ITEM: 13

SUBJECT: CONSIDERATION OF A PROPOSED RESOLUTION AUTHORIZING THE EXECUTIVE DIRECTOR, OR HIS DESIGNEE, TO EXECUTE A STANDARD AGREEMENT TO PROVIDE STORAGE CAPACITY FOR ACID MINE DRAINAGE (AMD) FROM LEVIATHAN MINE, ALPINE COUNTY

DISCUSSION: Leviathan Mine is an inactive sulfur mine on property presently owned by the State of California and under the jurisdiction of the State Water Resources Control Board (SWRCB). Surface waters in the vicinity of Leviathan Mine are significantly degraded by the discharge of acid mine drainage (AMD) from the mine.

AMD from Leviathan Mine is a result of past mining activities. In particular, open pit mining conducted by Anaconda Minerals Company from 1954 until 1962 contributed to the discharge of AMD. Anaconda Minerals Company is a wholly owned subsidiary of Atlantic Richfield Company (ARCO); therefore, ARCO is a previous mine owner/operator.

The discharge of AMD from Leviathan Mine continues to degrade surface waters in the vicinity of Leviathan Mine, including: Leviathan, Aspen, and Bryant creeks. Leviathan and Aspen creeks are tributary to Bryant Creek, and Bryant Creek is tributary to the East Fork Carson River.

In response to ongoing discharges of AMD from Leviathan Mine, the Lahontan Regional Water Quality Control Board (LRWQCB) initially took action against the persons who owned the mine site in 1970 - Alpine Mining Enterprises (Alpine). Alpine had purchased the mine site from Anaconda Minerals Company in 1963. When it became apparent that Alpine did not have the financial means to remediate the site, other public agencies urged the LRWQCB to take on the challenge of pollution abatement at Leviathan Mine and promised their support. In 1980, the LRWQCB obtained $3.76 million in State bond money to identify and implement a project to abate the discharge of AMD at Leviathan Mine. However, this money was not sufficient to cover the costs of the remedial project (based on actual construction bids), and the LRWQCB began to pursue other funding sources. One of the potential funding sources considered by the LRWQCB was the Federal Demonstration Grant, which required the grantee to have title to the project site. In addition, in order to assure unrestricted access for construction, operation, and preservation of State funded improvements, it was deemed necessary for the State to acquire ownership of Leviathan Mine. The State acquired ownership of the mine site in 1984.

In 1983, the LRWQCB alleged that Anaconda Minerals Company was responsible for the creation of pollution problems at Leviathan Mine. Also in 1983, the LRWQCB requested the California Attorney General to initiate legal actions against Anaconda to recover funds for the cleanup and abatement of water pollution generated at Leviathan Mine. The decision to pursue legal action against Anaconda culminated in a settlement whereby the LRWQCB obtained $2.337 million from ARCO for specified remediation work at Leviathan. This money was combined with State funds to pay for the Leviathan Mine Pollution Abatement Project (with a total construction cost of $4.227 million).

The LRWQCB completed the Leviathan Mine Pollution Abatement Project in 1985. The completed project included several remediation measures, including: channelization of Leviathan Creek to prevent its contact with mining wastes, re-grading and compacting the mine pit to reduce AMD production, and construction of five lined ponds to capture and partially evaporate AMD from underground mine workings. Overflow of AMD from the evaporation ponds occurs when the influent AMD and direct rainfall exceed the storage and evaporative capacity of the ponds. Pond overflows result in the discharge of AMD to Leviathan Creek.

The United States Environmental Protection Agency (USEPA) has issued an Administrative Order on Consent (AOC) to ARCO. According to the AOC, ARCO is required to provide at least 8.5 million gallons of storage capacity in the evaporation ponds at Leviathan Mine by October 1, 1998.

There exists several unresolved issues regarding responsibility for ongoing discharge of AMD, with ARCO alleging the LRWQCB has some responsibility and the LRWQCB disagreeing. Nonetheless, both parties agree that immediate action is necessary to prevent pond overflows in 1999. One option is to enter into a contract with ARCO. If this option is pursued and ARCO incurs costs prior to initiation of the contract or beyond the contract amount, these costs shall be borne by ARCO.

The LRWQCB proposes to contract with ARCO or another contractor to provide adequate storage capacity in the evaporation ponds, so that the discharge of AMD to Leviathan Creek resulting from pond overflows does not occur in 1999. The contract amount shall be no more than $625,000.

POLICY ISSUE: Should the SWRCB adopt a proposed resolution authorizing the Executive Director, or his designee, to execute a standard agreement to take appropriate actions to increase evaporation pond capacity as a means to prevent pond overflows in 1999?

FISCAL IMPACT: Subject to availability of funds being appropriated for this purpose in fiscal year 1998/99, state expenditures for the project shall not exceed $625,000. The proposed project is consistent with recommendations put forth in the Workplan for immediate action to prevent pond overflows. Execution of an agreement during state fiscal year 1998-1999, to provide adequate storage capacity in the evaporation ponds to prevent pond overflows in 1999, shall be contingent upon the LRWQCB securing the contract amount ($625,000) for expenditure during state fiscal year 1998-1999.

RWQCB IMPACT: Lahontan RWQCB Staff shall manage the contract for the proposed project.

STAFF RECOMMENDATION: That the SWRCB adopt a proposed resolution authorizing the Executive Director, or his designee, to execute a standard agreement to provide adequate storage capacity in the evaporation ponds at Leviathan Mine, so that the discharge of AMD to Leviathan Creek resulting from pond overflows does not occur in 1999.

DRAFT MAY 27, 1998

WHEREAS:

1. Leviathan Mine is an inactive sulfur mine on property presently owned by the State of California under the jurisdiction of the State Water Resources Control Board (SWRCB). The mine is located in Alpine County, approximately five miles east of Markleeville, California.

2. Degradation of water quality in Leviathan, Aspen, and Bryant creeks occurs as a result of the discharge of acid mine drainage (AMD) from Leviathan Mine. The AMD from Leviathan Mine can be characterized as a dilute sulfuric solution (pH 2-3) containing dissolved heavy metals, including: arsenic, copper, nickel, aluminum, and iron.

3. Anaconda Minerals Company, a wholly owned subsidiary of Atlantic Richfield Company (ARCO), conducted open pit mining at Leviathan Mine from 1954 until 1962. Anaconda's mining activities contributed to the discharge of AMD from Leviathan Mine.

4. ARCO, through its ownership of Anaconda Minerals Company, is a previous mine owner/operator.

5. In 1984, the SWRCB acquired ownership of the mine. The Lahontan Regional Water Quality Control Board (LRWQCB) completed the Leviathan Mine Pollution Abatement Project in 1985. The completed project included several remediation measures, including: channelization of Leviathan Creek to prevent its contact with mine tailings, re-grading and compacting the mine pit to reduce AMD production, and construction of five lined ponds to capture and partially evaporate AMD from underground mine workings.

6. Overflow of AMD from the evaporation ponds occurs when the influent AMD and direct rainfall exceed the storage and evaporative capacity of the ponds. Pond overflows result in the discharge of AMD to Leviathan Creek.

7. As a means to prevent pond overflows, LRWQCB staff are exploring various means to increase the storage capacity of the evaporation ponds. One obvious method of increasing pond capacity is the removal of AMD from the ponds during the summer months. Removal of AMD during the summer months will provide additional storage capacity and prevent overflows later in the water year.

8. The United States Environmental Protection Agency (USEPA) has issued an Administrative Order on Consent (AOC) to ARCO. According to the AOC, ARCO is required to provide at least 8.5 million gallons of storage capacity in the evaporation ponds by October 1, 1998.

9. There exists several unresolved issues regarding responsibility for ongoing discharge of AMD, with ARCO alleging the LRWQCB has some responsibility and the LRWQCB disagreeing. Nonetheless, both parties agree that immediate action is necessary to prevent pond overflows in 1999. One option is to enter into a contract with ARCO. If this option is pursued and ARCO incurs cost prior to initiation of the contract or beyond the contract amount, these costs will be borne by ARCO. The LRWQCB proposes to contract with ARCO or another contractor to provide adequate storage capacity in the evaporation ponds, to significantly reduce the possibility of pond overflows to Leviathan Creek in 1999.

10. Execution of an agreement during state fiscal year 1998-1999 to provide adequate storage capacity in the evaporation ponds, to significantly reduce the possibility of pond overflows to Leviathan Creek in 1999, shall be contingent upon the LRWQCB securing the contract amount ($625,000) for expenditure during state fiscal year 1998-1999.

THEREFORE BE IT RESOLVED THAT:

Subject to availability of funds being appropriated for this purpose in fiscal year 1998/99, the SWRCB authorizes the Executive Director, or his designee, to execute a standard agreement to provide adequate storage capacity in the evaporation ponds at Leviathan Mine, to significantly reduce the possibility of pond overflows to Leviathan Creek in 1999. The contract amount shall be no more than $625,000.

The undersigned, Administrative Assistant to the Board, does hereby certify that the foregoing is a full, true, and correct copy of a resolution duly and regularly adopted at a meeting of the State Water Resources Control Board held on June 18, 1998.

______________________________

Maureen Marché

Administrative Assistant to the Board