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SETTLEMENT AGREEMENT JUSTIFICATION NOV C-94-034 Notice of Violation C-94-034 was issued for "Failure to dispose of non-coal waste in a designated non-coal waste disposal area by failing to dispose of drilling mud in an area designated for disposal". ]ce Dudash issued the NOV to Basin Resources Inc. on November 22, 1994 for the New Elk Mine. It was based on his November 10, 1994 inspection. During his inspection he observed a few inches of drilling mud in Pond 4 at the point of disposal and a thin veneer covering a small area around it. The mud had settled in the NW corner of the pond. Some water was ponded in the SE comer of the pond where the outlet is. There was no discharge from the pond. Mr. Dudash stated there are three approved waste disposal areas in the permit area, Pond 4 is not one of them. It is approved only for surface water runoff. As required by the abatement, the mud has been removed from the pond and placed in an approved site. Ralph Lopez, representing Basin Resources Inc. (BRI), stated that the drilling mud was placed in Pond 4 because it was liquid, 95% water. If it had been placed in the approved disposal site, the waste pile, it would have run off the pile, into the ditches and into Pond 4. In the process it would have picked up additional waste material. BRl did not want to get the waste pile soggy, create undue erosion of the pile or cause unnecessary flow through the ditches. Furthermore, he said the drilling mud has always been placed in Pond 4. The drilling mud consists of water, dirt, sediment, bentonite and residual chemicals, a foamer and a defoamer. He presented a copy of the Materials Safety Data Sheet (MSDS). The substance of concern is the defoamer. It is considered a hazardous waste. Mr. Lopez said that only a very small amount of defoamer was used at the drill site. It was strongly diluted with water. It was placed in Pond 4 because the pond is greatly oversized and it has never discharged. Upon issuance of the NOV, BRI promptly removed all of the drilling mud from the pond and disposed of it properly. The proposed civil penalty was: History $0.00 Seriousness $1000.00 Fault $1000.00 Good Faith $0.00 Total $2000.00 Seriousness This NOV was assessed for significant seriousness because of the potential for harm. Mr. Lopez said the potential for harm is negligible. The small amount of defoamer used was diluted by thousand's of gallons of water. It was placed in the NW corner of Pond 4, a high point, where it is well vegetated with willows. Furthermore, Pond 4 is way oversized, and it has never discharged.