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Mr. Jeff Deatherage -August 6, 2010 <br />Page Three <br />Issues of Concern <br />In the interim, AGC has the following two issues to address, both of which require immediate <br />response actions (that are inter-related, for reasons discussed below), and for which we have <br />specifically developed the proposed environmental mitigation program: <br />(1) the need to terminate an ongoing adit discharge that is now flowing at a nominal rate of <br />2 to 5 gpm (this adit flow was observed to be in excess of 25 to 30 gpm during the spring <br />2010 run-off period); and, <br />(2) the need to deplete a surplus of water within the tailing impoundment that exceeds the <br />DRMS-stipulated minimum freeboard (we estimate the surplus volume to be on the order <br />of 400,000 to 500,000 gallons). <br />Mitigation Alternatives <br />AGC has evaluated the practicable alternatives for addressing the two immediate issues of <br />concern, as follows: <br />Option 1- Discharge to Surface Water <br />AGC has evaluated permitting options within the Colorado Department of Public Health and <br />Environment - Water Quality Control Division. This option does not appear to be viable in that <br />there is apparently no permitting authority under which AGC's planned mitigation action could <br />proceed. <br />• WQCD no longer has the "Minimum Industrial Discharge Permit" program in place. That <br />program would have been the proper venue for an underground mine dewatering action. <br />• The tailing pond liquid volume is presumably comprised of (prior operator introduced) <br />mine dewatering volumes, meteoric precipitation, and to a lesser extent, process water <br />associated with milling processes. Commingled, the liquid volume constitutes "process <br />water" which cannot be discharged to a surface water receiving stream except under <br />conditions imposed by a CDPS permit. <br />• Requirements for applying/securing a Colorado Pollutant Discharge Permit (CDPS) are <br />such that up to one year's water quality data is necessary to support the permit <br />application. <br />• WQCD has stated that there is no other WQCD administered permitting program <br />available to allow a mine dewatering discharge, short of obtaining a CDPS permit.