2014-08-20_INSPECTION - M2005033

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PERMIT#: M-2005-033 INSPECTOR'S INITIALS: MAC INSPECTION DATE: July 11,2014 OBSERVATIONS The inspection was conducted by Michael Cunningham of the Division of Reclamation, Mining and Safety (Division). Dick Coulson of Coulson Excavating Company, Inc. was also present for the inspection. The Gardels Pit is located one mile east of Loveland, Colorado. The site is permitted for 30 acres and the post-mining land use is general agriculture. Mining at the Gardels Pit is complete and the reclamation of the surface area is complete. The conditions remain unchanged from the last inspection conducted on June 17, 2010. The inspection report from the last inspection incorrectly stated that the reclaimed site contains two clay-lined ponds and one groundwater pond. The site contains one clay-lined pond and two groundwater ponds. Cell B was reclaimed to a clay-lined pond and is located on the west end of the site. The clay liner was approved (WDID 0403396) by the Office of the State Engineer (SEO) on October 4, 2012. The two groundwater ponds are located on the east side of the site (Cells C and D) and together comprise 9.39 acres of exposed groundwater. As noted above, all surface reclamation is complete at the site. However, the site will not be considered to be fully reclaimed until the Operator obtains a court approved augmentation plan to address the long-term evaporative depletions associated with the exposed groundwater. According to the Operator, an augmentation plan has not yet been submitted to the appropriate water court for approval. Construction Materials Rule 3.1.3 states that all reclamation is to be carried to completion by the Operator within five years from the date that mining is complete. The failure to complete reclamation by obtaining a court approved augmentation plan is considered a problem and will require corrective action by the Operator. Please see the first page of this report for additional information. In addition to obtaining a permanent augmentation plan, the Operator is responsible for ensuring that the short-term evaporative depletions are covered through a Temporary Substitute Water Supply Plan (SWSP). The current SWSP (WDID 0402547) is valid through October 31, 2014. In April 2010, the Division implemented a new policy for sites with exposed groundwater which required Operators to address the financial liability of the exposed groundwater through one of four different options. The three options available for this operation were: 1) File a financial warranty in an amount that would cover the backfilling of all exposed groundwater to at least two feet above the static water level, 2) file a financial warranty to cover the cost of installing a clay-liner or a slurry wall, or 3) dedicate water shares to the SEC) in an amount equal to cover the evaporative depletions associated with the exposed groundwater. Operators were to notify the Division no later than April 2011 as to how they would address the financial liability. A search of the Division's records found that Coulson Excavating Company did not notify the Division as to which one of the four options would be chosen. The failure to address the Division's groundwater policy is considered to be a problem and will require correct action. The Operator must, within 30 days of the mailing date of this report, complete one of the following actions: 1) Submit a Technical Revision to the Reclamation Plan with an alternate plan for installing a clay-liner or slurry wall around the two unlined groundwater ponds. 2) Dedicate water shares to the SEO to cover the 9.39 acres of exposed groundwater and provide the appropriate documentation to the Division demonstrating that water shares have been dedicated. 3) Post a financial warranty in an amount equal to the cost of backfilling both of the unlined ponds (cost to be determined by the Division). Page 2 of 5