
Mines, Inc. ("NAEM"), and the North Carolina Division of Land Resources ("DLR") of the
North Carolina Department of Environment and Natural Resources, Respondent, hereby enter
into this Settlement Agreement ("Agreement") in order to resolve a matter in controversy
between Petitioners and Respondent, and to avoid a controversy with NAEM, all pursuant to
N.C. Gen. Stat. § 150B-31(b). This matter comes within Respondent's purview as it relates to
matters which concern Mining Permit number 02-06, held by NAEM, for the purpose of mining
properties located in Alexander County, North Carolina. While NAEM is not a party to the
above Office of Administrative Hearing's case, they are a necessary and essential party to this
Agreement.
NOW, THEREFORE, without any trial of fact or law in this matter and in mutual
consideration of the covenants set forth below, DLR, Wm. Fred Walker, NAEM and D & M
Emeralds hereby agree as follows:

That NAEM shall:
a. Request DLR to modify the Mining permit, only as it relates to conditions
8. A and 8. J of the permit, incorporated herein by reference. The request
shall be as follows.
l . Pertinent parts of the Mining Permit shall be amended to provide in
section &A that "[i]n all blasting operations, the maximum peak particle
velocity of any component of ground motion shall not be greater than 25%
of Figure 1" as allowed by provision 8.A.
2. Pertinent parts of the Mining Permit shall be amended to provide in
section 8.J that "warning of mine blasting will be given 30 minutes prior
to blasting so that the warning will be Perceived ... by the nearest two
properly OV'Iers to thl: site of the Nastin ..." c.e., by Wa ker and D&M
Emeralds,hic.
2. Upon the receipt of the request from NAEM, DLR shall modify the Mining
Permit as requested by NAEM pursuant to paragraph 1.
s. Upon issuance of a final Mining Perniit with the amendments as set out in
Paragraph 1, Petitioners shall dismiss with prejudice their petitions in the above referenced
action.
4. The parties and signatories agree that all parties have been correctly designated
and that there is no question as to misjoinder or nonjoinder.
5. The parties agree that the consideration for this settlement is the promises
contained herein, each party will be responsible for their respective litigation expenses and that
this Agreement contains the whole agreement between them.

6. This Agreement shall be binding upon the parties, their successors and assigns,
upon execution by the undersigned, who represent and warrant that they are authorized to
enter into this agreement on behalf of the parties hereto.
FOR THE DIVISION OF LAND
RESOURCES
7 By:
James D. Simons, Director
Date:_ 16 2-6 ' 5-
FOR D&M EMERALDS, INC.
Date: to — per— eS
FOR NORTH AMERICAN
EME kD MINES, INC. �(
By:
Da:e:_-Ee `9__UL
FOR WM. FRED WALKER
y:_ ZVj&i
Date:
-- - -`

,n,un off
1 oy
Q i
t i ^y
State of North Carolina
ROYCOOPER Department of Justice
ATTORNEY GENERAL 9001 Mail Senlice Center
RALEIGH, NORTH CAROLINA
27G99-C" 1
July 29, 2005
VIA FACSIMILE AND U.S. MAIL
William W. Toole
Robinson, Bradshaw & Hinson, PA
101 North Tryon Street, Suite 1900
Charlotte, NC 28246
Re: Walker v. NC DENR
Case No. 04 EHR 2162
Dear Mr. Toole:
Reply to:
Anita LeVeaux
Assistant Attorney General
Environmental Division
Tel: [phone]
Fax: [phone]
As per your request by letter dated July 22, 2005 and consistent with N.C. Gen. Stat.
§ 132-1.1(a), enclosed please find a copy of all correspondence between NAEM and DENR since
June 23, 2005.
Please note these documents are available to you from our client. Requests such as these
can and probably should be made directly to the client.
Please feel free to call if you have any questions or need anything further.
Sincerely,
Anita LeVeaux
Assistant Attorney General
AL/md
Enclosures
cc: James D. Simons, Director, Division of Land Resources
Floyd Williams, State Mining Specialist
,;zg- b3S- 8DED j4ftM

NCDENR
North Carolina Department of Environment and Natural Resources
Division of Land Resources
James 0. Simons, P.G., P.E.
Director and State Geologist
July 19, 2005
Certified Mail
Return Receipt Requested
7003 1010 0003 5645 1457
Mr. James R. Hill, Chairman
North American Emerald Mines, Inc.
531 Duncan Lane
Hiddenite, North Carolina 28636
RE: North American Emerald Mine (Permit No. 02-06)
Dear Mr. Hill:
F. Easley, Governor
I. Ross Jr., Secretary
We have received a copy of a report dated July 11, 2005 from Sauls Seismic, Inc. in
response to my letter of June 24, 2005 to Mr. James Summers. However, some issues
remain outstanding.
From our telephone conference call to Mr. Summers on June 22, 2005, we understand
that you may no longer have all of the blasting records for blasts conducted under your
management. However, we request the following clarifications or additional information.
Do all records show that air blasts and ground vibrations have been within the
limits of the permit? Please set out the limits and actual levels of the air blasts
and vibrations. Overall, were the blasts consistently well within the limits (for
example average of 50% of the limit, etc., barely within the limits, or scattered
within the entire range? Are there any notations in the records within your
possession indicating that weather conditions or other circumstances that may
have caused the periodic complaints, even when the blasting measurements were
well within the limits?
2. Do any of the records note the occurrence of flyrock beyond the immediate blast
area, or beyond the guarded area? Where do the records note the occurrence of
flyrock?
3. The July 11, 2005 report acknowledges that blasting for this mine is different
from quarries and construction. Although the total poundage of explosives per
delay required may be less, the possibility of flyrock exists. What guidelines for
blast confinement are used for blasting in this case to prevent flyrock? Offsite
Geological Survey • Land Quality • Geodetic Survey
Division of Land Resources • 1612 Mail Service Center, Raleigh, North Carolina 27699-1612
512 North Salisbury Street, Raleigh, North Carolina 27604
919-733-38331 FAX: [phone] Internet: www.dlr.enr. state.nc.us/dlr.htm
An Equal opportunity 1 Affirmative Action Employer -50% Recycled 110% Post Consumer Paper

Mr. Hill
July 19, 2005
Page 2
occurrences of flyrock have been alleged. Are there additional precautions that
can be used? What are the additional precautions?
4. The July 11, 2005 report confirms that the seismograph is mounted much closer to
the blasting than the nearest offsite structure. A concern has been raised that
having the seismograph mounted in the soil is not as accurate as having the
seismograph resting on a rock layer. Please let this office know if there are
alternative placements for the seismograph. Would your consultant please render
a professional opinion on this?
5. One of the concerns raised by the neighbors is the startling effect of having a blast
go off without notice. What kind of warning notice is given before blasting?
Please contact Floyd Williams or me if you have any questions. We would appreciate a
response within 10 days of receipt of this letter. Thank you for your cooperation.
Ames D. Simons, PG, PE
cc: Mr. Steve Allred, CPESC
Mr. Floyd Williams, PG
Ms. Anita Leveaux
Mr. Roger Reeder

on III Lb
6AWL0
SEISMIC, INC.
July 11, 2005
1627 FC'NERS FERRY ?CA D
8= 24- SUITE 100
AiLANTA. GA 30 7
Mr. James R. Srmtmers, President(CEO
North American Emerald Mines, Inc.
531 Duncan bane
Hiddenite, North Carolina 28636
RE: North American Emerald ,dine (Permit No. 02.06)
Review of Blasting Records, Blasting Procedures,
Blasting Requirements and Vibration Monito ing
Dear Mr. Summers:
Per your request I have reviewed North American Erterald brines' .Blae i al; Decor s e i3sii
Procedures; Blasting Requirements and Vibration Mcnitoring at Per*nit No. 02-06. Tarr: nest rs
are described below.
MR14ne Records
The North American Emerald Mines' Blasting Records were reurd to be in or(Ier
necessary information needed for any type of post blrst evaluation. The 11fornatiep gi-,,en i.-: tI_z
blasting records are accurate and consistent with the t3 a blasting conducted at this rr ae.
Blasting Procedures
The blasting procedures at the Nort'o American Emertid Min., are desinned. to
not break material. This is dir%rent from quarries anc ; onstr.:czon. =, is ✓p, b.:a:;f
larger pattems using fewer pounds- of explosives per,ic>lay. T1e proczdttres use(i fc.r ; je..'
storage, loading, warning signals, detonating and all clear signals, are cons;
i_;to>e
in other types of mining in North Carolina. stent ,vjth used
Blasting Requirements
There are no blasting requirements that would exceec. those r:cuired b7 the agency.
Vibration Monitorin
North American Emerald Mine is now monitoring the g;oun(a ;ibnkticn and air ove _;. e;s:_r. at a
distance of approximately 680 feet. This location is b etneeu :n•: mining and .Ye :;Ir
sCacture. This off -site structure is approximately 3000 feet from the mi1ting.: i,a E; ze zrr
monitoring location is more than adequate to ensurethe Mtection of the adjacent rc-e
Ap'•
2OS-39 6 7�2466 4SS CKMaIIENe ILUTClluE r.
304-eSL2155 704-5G"466 =-;5?•2a66 6 '=tt N T1'f 'YL•.!M ':IItY`.Oh
1.399-=56 06Fc

07/11/2005 11:07 9256357080
N-EV
SEISMIC, INC.
In reviewing the seismograph data, I found the readings to be accurate based on the given
distance and porards per delay. At the g
is very low, With the type noinin NorthPresent time the vibration bein ive
will continue to do, I do not foresee en� p�Aerald Hine is d Produced by the biasing
case I feel Y significant inch ase in doing and ss I ::nee,-s-ar'
sate the ,mine can �
the ]on operate at a lower blasti_ e a readings.: his :,ei rg ,he
g ge mining plan, I will not sub 't8 fit• but without foil under standing of
submit a recommendation at this une.
Please call if you have questions or you require firrtber assistance in this matt_
r.
Sauls Seismic, Inc.
ROSer Reeder
'"flC,"AL ARM -A CA CHAPkwNY�T1Els�r qy, -. ram [G�S�I�EKY
w47fl4lE �4 171^:CrIiELP

North
James D. Simons, P.G., P.E.
Director and State Geologist
''��
Carolina Department of NCDENR Environment and Natural Resources
Division of Land Resources
Certified June 24, 2005
Return Receipt Requested
1uU3 1010 0003 5645 1440 7003 1010 0003 5645 1440 i
Michael F. Easley, Govemt
William G. Ross Jr., Secreta
Mr. James R. Summers, President/CEO
North American Emerald Mines, Inc.
531 Duncan Lane%
FEddenite, North Carolina 28636 Off.
RE: North American Emerald Mine (Permit No. 02-06) �s
Dear Mr. Summers:
This office has received complaints regarding North American Emerald Mines (NAE
(Mining Permit # 02-06) mining activities in Alexander County. M)
Photographs have been submitted to our office showing flock
Properties, although we have not received any reported specific incide cesing of flyrock on the room your
that the somewhat different nature of yocompany. Flyrock beyond your guarded area is a violation of your perini
latit. We are concerned
ur mining and blasting procedures at this mine dictate
that special blasting requirements are necessary to ensure the safety of neighboring persons and
properties.
Accordingly, please submit to this office within 30 days of receipt of this letter a report
Prepared by a qualified blasting consultant to cover the following items:
] • Review all available blasting records and company blasting
blasting requirements for your company necessary to conduct
and
operations; mining
2• Submit a recommendation to this office of the lowest blasting limi
which the mine can operate; and ts under
3• Verify that the location of the seismograph
readings to ensure thee most accurate
more suitable location. protection of the adjacent proprovideserti s, or recommend a
We ask that you give this matter your immediate attention. If you have any questions,
please feel free to contact this office.
S' rely,
-/��
ames D. Simons, PG, PE
cc: Doug Miller, PE
Floyd Williams, PG
Geological Survey ° Land Quality ° Geodetic Survey
Division of Land Resources • 1612 Mail Service Center, Raleigh, North Carolina 27699-1612
512 North Salisbury Street, Raleigh, North Carolina 27604
919-733-38331 FAX. [phone]Internet www.dlr.enr. state.nc.us/dlr.hh
An Equal Opportunity 1 Affirmative Action Employer- 50°% Recycled 110% Post Consumer Paper

North Carolina
James D. Simons, PG, PE
Director and State Geologist
r_
NCDENR
Department of Environment and Natural Resources
Division of Land Resources
Land Quality Section
Mr. Ronald J. Summers
North American Emerald Mines, Inc.
531 Duncan Lane
Hiddenite, North Carolina 28636
July 6, 200 "f
7Gq �0
�4el s
Michael F. Easley, Governor
William G. Ross Jr., Secretary
RE: North American Emerald Mine (Permit # 02i06)
Alexander County, N.C.
Dear Mr. Summers: .
Attached is a copy of our report documenting an inspection recently conducted at a mine site for
which our records show you to be responsible. The inspection was performed under the
provisions of North Carolina General Statute 74-56 of the Mining Act of 1971.
Please review the report carefully and note any problems or deficiencies documented by the
inspector. Furthermore, please note any recommendations and/or specific corrective actions
required to correct any deficiencies that may be listed.
The responsibility for understanding and complying with the terms and conditions of your
mining permit and the Act lies with you.
Please do not hesitate to contact this office if you have any questions concerning the attached
report.
Your cooperation is appreciated.
Sincerely, y/A
Cindy Safrit �N
Assistant Regional Engineer
Attachment
/Cc: Floyd Williams, PG — Mining Specialist
CTG/ae

North Carolina Department of Environment and Natural Resources,
Division of Land Resources, Land Oualitv Cam.,..
MINE INSPECTION REPORT
(PERMITTED MINE)
1. Mine Name: North American Emerald Mine
3. Operator: North American Emerald Mines, Inc. 2. 1&Iining permit T: 07_ &'
5. Address: 531 Duncan Lane Hiddenite, NC 28636; Attn. Mr. J. Ronald Summ4. ers
6. Permit expiration date: 3115110
7. Person(s) contacted at site: Ron Summers
8. Was mine operating at time of inspection? Yes: No: X 9. Pictures: Yes: X No:
10. Date last inspected: 4/18/05 11. Any mining since last inspection? Yes: X
12. Is the mine in compliance with the O erat' C
If no, explain;
P mg onditions of the permit? Yes: No: X No:
O.C. #4A• Adequate mechanical barriers have not been provided beyond the overburden placed beyond the
berm of the mine area just west of silt basin No. 2. Silt fence has been installed along the edge of the
overburden since last inspection, but the device has not been properly installed.
13. Is the mine in compliance with the Reclamation Conditions of the permit? Yes: X No:
If no, explain:
14. Did any of the above deficiencies result in offsite damage? Yes: severity of the damage: No: X If yes, describe the type and
15. Corrective measures needed and/or taken: 1.) Properly install the silt fence located at the edge of the
overburden placed beyond the berm of the mine area just west of silt basin No. 2 by trenching the lower 6" to 8"
of material below ground and backfilling with compacted soil.
16. Other recommendations and comments: During this inspection, an area of disturbance was noted on the
Sulphur Springs tract adjacent to the South Yadkin River in the form of a graded road. This disturbance on non -
bonded property would appear to be covered under exploration dig criteria pertinent to 3/9/05 memo in the mine
file of telephone call from Judy Wehner addressing this type of activity.
17. Is the Annual Reclamation Report +I- map accurate? Yes: No: (explain) Not reviewed: X
IS. Follow-up inspection needed? Yes: X No:
Proposed date:
19. Number of additional pages of inspection report: 0 20. Copy of report sent to operator: 7/1/05
Inspected by: Charles Gerstell
Phone number: 704-663-1699 Date: 6/29/OS

AN. I,, 2005 6: j6PM
N0. 8 i 9 P. 2
ROBINSON BRADSHAW & HINSON
CHARLO' E OFFICE DIRECT DIAL: 704.377.8 1 12
DIRECT FAX; 70R, 339.34 1 a
JREVELLC®RBH.COM
June 15, 2005
VIA FACSIMILE AND f FRTM D MAIL
RETURN RECEIPT REQUESTED
Ms. Anita LeVeaux
N.C. Department of Justice
Entonmental Division
9001 Mail Service Center
Raleigh, NC 27699
RE: Wm. Fred Walker, Jr, v, N.C. Dept, of Environment and Natural Resources, Case
No. 04-EHR-2162;
Dear Anita:
I write in response to your request that we propose a settlement arrangement acceptable
to Mr. Walker and D&M Emeralds, Inc.
Our clients' primary concern is that blasting by North .American Emerald Mines
("NAEM") under its mining permit has thrown flyrock hundreds of feet beyond the boundaries
of the permitted area and has caused substantial damage to at least three area' wells and a
residence, We presume that NAEM is blasting within its permitted range; therefore, the blasting
levels set in the permit are too high for the specific area.
Mr. Walker and D&M Emeralds, Inc. will dismiss their petitions if DENR will modify
the permit (1) to lower blasting levels to a range adequate to avoid flyrock being thrown beyond
the permit boundaries and additional structural damage to residences and area wells and (2) to
require NAEM to place its seismograph on the diorite ridge into which it is blasting to ensure
accurate readings. We are not in a position at this time to state the precise blasting limits that
should be incorporated into the permit, but we believe a coordinated review with DENR of all
NAEM blasting records would help the parties arrive at a mutually agreeable set of limits.
In order that we know if we must continue with our trial preparations, please let me know
by Wednesday, June 22 if DENR is willing to discuss amending the permit in accordance with
this proposal,
CM8059v1 18484.00011
Attomey3 at Law
Charlotte Once: 101 North Tryon Sheet, Suite 1900, Charlotte, NC 28246 Ph: 704,377.2536 Fx: 704.178,4000
South Carolina Office: 140 East Main Street, Suite 420, P.O, Drawer 12070, Rock Hill, SC 29731 Ph: 803,325,2900 Px: 903,325,2929

AN. IJ• 200§ 6:36PM
NO, 819 P. 3
Ms. Anita LeVcaux
6/15%2005
Page 2
Sincerely,
ROBINSON, BRADSHAW & HINSON, F,A,
Jennifer F, Revelle
cc: 1p Mr. William Fred Walker, Jr,
Ms. Dorothy Lewis Watkins
W. William W. Toole
C-938059v118484,00011

PAGE 01
NAEM
/16/2005 10:19
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06/16/2005 10:19 8266357080 NAEM
PAGE 02
1
Producing tke Finest Quality Emeralds & Gemstones in North America
rem d atf
Return ReCe6pt Re
avealAd
October 8, 2004
Esmeralda Exploration
311 Macedonia Church Road
Taylorsville, NC 28681
RE: Permit # 02-06
North American Emerald Mines
Alexander County
Yadkin River Basin
Dear Esmeralda Exploration.
This is to notify you that NAEM, Inc, has formally applied through the North
Carolina Department of Environmental and Natural Resources in Raleigh
to increase the company's permitted mining acreage to 94.6 acres.
This is a strategic decision only that will facilitate the approval process to
secure the use of future land for mining purposes, At this time we do not
foresee any change in our current mining plans,
Sincerely,
J, Ronald Summers, President and CEO
North American Emerald Mines, Inc.
537 Duncan L28636
ffze828-635-9080 + Fax= 826- 35-7080
O

06/16/2005 10:19 8286357080
NAEM PAGE 03
uali
Producing the Finest Qty Emeralds &Gemstones in North America
.QiL ed Mall
Ro►,,."�` n ecel t Reaue¢Lqd
October,8, 2004
Jack Wooten
Jack B Wooten Company
847 Buffalo Shoals Road
Statesville, NC 28677
RE: Permit # 02-06
North American Emerald Mines
Alexander County
Yadkin River Basin
Dear Mr. Wooten:
This is to notify you that NAEM. Inc. has formally applied through the North
Carolina Department of Environmental and Natural Resources in Raleigh
to increase the company's permitted mining acreage to 94.6 acres.
This is a strategic decision only that will facilitate the approval process to
secure the use of future land for mining purposes. At this time we do not
foresee any change in our current mining plans.
Sincerely,
J. Ronald Summers, President and CEO
North American Emerald Mines, Inc.
531 Duncan
28636
fice:828-635-8080 • Fax:[phone]

06/16/2005 10:19 8286357080 NAEM PAGE 04
Producing the ,Fittest Quality Emeralds & Gemstones in North America
Certified MaII
Return Reaeiot Requested
October 8, 2004
David Sprinkle
328 Davis Lane
Hiddenite, NC 28636
RE: Permit # 02-06
North American Emerald Mines
Alexander County
Yadkin River Basin
Dear Mr, Sprinkle:
This is to notify you that NAEM, Inc. has formally applied through the North
Carolina Department of Environmental and Natural Resources in Raleigh
to increase the company's permitted mining acreage to 94.6 acres.
This is a strategic decision only that will facilitate the approval process to
secure the use of future land for mining purposes. At this time we do not
foresee any change in our current mining plans.
Sincerely,
J. Ronald Summers, President and CEO
North American Emerald Mines, Inc.
531 Duncan Lane ♦ Hiddenite, North Carolina 28636
Office= 828-635-8080 ♦ Fax: [phone]

06/16/2005 10:19 8286357080 NAEM PAGE 05
Producing the Finest Quality Emeralds & Gemstones in North America
Certifled Matt
Return Recetat Requested
October 8, 2004
Betty Wooten
5485 Chenoult
Cleveland, NC 27013
RE: Permit # 02-06
North American Emerald Mines
Alexander County
Yadkin River Basin
Dear Ms Wooten:
This is to notify you that NAEM, Inc. has formally applied through the North
Carolina Department of Environmental and Natural Resources in Raleigh
to increase the company's permitted mining acreage to 94.6 acres.
This is a strategic decision only that will facilitate the approval process to
secure the use of future land for mining purposes, At this time we do not
foresee any change in our current mining plans.
Sincerely,
J. Ronald Summers, President and CEO
North American Emerald Mines, Inc.
531 Duncan Lane ♦ Hiddenite, North Carolina 28636
Office:828-635-8080 • Eax:828-635-7080

06/16/2005 10:19 8286357080
NAEM PAGE 06
Producing the Finest Quality Emeraldn&e?:n6t:o
nes in North America
Cer►ifled Mati
Refum Recefa} Rea ate
October 8, 2004
Dorothy Watkins
D & M Emeralds
P.O. Box 276
Hiddenite, NC 28636
RE; Permit # 02-06
North American Emerald Mines
Alexander County
Yadkin River Basin
Dear M$ Watkins:
This is to notify you that NAEM, Inc. has formally applied through the North
Carolina Department of Environmental and Natural Resources in Raleigh
to increase the company's permitted mining acreage to 94.6 acres.
This is a strategic decision only that will facilitate the approval process to
secure the use of future land for mining purposes. At this time we do not
foresee any change in our current mining plans.
Sincerely,
J, Ronald Summers, President and CEO
North American Emerald Mines, Inc.
531 Aoffi 828-635--80801 FaN828-635 9080 28636

PAGE 07
06/16/2005 10:19 8286357080
NAEM
...... ...........
North America
Producing the Finest Quality Emeralds & Gemstones in
Celf� e-^-OR
R et U rn A Med t ues
October 8, 2004
Mr, John M. Brown, Trustee
Mary Jewell Duncan Heirs Trust
2301 Crown Point Exet. Drive, Suite F
Charlotte, NC 28280
RE: Permit # 02-06
North American Emerald Mines
Alexander County
Yadkin River Basin
Dear Mr. Brown:
This is to notify you that NAEM. Inc. has formally applied through the North
Carolina Department of Environmental mining and
acreage sage to 94.6 Natural
in Raleigh
s.
to increase the company' permitted
This is a strategic decision only that will facilitate the approval process to
secure the use of future land for mining purposes. At this time we do not
foresee any change in our current mining plans.
Sincerely,
J. Ronald Summers. President and CEO
North American Emerald Mines, Inc.
....---....
-- — - '� Noah Carolina 28636
531 Duncan Lane ♦ Htddenite,
Otflce:e28-635-8080 + Fax:[phone]

-UN. 15. 2005 6 ,6PM
N0 8i9 P. 2
ROBINSON BRADSHAW & HINSON
CHARLOTTE OFFICE DIRECT DIAL.: 704.377.e 1 1 $
DIRECT FAX; 704.338.34 12
JREVELLC®Re H.00M
June 15, 2005
UN-MI-1' t 1 S/
Ms. Anita LeVeaux
N.C. Department of Justice
Envl}'ontnental Division
9001 Mail Service Center
Raleigh, NC 27699
RE: Wm. Fred Waltzer, Jr. v, N.0 Dept, ofEnvtronment and Natural Resources, Case
No. 04-EHR-2162;
Dear Anita:
I write in response to your request that we propose a settlement arrangement acceptable
to Mr. Walker and D&M Emeralds, Inc.
Our clients' primary concern is that blasting by North .American Emerald Mines
C NAEM') under its mining permit has thrown flyrock hundreds of feet beyond the boundaries
of the permitted area and has caused substantial damage to at least three area, wells and a
residence. We presume that NAFM is blasting within its permitted range; therefore, the blasting
levels set in the permit are too high for the specific area,
Mr. Walker and D&M Emeralds, Inc. will dismiss their petitions if DENR will modify
the permit (1) to lower blasting levels to a range adequate to avoid flyrock being thrown beyond
the permit boundaries and additional structural damage to residences and area wells and (2) to
require NAEM to place its seismograph on the diorite ridge into which it is blasting to ensure
accurate readings. We are not in a position at this time to state the precise blasting limits that
should be incorporated into the pemrit, but we believe a coordinated review with DENR of all
NAEM blasting records would help the parties arrive at a mutually agreeable set of limits.
In order that we know if we must continue with our trial preparations, please let me laaow
by Wednesday, June 22 if DENR is willing to discuss amending the permit in accordance with
this proposal.
C.938059v1 18484.00011
Attorneys at Law
Chsrl=e Office: 101 North Tryon Street, Suite 19o0, Charlotte, NC 28246 Ph: 704,377,2536 Fx: 704,378,4000
South Carolina Office: 140 East Main Street, Suite 420, P.O. Drawer 12070, Rock Hill, SC 29731 Ph: 803,325.2900 Px: 903.325,2929

,UN. 15. 2005 6 36PM NO 879 P. 3
Ms. Anita L®Veaux
6/15%2005
Page 2
Sincerely,
ROBINSON, BRADSHAW & HINSON, P.A.
�447K
Jennifer F, Revelle
cc: i Mr. William Fred Walker, Jr.
Ms. Dorothy Lewis Watkins
Nft, William W. Toole
C-938059vl 18484,00011

JUN'27.2005 10:57AM
I
jTo:
I
Location;
I
Telephone:
I
Fax:
I
Ana:
RQSINSQN SN0,961
RADSHAW & H,IVSON
FAX cool I2 srrE�r
MN• Atlita Leveanx r---
AlttorneY Generals Office
919/7I6.6971
9191716 6766
'Wm,ftm W. Toole
ComMBNU.
P.1
RECFi'vEp
JUN 2 9 2005
LAND O(1AI I, v cz, ,.
date; June 27 2005
Ntlm6er ,ages (including this page)., Origin �/ � C�entlMattert 18484,000I l
Original NOTfnlfow
Will follow by.
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Ph; 803.325.2900 P4; 603,325,2929

JL 04. 27. 2005 10: 5enM
tg0.961
P.2 -"
ROBINSON
" I "M W. TOOLE
CFNRW'rfz Qp ,,CC
'VTA, FACST111CLE TIiA1V'cmrr�o
I
! The J Rouorable
� awes L. Conner, II
Adtttinistrative Law Judge
Office of Administrative Ieayinga
67I4 Matz Service Center
RBI NC 27699.67I4
BRADSHAW S� HINSON
June 27, 2005
°IRSOT PML: 70q• 077. 6373
DIRPOT FAX: 704' a73.3973
Wr004F@Rek,,,,
Re' 0 4eii walker, Jr, v. N.C. pept.
NO -a. 04,ETM,2162 of Environment On NaiuraI Resaurcr s, Case
Dear Judge Cotner:
r reasons
deadl"2 s°ttlat You set nit belowoSlta dtte to the uest an 8 the
ension of 60 days folr e
concurs in Your
FT°rior e b
this re nest. hearings in this acP of
matter. Respondent
On Juno 22, 2005, rcpresegtatives far Petitioner F
D&Department
.M Bmm raldaRIna °nment and 1Yatural ResogroeS, North America, Walker, Respondent a
met b co
American $ North Caralitla
to a settlement of this matter. Th1tce 04U to discuss a process whin merald Mines, Inc, and
While it is too early to tell if a final se e000ss b, if saoce0fitht co4ld lead
tt1 went w 1 bespossibllee, alew is fair ll l*elY take 60 days,
hopeful that a mutually acceptable Settlement may result from to say that all parties are
agreed to is prinelpal. For this reason, petitioner the process that the parties have
establisher) by the Court during the June 8 h and Respondent r
eating be extended b eition that the deadlines
Y � additjaxuti 60 days,
June 8 hegy of reminder, your Eonor bad established the following deadlipes
during the
Admission Or Denial by Respondent Of certain requests for admission
potitioner on or pefore July 8, 2005;
Pzomulgated by
Del;yery by petitioner of a document which supports and dac
PP residence at 173 Riverside .Fart Lane
before Jnly 8, 2005; and un tents IOcatian of
FJiddauite, North Camluta On or
tiling Dispositive Motions by July 30 (a Saturday),
Qwrlottc oftce, 101 North Attomeyo W L&W
Sogth C4rolinn oRico: 1 R0 grit 1'*Irl STryon st, Suits 19p0, Charlotte, N0 28W Ph: 704,3772536 Suite 420, P.O. Drawer 12070. Rook Hill, SC 2971, Ph, &03 '2gpp 8 ��
Fx; 803,325.2920

SL0.27.2005 10:senm
NO.961 'P.3 -
The f%norable lames L. Conner, iI
June 24, 2005
page 2
Petitioner did not draft and deliver draft Orden for review b
June 21, 2005. Respondent leas not Yet corgpieted its review arld
orders. Because the orders are not et re Y Respondent until
extension of the deadlines in orders y ready to be submitted to oo�exit upon those dr&ft
ers which area 1 y0 Honor for review, EUng an
confusing, Assunling that you wilt grant the joint in draft Form Would seem prettlature and
Pe&Vs the more expedient way to handle h request for a 60 day exteurrion, it se be in the form of a letter from You han y extension of thno apPn�ved b erns that
orders onmeatly being prepared b co a revision r, the delivery atld films dates ntthewd �d
Y unaeI for Petitioner, &ti
Ms, LeVeaux and I look forward to 12
e4TIlg your thanghts an this {Harker.
WWT/apd /
cc: Anita LeVeaux, Esq, J
Jennifer V- Revelle, .$aq.
Reef C. Ivey: II, Esq.
C-939490v l 19484-00011
Sincerely,
ROWNSON, BRADSH'AW &
HINSON, p.A
illiam W, Toole

Fwd: RE: William Fred Walker, Jr. v NC DENR, 04 EH...
Subject: Fwd: RE: William Fred Walker, Jr. v NC DENR, 04 EHR 2162
From: "Anita Leveaux" <[e-mail]>
Date: Mon, 25 Jul 2005 12:16:42 -0400
To: <floyd.will [e-mail]>, <[e-mail]>
Please read the attached ---Anita
Subject: RE: William Fred Walker, Jr. v NC DENR, 04 EHR 2162
From: "Revelle, Jennifer F." <[e-mail]>
Date: Mon, 25 Jul 2005 11:09:40 -0400
To: "Anita Leveaux" <[e-mail]>, "Toole, William"
<[e-mail]>
Anita, thank you for this information.
I received a call from Mr. Walker this morning, and he informed me that
after a storm this past weekend, a large amount of red clay was
discharged from North American's property into Sulphur Spring Creek. He
asked me to relay this information to you so that you could advise DENR
the erosion problems have escalated significantly. Mr. Walker is sending
me some pictures he's taken showing the extent of the problem, and I am
happy to forward them to you for your client's use.
Best regards,
Jen
Jennifer F. Revelle
Robinson, Bradshaw & Hinson, P.A.
101 N. Tryon Street, Suite 1900
Charlotte, NC 28246
Direct Line: 704-377-8112
Direct Fax: [phone]
This message is intended only for the use of the addressee and may contain
information that is PRIVILEGED and CONFIDENTIAL and may contain ATTORNEY
WORK PRODUCT. If you are not the intended recipient, you are hereby notified
that any dissemination of this communication is strictly prohibited. If you have
received this communication in error, please erase all copies of this message and
its attachments and notify us immediately. Thank you.
1 of 2 7/25/2005 1:53 PM

Management Changes at N. Amer. Emerald MIne
Subject: Management Changes at N. Amer. Emerald MIne
From: Jim Simons <[e-mail]>
Date: Fri, 22 Jul 2005 16:43:08 -0400
To: Anita Leveaux <[e-mail]>
CC: [e-mail], Floyd Williams <[e-mail]>,
Mell Nevils <[e-mail]>, Steve Allred <[e-mail]>
Anita,
I left word on your voice mail, but wanted you to know that Floyd and I called the
N. Amer. Emerald Mine and learned that there has been a change in management
within the last week. James Summers and their previous attorney are out. James
Hill is now chairman. Douglas G. Eisele, of Eisele, Ashburn, Greene &
Chapman, PA, 320 West Broad Street, Statesville, NC 28687 , [phone] and
fax [phone] is their new attorney.
I basically told Mr. Hill about our blasting concern and the third party appeal. He
sounded cooperative in submitting additional blasting information and amending
the blasting conditions.
Jim
1 of 1 7/25/2005 2:23 PM

07/11/2005 11:e7 8266357080
W-01
alkiaI Lb
w
SEISMIC, INC.
July 11, 2005
1627 FOWEF5 FERRY FORD
BLOO 24—SUITE 100
ATLANTA, OA =91
Mr. James R. 31mn-ners, President/CEO
North American Emerald Mines, Inc.
531 Duncan Lane
liiddenite, North C&-olina 28636
RE: North American, Emerald lie (permit No. 02.06)
Review of Blasting Records, Blasting Proced- S,
Blasting Requirements and Vibration Monitoring
Dear Mr. Summers:
a8nh:rc:, sserism-.eoe
sseismic .om
Per your request l have reviewed North American Emerald �v.ines' Blasting Feror.g; }, ra_i,,
Procedures, Blasting Requirements and Vibration Mrnitoring at 1?ermit No. 02-OCa. %" e rw -1,
are described below.
SHMOr= Recorda
The North American Emerald Mines' Blasting Records were fourd to be in arc} r .. ecn a
necessary information needed for any type of post blast evaluation. The istfbr aTc;icr: given 4 ttz
blasting records are accurate and consistent with the type blasting conducted at this sr_<�se.
Blastirat pt oeedu rQs
The blasting procedures at the North American Emerald Mine are designed. to loose:.. mate�aa%
not break material. This is different from quarries and cons+ructiaL This Lyp! b Lst . } 17,c ., s
larger Patterns using fewer pounds of explosives per delay. T'ne procedures used ,
fc.;- s=_ er.
storage, loading, warning signals; detonating and all clear signals, are consistent with ±rose used
in other types of mining in North Carolina.
BlasftE itequlrements
There are no blasting requirements' that woule exceed those required by the scat; xc�z,;:Iatory
agency.
Vibration Lbaftaring
North American Emerald Mine is now monitoring to ground vibration and air over Fresscre at s
distance of approximately 680 feet. This location is between ire mining and t Le s to _ -'re ,
structure. This off -site structure is approairnately 3000 feet from the mining. Tl•e pressnt
monitoring location is More than adequate to ensure the protection of the adjacent Wra-er s_-s.
Ed,Mi4GNF1MAL AiluhKQ, aramw5v-.rewr a"O"41+c ici"MEx: nam,x+.rssa'�1 206-S92-2466 77OPS2466 $04-SSS246S 70450"466 502•:5R2466 6i,+0S9.2abd K64142.5 6 iS5S

JUN.27.2005 10:57AN
NO.961 P.1
ROBINSON BRADSHAW & HINSON
Fax COYEA STTEET
To:
Nis. Anita Leveaux
Location:
Attorney General's Office
Telephone;
9191716-6071
Fax:
919/716,6766
From;
'WiAiapl W. Toole
Commum..
RECEMD
JUN 29 2005
LANQ QUA1 ITY SECTION
Date; lure 27, 2005 ClielitWatterl 18484.00011
Number of Pages (including this page):
[] Original will NOT follow
Q Original -,VM follow by:
THE MOW4nON CONTAMI) IN T1118 TEI.ECOPY MAY A$ PTl aEORD A 10F. CONFIDCNTTAL AND E NTHNDEO ONLY 80R TEE USE OP TAU
PERSON TO WHOM IT 1S ADDRPSsen. 7F Tne ",kDE1t OF MO WSSAaE IS NOT THE INTR%T)SU PCfPIENT (09 SUCH RgCIPIENT,5 EMPLOYEE OR
AGENT), YOU AU HERHEY NOTIFIED NOT TO READ, PISTMUTE OR COPY TFIT; MATER1ALe ATTAMMI) FIRMTO M741OTM Tgg N QOR WR[TTaN
CONSpnT OF THE SCNDIIN IR YOU HAVE RECEWC9 ME TELECOPY N ERROR, PLEASE NOTIFY TTIR SENDER PY C9L Wr T1,4Pf4QNG CALL AND
RETURN THE ORIOTNAL M} COPY TO CIS DY MAIL AND WR WrLL RPTMWROR YOU MR T1fER000ULW PO$TAQR, THANKYOLY.
Agotpeys at Law
Chtulaue 04M= 101 NOM Th you $tree; SL}ite 1900, C$QrWe, NC 28246 Ph: 704,377,2536 Fx+ 704.379.4000
South Carolina Otccc; 140 East Main Smot, Suite 420, P 0. Drawer 12070, Rock H01, 80 29731 Ph: $03325.2900 lac; 803.325.2929

JUN.27.2005 10:58AM NO.961 P.2
ROBINSON BRADSHAW & HINSON
WII.UAM W, TepLE
CIIAR4OITE Orrice
June 27, 2005
FACSIM.L—F T9AN'SMISSION
The honorable James L. Conner, n
Administrative Law Judgv
Office of Administrative Hearings
6714 Mail Service Center
Raleigh, NC 27699,6714
DIRROT PJAU 704.377.8373
DIRPOT FAX; 704.373.3973
[e-mail]
Re. WY. Fred 6Palker, Jr. v. N,C Dept. efEnWronmentaandNgtargdRerourees, Case
No. 04-ERR-2162
Dear Judge Conner;
For remous Set out below, I write to request an extension of 60 days for each of the
deadlines that your donor established during the Time 8 hearings in this matter, 12eapondent
conours in this request.
On June 22, 2005, represeatatives for Petitioner Fred Walker, Respondent North Carolina
Department of 13nvironment and Natural R moilrees, North American Emerald Mines, Inc, and
D&M Emeralds, Ino_ met by aonf=nce call to discuss a process which, if suocessfal, could lead
fp a settlement of this matter, That prooess and associated review will likely take 60 days,
While it is too early to tell if a final settlement will be possible, it is fair to say that all parties are
hopeful that a mutually acceptable sstllemaut may result from the process 1b4t the parties have
agreed to in principal. For this reason, petitioner and Respondent request that the deadlines
established by the Court during the June 8 hearing be extended by an additimW 60 days,
By way of reminder, your Honor hod established the following deadlines during the
June 8 hearing:
• Admission or Denial by Respondent of certain requests for admission promulgated by
Petitioner on or before July 8, 2005;
• Delivery by Petitioner of a document which supports and documents location of
Petitioner's residence at 173 Riverside Farm Lane, Wddenite, North Carolina On or
before July 8, 2005; and
• Filing Dispositive Motions by July 30 (a Saturday).
c:K94MY118 84.000
Attorneys at Law
Qwdo#e 0'r"' 1011Varth Tryon St„ Spiro 1900, Charlotte, NO 20246 Pb: 704,377.2536 FX; 704.378,4000
Soath Carolina Of m 140 East Main Sr., Suite 420, P.O. Drawer 12070, Roolt Hill, SC 29731 Ph: 903.325,2900 F$; 803.325.2929

JUN.27.2005 10:59RM N0.961 P.3 '
a
The I-Ionorable ,tames L, Conne; U
JMo 24,2005
Page 2
Petitioner did not draft and deliver draft orders for review byRespondent until
June 2I, 2005. Respondent has not yet completed its review and Comirtent upon those draft
orders. Because the orders are not yet ready to be submitted to your Honor for review, flung au
extension of the deadlines in orders whiols are still in draft form would seem pratnM aan
confiming, Assuming that you Will grant the joint request for a 60 da ext
perhaps the more expedient way to handle any extension of time a Y ensfon, it seems that
be in the form of a letter from you directing a revision a the me PPmved by Your Honor would
orders currently being prepared by oounseI for Petitioner,3 fiUng dates in the draft
Ms. LeVeaux and I look forward to hearing your thoughts on this natter.
Sincerely,
ROBINSON, BRADSUAW & HINSON , P.A_
illiam W. Toole
WWT/spd /
cc: Anita LeVeaux, Bsq,
Jennifer F. Revelle, l sq.
Reef C. Ivey, II, Esq.
C439490vt 18484.0oon

JUN.27.2005 10:57PM
NO.961
P.1
RECEIVED
f Ufa ?��5
Div of Land Resources
o:
Location:
Telephone:
Fax:
From:
ROBINSON BRADSHAW
FAX COVER 81IEl;T
Alp. Apita Leveattx
Attorney Gonerallp Office
919/716-6971
919/716,6766
William W. Toole
COMMENTS:
Date; yune 27, 2005
Number of Pages (including this page):
r�•r.+A r.unutr
Will follow by:
lar mail
& HINSON
Clie,AV Matter 184K00011
THE INFOW6TIOA CONTAINED W TIatS TELECOPY MAY A6 FME"P ANp/09 CONMENITAL 4ND IS INTENABp ONLY FOR THE OSE OP THa
PERSON To WHOM IT IS ADDMSen. 1S Tx RRlLDaR OF 11115 MMSAGE IS NOT TF7E INTE,''JTM MGtpIENT (0R SUCH nCIPIBK T'5 EMPLOYER 0g
AGENTI YOU Ana HEMYNOTIFIED INOTTREAP AISUMUTE OP COPY TpM MATBRIALS ATTAflHF.D IIBBSTO WIT}TOUT VIE rAJOK w mTaN
CO ST'" O TM S RECEIVED TM T&LECOPY IN BRROR. PLEASE NOTIFY THg SENDER Y RETUiN THE OSIGINAL T411COPY TO US BY MAIL AND W8 WYLL RFR,PMRPE YOU UORT71ERe M"D POSTAGE, CWMV TaAPRQNE CALL AND
Q THANK YOL'.
Attomgs 4 Law
Charlotte Of{1ce: 101 INOM'117on NtTeet, State I900, Chp lot e,1NC 2SW Ph: 704.377,2534 Fx: 704.375.4000
South Carotins 01TIce; 140 Feast Main Street, suite 420, P0. Drawer 12070, Rack Hdi, 80 29731 Ph: 803325.2900 N; 803.325.2929

JUN.27.2005 10:58AM N0.961 P.2
ROBINSON BRADSHAW & HINSON
MWAM W. TCOLE
CHARLorra OrFice
June 27, 2005
'VISA FACSII4III,R T M1 8IO1V
The Honorable James L. Comer, H
Administrative Law Judge
Office of Adminiau2gva llearings
6714 Mail Service Center
Raleigh, NC 27699,6714
OIR=T PML: 709. 077.8373
DINV;CT FAX; 744. 373.3973
YRAC1e@WaH.0OM
Re: WM, Fred Walker, A v. N.0 Dept. ofE'nwronment and Natural Resources, Case Nc. 04,ERX-2162
Deaf' Judge Comer;
For reasons Set out below, 1 Write to request art extension of 60 days for each of the
concurs in this request.
deadlines that Your Honor established during the June 8 hearings in this matter. Respondent
On June 22, 2005, representatives for Petitioner Fred Walker, Respondent North Carolina
Department
Finar ld . Environment and Natural Resources, North American Emerald Mures, Inc, and
D&M Pmeraids, IncInc• met by aonfpmnce 0AU to discuss a process whist, if successful
to a settlement of this matter, That prooess and associated review will could lead likely take 60 days,
While it is too early to tell if a final settlarnent will be possible, it is fair to say
hopeful that a mutually acceptable Settlement may result filiac all parties are
from the process that the parties have
established by the Cow during the
agreed to in principal. For this reason, Petitioner And Respondent request that the deadlines
June 8 hearing be extended by an additioual 60 days,
BY way of reminder, June 8 hearing; your Tionor had established the following deadlines during the
Adn:d&sion or Denial by Respondent of certain requests for admission promulgated by
petitioner on or pefore July 3, 2005;
Delivery by Petitioner of a document which 4upport6 and documents location of
Petitioner's residence at 173 Riverside Farm Lane, Mddenito, North Caroli
before July 8, 2005; na ott or
• Filing Tlispositive Motions by July 30 (a Saturday).
Attarneyg at Lew
Charlattc Offiao; 101 NorM Ttyon st„ Spico 1900, Vbarlettc,, iC 28246 Pb: 704,3772536 Px:704,378,4000 SQNth Caralina Offiea t 40 East MOn St., Suite 420, P.O. Drawer 12070, Rook Hill, SC 29731 Pb: 803,325,2900 Fao 803,323,2929

SUN.27.2005 10:58RM N0.961 P.3
The honorable dames L, Conner, If
dune 24, 2005
Page 2
Petitioner did not daft and deliver draft Orden for review by Respondent until
June 21, 2005. Respondent l,as not yet completed its review and comtrlent upon those draft
orders. Because the orders are not yet ready to be submitted to your Honor for review, ding an
extension of the deadlines in orders which are still in draft form would Seem prematwand
confusing, Assuming that you will grant the joint request for a 60 day extension, it seems that
Perhaps the more expedient way to handle any extension of time approved by your $odor Would
be in the fomr of a letter from you directing a revision of the delivery and orders currently being prepared by eour4ol for Petitioner, filing dates in the drub
Ms, LeVeaux and I look forward to hearing your thoughts on this matter.
Sincerely,
ROBlNSON, BRADSHAW & THNSON P.A.
illiam W, 'Poole
WWT/spd /
cc: Anita LeVeaux, Esq. ,/
Jennifer li, Revello, $sq.
Reef C. Ivey, II, Esq.
C-M490v1 18484.00011

M
STATE OF NORTH CAROLS
COUNTY OF ALEXANDER
WM. FRED WALKER, JR.,
Petitioner,
V.
N.C. DEPT. OF ENVIRONMENT
AND NATURAL RESOURCES,
Respondent.
THE OFFICE OF
IISTRATIVE HEARINGS
04-EHR-2162
PETITIONER'S MOTION TO HAVE
ADMISSIONS DEEMED ADMITTED OR
TO COMPEL RESPONSES TO
REQUESTS FOR ADMISSION
Pursuant to Rules 36 and 37 of the North Carolina Rules of Civil Procedure and Rule
.0112 of the Rules of the Office of Administrative Hearings, Petitioner Fred Walker
("Petitioner") hereby requests that the OAH find Respondent N.C. Department of Environment
and Natural Resources' ("Respondent") responses to Petitioner's Requests for Admission
("Requests") insufficient. At issue is Respondent's refusal to answer those requests directed to
statutory notice defects, permit violations, improper permit terms, and the trustworthiness of the
permit holder's controlling shareholder to have access to explosives. Each of these issues is, at a
minimum, relevant to determinin whether Respondent was arbitrary and capricious when it
issued the contested permit. Petitioner therefore moves the OAH to deem admitted all Requests
Respondent has not expressly denied or, in the alternative, to compel Respondent to provide full
and complete responses to all Requests. In support of this motion, Petitioner shows the
following:
1. Petitioner leases and cares for real properties that have been damaged by blasting allowed
under a mining permit (the "Permit") Respondent issued improperly to North American Emerald
Mines, Inc. ("NAEM"). Most recently, Respondent issued the Permit eleven days before the full
C-9315320 18484.00011

30 day notice period and without giving notice of the public's right to request a public hearing.
Now, blasting conducted under color of the Permit has polluted Petitioner's water well and
thrown flyrock onto the land he leases and oversees, in direct violation of the Permit.
2. On April 14, 2005, Petitioner served Requests for Admission on Respondent. The
Requests sought admissions with regard to four aspects of this case: (1) procedural defects in the
issuance and subsequent modifications of the Permit (Requests 1-14); (2) substantive defects in
the Permit, namely the excessive level of blasting allowed and the provision ordering improper
placement of the seismograph (Requests 41-46 and 49-55); (3) serious violations of the Permit
by NAEM (Requests 15-40, 46-48); and (4) the criminal record of James King Hill, NAEM's
majority owner, who has a lengthy history of violence and alcohol -related offenses (Requests 56-
67).
3. On May 2, 2005, Petitioner's counsel received Respondent's response to the Requests, a
copy of which is attached as Exhibit A. With respect to 60 of the 67 Requests served,
Respondent made blanket objections and refused to admit or deny the Requests.
4. With regard to the first three categories of Requests described in Paragraph 2 above —
procedural defects in the public notice, an excessive blasting limit resulting in substantial
property damage, and documented flyrock and road building violations of the express terms of
the Permit — Respondent objected on the grounds that the Requests were not reasonably
calculated to lead to the discovery of admissible evidence under Rule 26. Respondent asserted
that the procedural validity of the Permit, the Permit's terms and conditions, and NAEM's
violations of the Permit are not relevant to whether Respondent validly modified the Permit on
October 27, 2004.
S. Discovery on each of these subjects could not be more central to this Court's evaluation
of the propriety of the 2004 modification. If Respondent issued the original Permit pursuant to a
C-931532v3 18484.00011

defective notice process in 2000
can be valid. See
the Permit was invalid ab initio and no subsequent modification
Atlantic Coast Line
R.R. Co. v. Town of Sanford, 188 N.C. 21g 220, 124 S.E.
statutory
ory node) to ity's subsequent assessments were invalid where aldermen failed to give
statutory notice to adjoining landowners; time to file objections does not be in w
notice not given). The same reasoning � g here statutory
applies with respect to the 2002 modification. If th
original issuance and 2002 modification ewere invalid, there was no valid permit for Respondent
to modify in 2004.
6. Respondent's files do in fact demonstrate that neither the original 2000 issuance nor the
2002 modification occurred in accordance with statutory procedure found at N.C. Gen. Stat §74_
50. Adjoining landowner D
Inc. (``D&M) received no notice from either NAEM
or DENR in either instance. Attached as Exhibit B are the deeds to a portion to the Permit, land now owned by NAof the land subject
EM. Attached as Exhibit C is D&
deed, filed on January 27, 1999, describing D&M's tract as Lot #1 of theM's January 25, 1999
Exhibit D is a plat of the Rist Mine showingthe co Rist Mine. Attached as
The mmon property line of D&M and NAEM.
property now owned by NAEM is identified as bein
Exhibit D. Exhibits B C g owned b y LKA lntemational, Inc. on and D are on file with the Alexander County Register of Deeds.
Exhibits B and C may also be found at the official Deeds, website of the Alexander County Register of
www.alexanderrod.com. D&M was entitled to the notice of e issuance, and permit modifications described in N.C. p Permit application, permit
1• Respondent's files contain Affidavits ofNotifi anon NAEM submitted in c '
with both its 2000 and 2002 applications. conjunction
Neither affidavit lists D&M among the parties entitled
to notice. The NAEM affidavits are attached as Exhibit E. Respondent's internal memorandum
states that Notices of Issuance were sent only to the parties listed on NAEM's affidavit in 2000.
The 2000 memorandum is attached as Exhibit F. Respondent's files contain no corresponding
C-931532v3 18484.00011
3

memorandum regarding Notices of Issuance in 2002. D&M in fact reports that it did not receive
any notice of the Permit issuance in 2000 or of the 2002 amendment. Thus, Respondent also.
Because D&M did not receive the mandatory notices in either 2000 or 2002, the Permit was
invalidly issued in 2000 and invalidly modified in 2002.
8. Under Orange County v. North Carolina Dept. of Transportation, 46 N.C. App. 350,
360-61, 265 S.E.2d 890, 895-96 (1980) and Empire Power Co. v. North Carolina Dept. of
Environment, Health and Natural Resources, 112 N.C. App. 566, 571, 436 S.E.2d 594, 598
(1993), rev'd on other grounds, 337 N.C. 569, 590, 447 S.E.2d 768, reh g denied, 338 N.C. 314,
451 S.E.2d 634 (1994), Petitioner has an interest as a citizen in Respondent's compliance with
the public notice provisions that govern permit issuance. The validity of the 2000 issuance and
2002 modification bear directly on whether a valid permit exists that Respondent could properly
amend in 2004. Thus, Requests 4-14 regarding procedural defects in the 2000 issuance and 2002
modification fall within the scope of discoverable information under Rule 26, information
reasonably calculated to lead to the discovery of admissible evidence.
9. The Requests regarding substantive defects in the Permit terms and Permit violations bear
directly on the validity of the 2004 modification. N.C. Gen. Stat. § §74-51(d)(7) and 74-52(b)
provide that a permittee's failure to be "in substantial compliance" with the Mining Act is
grounds for denying a permit modification. Had Respondent complied with the statutory notice
provisions for permit issuance and amendment and not cut the period short by 11 days, it would
have heard from the community about homes and water wells physically damaged by NAEM's
blasting, rock flying beyond the permitted area, illegal road construction beside a stream, and
other substantive problems with the Permit terms and NAEM's compliance with the Permit.
Petitioner's Requests pertaining to substantive Permit defects and Permit violations are directly
relevant to whether Respondent acted arbitrarily and capriciously in granting NAEM's 2004
C-931532v3 18484.00011

modification without lowering the blasting level and ensuring NAEM was in compliance with its
obligations under the Permit.
10. Respondent's objections to the Requests regarding James King Hill's documented
charges and criminal judgments for physical violence and substance abuse on the grounds that
they "may be construed as seeking or [do] seek information not within the personal knowledge
of Respondent" do not meet the obligation to make reasonable inquiry. Mr. Hill was until
recently the President of NAEM and, upon information and belief, remains a majority and
controlling shareholder of NAEM. Certainly, he has corresponded with Respondent on many
occasions on behalf of NAEM, and a phone call or letter from Respondent looking into the issues
would not be burdensome. Rule 36 requires that "[a]n answering party may not give lack of
information or knowledge as a reason for failure to admit or deny unless he states that he has
made reasonable inquiry and that the information known or readily available to him is
insufficient to enable him to admit or deny." Respondent does not make any statement about its
inquiry efforts, apparently because it made no effort to investigate these Requests. In fact, the
answers to these requests are a matter of easily obtained public record. Attached as Exhibit G
are the results of the criminal background check Petitioner's counsel performed on Mr. Hill in
the Westlaw database. A brief call to the Dare County clerk's office confirmed the allegation in
request 61 that Mr. Hill was scheduled to face trial on various criminal charges on April 22,
2005. Respondent failed to make any inquiry, much less a reasonable inquiry, into these
requests.
11. Petitioner regrets it must impose upon this Court to compel the responses to which
Petitioner Walker is entitled. Upon reviewing Respondent's response to the Requests, Petitioner
tried to resolve this matter informally, sending Respondent's counsel a letter on May 3, 2005,
pointing out the deficiencies in the response and requesting that Respondent provide substantive
C-9315320 18484.00011

responses. Though the deadline for answering the Requests had passed, Petitioner's counsel
offered to extend Respondent's time to answer until May 9, 2005 if Respondent would agree to
amend its responses. A copy of this letter is attached hereto as Exhibit H. When Petitioner's
counsel received no response to this letter, Petitioner's counsel left a voice -mail message for
Respondent's counsel at approximately 7:20 a.m. on May 5 asking Respondent's counsel to
answer the letter. Upon receiving no response to this voice -mail message, Petitioner proceeded
to file this motion. By objecting to these Requests rather than investigating and answering their
assertions, Respondent continues to treat this case as a procedural exercise rather than an
opportunity to perform its statutory duty.
12. Under Rule 36 of the North Carolina Rules of Civil Procedure, "[i]f the court determines
that an answer does not comply with the requirements of [the] rule, it may order either that the
matter is admitted or that an amended answer be served." The attached evidence demonstrates
that Respondent must admit Petitioner's Requests. In light of this compelling evidence and in
consideration of judicial economy, Petitioner asks that the OAH deem his Requests admitted. In
the alternative, Petitioner asks that the OAH compel Respondent to answer the Requests fully
and completely within 15 days or such other time as the OAH deems reasonable.
WHEREFORE, Petitioner moves the OAH to deem admitted all requests Respondent
has not expressly denied or, in the alternative, to compel Respondent to provide a full and
complete response to all requests. Petitioner also asks that the OAH grant Petitioner such other
relief as the OAH deems just and proper.
C-931532v3 18484.00011

This Sday of May, 2005.
4, zz—
William . Toole
N.C. Bar No. 16862
ROBINSON, BRADSHAW & HINSON, P.A.
101 North Tryon Street, Suite 1900
Charlotte, North Carolina 28246
Direct Dial: [phone]
Direct Facsimile: [phone]
Email: wtoolenaxbh.com
A. 4
Jennifer 1. Revell
N.C. Bar No. 32896
ROBINSON, BRADSHAW & HINSON, P.A.
101 North Tryon Street, Suite 1900
Charlotte, North Carolina 28246
Direct Dial: [phone]
Direct Facsimile: [phone]
Email: jrevelle(Z4bh.com
Attorneys for Petitioner Wm. Fred Walker, Jr.
C-931532v3 18484.00011

CERTIFICATE OF SERVICE
I hereby certify that the foregoing PETITIONER'S MOTION TO HAVE
ADMISSIONS DEEMED ADMITTED OR TO COMPEL RESPONSES TO REQUESTS
FOR ADMISSION has been served upon each of the parties to this action by depositing same in
the United States mail, postage prepaid, return receipt requested in an envelope(s) addressed as
follows:
Anita LeVeaux
N.C. Department of Justice
Environmental Division
9001 Mail Service Center
Raleigh, NC 27699
[e-mail]
This,5day of May, 2005.
----/1 � , /L
JemlifeffF. Revelle
C-931532v3 18481.00011