ALJDEC decisions subject to certification as final

21-004-WQAB · Water Quality Appeals Board · 2022-06-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

CHRIS WERKHOVEN,

AND

PATAGONIA AREA RESOURCE ALLIANCE

Appellants,

vs.

STATE OF ARIZONA DEPARTMENT OF ENVIRONMENTAL QUALITY

Respondent,

ARIZONA MINERALS INC.

Intervenor

No. 21-004-WQAB

No. 21-006-WQAB

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: January 10, 11, 12, 13, 14, 18, 19, 20, and 21, 2022

APPEARANCES: Chris Werkhoven, Ph.D. on his own behalf; Billy Peard for Patagonia Area Resource Alliance; Jothi Beljan, Esq., for the Department of Environmental Quality; Christopher D. Thomas, Esq. for Arizona Minerals, Inc.

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

The Arizona Department of Environmental Quality issued to Intervenor Arizona Minerals Inc. (“AMI”) a significant amendment to an Aquifer Protection Permit. At issue are Appellants Chris Werkhoven’s and the Patagonia Area Resources Alliance’s appeals of ADEQ’s action.

AMI holds patented mining claims and is engaged in prefeasibility study and exploration work at the Hermosa Project located about five miles south of Patagonia Arizona. The Hermosa-Taylor deposit contains zinc, lead, silver, and manganese.

In furtherance of its exploration work, AMI plans to pump groundwater to depressurize fractured bedrock and it will be generating waste rock and other material to be added to an existing tailings storage facility. The water will be treated at Water Treatment Plant 2 and will be discharged to Harshaw Creek through Outfall 2. Neither WTP 2 nor Outfall 2 has been built. WTP2 is the best available demonstrated control technology or BADCT for Outfall 2, which is the newly permitted discharging facility.

The prior version of the APP authorized three discharging facilities: the tailings storage facility, the underdrain collection pond for that tailings storage facility, and Outfall 1 discharging to Alum Gulch.

The amended APP (1) adds Outfall 2 as a discharging facility and authorizes AMI to discharge 4,500 gallons per minute of treated mine-impacted water to Harshaw Creek; (2) modifies the Pollution Management Area (“PMA”) and the Discharge Impact Area (“DIA”) to account for the new discharges; (3) allows AMI to add material from new sources to an existing tailings storage facility (“TSF”) and increases the allowable volume of material by increasing the height to which material may be stacked and changing the stacking geometry; and (4) makes changes to the post-closure costs.

The PMA extends about 9.4 miles downstream on Harshaw Creek.

The Point of Compliance (“POC 4”) is at the termination of the PMA. POC 4 is conceptual in that the sampling actually takes place at Outfall 2.

AMI has been issued an Arizona Pollution Discharge Elimination System (“AZPDES”) permit authorizing its discharges to Alum Gulch and Harshaw Creek.

The docket is publicly accessible at https://portal.azoah.com/oedf/documents/21-004-WQAB//index.html .

FINDINGS OF FACT

Introduction

On October 19, 2021, the Arizona Water Quality Appeals Board issued a Notice of Hearing setting this consolidated matter for hearing on November 28, 2021 at the Office of Administrative Hearings in Phoenix, Arizona.

At issue are two appeals of ADEQ’s Decision to Grant [to Intervenor Arizona Minerals Inc.] an Aquifer Protection Permit (APP) Significant Amendment Hermosa Project – Trench Camp Property; Inventory Number: 512235 LTF ID: 83040.

AMI is conducting exploration activity and performing remediation. The amended Permit “does not permit mining activity” at the site. Ex. AMADEQ 86.

The amended Permit adds as a discharging facility Outfall 2 and it authorizes AMI to discharge 4500 gpm of treated mine-impacted water to Harshaw Creek; it amends the pollution management area (“PMA’) and discharge impact area (“DIA”) to account for that discharge; and it allows material from new sources to be added to the existing tailing storage facility (“TSF”) and increases the height to which material can be stacked and the volume of material that can be stored. It also modifies post-closure costs, which is not at issue in this matter.

Ex. AMADEQ 23 at Bates page number 01306 is Figure 6 prepared by Clear Creek and Associates LLC that shows the PMA, the DIA, the points of compliance, and many other pertinent features on a map of the project area.

Water Treatment Plant 2, which has yet to be constructed, is BADCT for the discharge to Harshaw Creek. The TSF was designed based on prescriptive BADCT as set out in ADEQ’s “Arizona Mining Guidance Manual BADCT.”

WTP2 has been designed to meet the most rigid discharge criteria found in either the APP statutes and rules or those found in the AZPDES statutes and rules.

At AMI’s own suggestion, and as requested by downstream landowner The Nature Conservancy, the AZPDES permit adopted the most stringent available numeric water quality standards based effluent limitations.

For AZPDES’s purposes, Harshaw Creek’s designated uses are A&We, PBC, and AgL from its headwaters to its confluence with Sonoita Creek.

Downstream of Outfall 2, Harshaw Creek is not impaired, whereas about 1200 feet upstream of WTP2 is a non-attaining reach and TMDL for copper and acidity.

Chris Werkhoven, Ph.D. is the Appellant in docket number 21-004-WQAB.

Patagonia Area Resource Alliance’s (“PARA”) is the only remaining Appellant in docket number 21-006-WQAB. As originally noticed, that matter included nine other named Appellants, who either withdrew or were dismissed for failure to prosecute their appeals. See Case Management Order No. 5.

The matter was continued and the hearing was conducted on January 10, 11, 12, 13, 14, 18, 19, 20, and 21, 2022. By agreement of the parties, to facilitate social distancing, the hearing was conducted at the offices of AMI’s attorney, Perkins Coie.

AMI is a Nevada Corporation owned by South32, a mining company organized under Australian law.

AMI owns the Hermosa Project consisting of patented mine claims, property, and unpatented mine claims within the surrounding Coronado National Forest Lands south of Patagonia. This property includes zinc, lead, silver, and manganese, which are important for electric vehicles, wind turbines, solar panels, and lithium-ion batteries, among other uses.

The Permittee is the Hermosa Project Property, located at 749 Harshaw Road, Patagonia, Arizona 85624. PARA’s Exhibit W is a compilation of maps and aerial photographs created by AMI’s consultant Clear Creek Associates. Page 1 shows the watershed boundaries, page 10 shows the Hermosa Project Site Plan, and page 12 shows Figure 6 that is also in evidence elsewhere.

The Hermosa Project site is about five miles south of Patagonia over the Santa Cruz groundwater basin, in section 32 Township 22S, Range 16E and in un-surveyed sections 3 and 5, Gila and Salt River Baseline and Meridian.

The site itself straddles two watersheds, Harshaw Creek and Alum Gulch. Outfall 2 is in the Harshaw Creek watershed. Outfall 1 that was permitted in the original APP is in Alum Gulch. The TSF is in both watersheds.

The Hermosa Project is in the prefeasibility stage and exploration drilling is ongoing. After peer review of the prefeasibility study is completed, the next step will be a more refined feasibility study.

Dewatering or depressurizing of rock units is necessary to safely conduct these exploration activities. That groundwater and other impacted water must be treated before it is discharged, which will be done in WTP2. In addition, core cutting and drilling are required, with material generated in these activities, including potentially acid generating (”PAG”) construction rock, to be placed in the TSF.

On August 14, 2020, AMI filed the application at issue, APP Application No. 512235, an application for a significant amendment to its existing APP.

Through a Notice of Granting License dated August 4, 2021, ADEQ granted AMI’s application for significant amendment.

The Permit is an area-wide permit that addresses all discharging facilities at the AMI property, as is authorized in Ariz. Rev. Stat. section 49-243(P).

On August 14, 2020, AMI also filed an application to amend its AZPDES permit (AZ0026387), which application was granted on July 30, 2021. The terms of the AZPDES permit are not at issue in this matter. But both permits allow AMI to discharge mine impacted water to Harshaw Creek after that water has been treated in yet to be built WTP2.

WTP2 is designed to meet the most stringent treatment standards, whether applicable to the APP program or AZPDES program.

The Application for significant amendment is in evidence as Ex. AMADEQ 23 and the amended Permit as Ex. AMADEQ 87.

Also in evidence is Ex. AMADEQ 83, which is redlined version of the prior permit prepared by ADEQ’s Vimal Chauhan as a courtesy to assist all parties, with the understanding being that not necessarily completely accurate.

The Witnesses at hearing

AMI appeared through counsel and presented the testimony of Pat Risner its President; Brent Musslewhite its Director of Environment & Permitting, who was AMI’s primary company contact; Troy Thompson PE (Colorado); David Kratochvil, Ph.D., PEng (British Columbia); and Alison Jones, RG (Arizona).

ADEQ appeared through counsel and presented the testimony of its Environmental Engineer and project manager Vimal Chauhan, and its Principal Hydrogeologist Daniel Reeder.

PARA appeared through a Board member and presented the testimony of Board Member and local resident Carolyn Shafer; Patagonia’s mayor, Ron Robinson; Steven Emerman, Ph.D., Owner of Malach Consulting; Andre Sobolewski, Ph.D., President of Clear Coast Consulting; and Laurel Lacher, Ph.D. , Principal in Lacher Hydrological Consulting.

Dr. Werkhoven a concerned local citizen who appeared and testified on his own behalf; he has a Ph.D. in physical chemistry and 45 years’ experience in the semiconductor industry.

Mr. Thompson is the co-founder and President of Ecological Resources Consultants, Inc. that provided expertise delineating the PMA in Harshaw Creek. He has over 25 years’ experience hydrology, hydraulics, geomorphology, and stream restoration. Mr. Thompson received a Bachelor’s degree in Civil and Environmental Engineering from Cornell University in 1993 and a Master’s degree in Civil Engineering from the University of Colorado in 1997.

Dr. Kratochvil is the President and CEO of BQE Water that was responsible for the design of WTP2’s treatment trains to ensure that WTP2 can treat the influent to meet the required discharge standards. Dr. Kratochvil’s Ph.D. is in chemical engineering; he has over 25 years of experience in mine water management and treatment including permitting, treatment options assessment, bench/pilot testing, engineering design, plant commissioning, and long term operations.

Ms. Jones is a Senior Associate with Clear Creek Associates LLC, AMI’s hydrogeological consultant that worked on the DIA. Ms. Jones manages mining support and environmental projects. She has over 25 years of technical experience. Ms. Jones received a BS degree in Geology in 1979 and an MS degree in Geology in 1983.

Ms. Jones had primary responsibility assembling or compiling AMI’s Application and she sealed the Application, understanding that her seal did not cover the engineering work. One of Ms. Jones’s primary duties was to ensure that the Application met the applicable administrative rules.

Ms. Jones was also responsible for delineating the DIA. In her role as compiler, Ms. Jones proofread other documents and periodically met with the other consultants, and then filled out the application form and assembled the supporting documentation. Her review also included evaluating whether the BADCT demonstration(s) were going to be sufficient. AMI was reviewing all this work.

Others from Clear Creek who worked on AMI’s application include: Douglas Bartlett, RG (Arizona) Principal Hydrogeologist, with over 30 years’ experience, and James Norris, RG (Arizona) Senior Associate with over 40 years’ experience.

Mr. Chauhan has a Master’s Degree in environmental engineering and has worked on APP issues since 2008. He was also ADEQ’s engineer who reviewed the three discharging facilities that were permitted under the original APP.

In his role as the engineer, Mr. Chauhan considered the increase in the height of the TSF, the capabilities of WTP2 to appropriately treat the influent as designed, and the closure costs, which information he included in an engineering memorandum in evidence as Ex. AMADEQ 68. After receiving Mr. Reeder’s hydrologic memorandum, Mr. Chauhan drafted the amended Permit.

Mr. Reeder has a Bachelor of Arts in geology and a Master of Science in geology with an emphasis in hydrogeology, and he has approximately 30 years’ professional experience in this line of work. Mr. Reeder’s review included evaluation of the PMA, the DIA and delineation of the POC, which included verifying that AMI’s, Clear Creek’s and ERC’s people had the required educational background and qualifications to provide informed opinions.

Mr. Reeder prepared a memorandum that is in evidence as Ex. AMADEQ 69 and completed a Hydrology Checklist showing that AMI’s application meets the applicable statutes and regulations that is evidence as Ex. AMADEQ 97.

Ms. Shafer is Board Member and Mission Coordinator of PARA and she is the Chairwoman of the Flood & Flows Committee for the Town of Patagonia. She has lived in the Patagonia area for 26 years. She testified has to her personal observations and experience.

Mr. Robinson, the mayor of Patagonia, testified as to Patagonia’s wells and as to his observations that there is a correlation between the water level in those wells and surface water flows.

Dr. Emerman is a geophysicist with postdoctoral appointments in fluid mechanics, soil physics, soil hydrology, and forest hydrology. He has taught at a variety of global institutions, and has worked as a consultant evaluating various aspects of mining projects for a variety of clients, including mining companies, on over 50 proposed projects. He testified as to his opinions related to the TSF and mine safety issues.

Dr. Sobolewski is a biologist who has worked in the area of environmental protections since the 1980s. He has assisted in development of governmental regulations, and has consulted on a wide variety of mining, water treatment and other industries since the 1980s to design, evaluate and develop a variety of treatment designs. He testified as to his opinions regarding issues related to WTP2.

Dr. Lacher is a registered professional hydrologist in the State of Arizona, with a Ph.D. in hydrology. She has worked on a variety of projects for dozens of varied consulting clients over the past several decades including water modeling, environmental permitting, hydrologic analysis, design, flow assessments, performance testing, groundwater impacts, and policy development. She has authored numerous publications and peer-reviewed articles and conference presentations over the past several decades. She testified as to her opinions regarding the PMA, the DIA, and the POC.

Dr. Werkhoven has a Ph.D. in physical chemistry and 45 years’ experience in the semiconductor industry. He is a concerned local citizen who testified as to his opinion that discharge from Outfall 002 will encounter pollutants and constituents left by legacy mining and naturally occurring minerals, and that these pollutants will travel downstream and enter the Sonoita Creek alluvial aquifer.

Background Information

The Hermosa Taylor Deposit contains zinc, lead, silver, and manganese. Mining in the project area has been intermittent since the 1870s.

In 2016 AMI purchased from the ASARCO Custodial Trust the January and Norton Mine Claims, the Trench Camp Mine Claims, and associated tailings piles and waste rock. The historic claims are closed and are not considered to be APP-regulated facilities.

The original APP was issued to AMI in January 2018. In the original permit, the site was referred to as the Trench Camp property. That permit was twice amended before AMI filed the Application at issue.

The original APP authorized three discharging facilities: the lined TSF, the underdrain collection pond (“UCP”), and Outfall 001 discharging to Alum Gulch (AZPDES AZ 0026387). The discharges to Alum Gulch are treated in Water Treatment Plant 1. The permitted flow rate from Outfall 1 to Alum Gulch is 172,000 gallons per day.

The original APP was issued in conjunction with AMI’s participation in ADEQ’s Voluntary Remediation Program (“VRP”).

As part of the VRP, AMI agreed to eliminate mine impacted water from January Adit and to the remediation of the then existing tailings piles, which included PAG seepage to Alum Gulch.

In furtherance of that remediation, AMI moved some of the existing tailings to create room to build a dry-stack tailings storage facility. The dry stack facility is lined and has an underdrain collection system that collects seepage that flows to the UCP, which pond also receives storm water runoff from the TSF.

AMI completed most of the voluntary remediation activities and plans to resume exploration work. The UCP is not complete because it is appropriate to construct that system immediately ahead of stacking the material to limit the risk of damage to the geomembrane liner.

AMI’s Application

On January 31, 2020, AMI and ADEQ had a pre-application meeting, and they conducted two additional (virtual) meetings in June 2020 during which they went through the proposed application.

On August 14, 2020 AMI filed its APP Application and its application to amend its AZPDES permit.

Between August 2020 and March 2021, ADEQ and AMI communicated frequently to clarify the pending applications and ensure that the amendments conformed with applicable statutes and regulations. AMI and ADEQ frequently corresponded on questions about the TSF, materials, and financial assurance. They also had further meetings regarding water quality and technical information.

Mr. Chauhan testified that AMI’s application was administratively complete, well organized and easy to follow, and ready to be subjected to a thorough technical review.

The Permit is an area-wide permit that addresses all discharging facilities at the AMI property.

Mr. Chauhan concluded that a significant amendment was more appropriate than a new application because the entire site is within one contiguous geographical area and under one ownership.

The amended Permit (1) adds as discharging facility, Outfall 2; (2) authorizes AMI to discharge from Outfall 2 to Harshaw Creek 4500 gpm of treated mine drainage water, tailings seepage, groundwater, core cutting water, drilling water and storm water; (3) provides that WTP2 is BADCT for the discharge; (4) it revises the PMA and DIA to reflect the additional surface discharge; (5) it designates a conceptual point of compliance for the discharge (POC 4); (6) it sets discharge limitations and alert levels; (7) requires sampling and testing of the discharge at Outfall 2; (8) it authorizes changes to the TSF; (9) it imposes recordkeeping and reporting requirements; and (10) it includes update closure costs and financial assurance mechanism.

The discharge limitations, alert levels, sampling frequencies, and reporting frequencies are set out in Tables 8, 9, 10 and 11 of the Permit. AMI’s discharge limitations are equivalent to the Aquifer Water Quality Standards (“AWQS”), which in some cases are less stringent than the standards that AMI must meet to comply with its AZPDES permit. The alert levels are 80% of the discharge limitations, which is typical for APPs.

AWQSs are based on primary Safe Drinking Water Act standards unless ADEQ adopts other standards by rule, which has not happened.

Ms. Jones proposed these discharge limits when filing AMI’s Application; she testified as to her opinion that these were appropriate.

Mr. Reeder’s opinion was to the effect that the compliance discharge monitoring schedule was appropriate considering the influent chemistry, the groundwater system being dewatered, and the potential contaminants. In addition, reports required by Permit Section 2.7.4.1 will also be evaluated to see if changes are required.

AMI is required to monitor the discharge from Outfall 2 before it leaves AMI’s property and report any exceedance of an alert level or violation of an AWQS, discharge limitation, or other permit condition.

Outfall 2 must be sampled and reported quarterly. Quarterly monitoring is typical for APPs, although semiannual and annual can also be used.

The APP permit requires monthly monitoring of TSF’s structural integrity, weekly monitoring of the phreatic surface in piezometers, and annual monitoring of the Facility height.

Exceedance of an alert level provides notice or a warning that a discharge is approaching the allowable discharge limitation and may require action on a permit-holder’s part.

AMI is required to maintain all facilities to prevent unauthorized discharges.

The Permit requires recordkeeping and reporting, and it includes a contingency plan, a compliance schedule, and closure requirements. AMI is required to complete and submit self-monitoring report forms, maintain appropriate records of inspections, report alert level status, report any violation of a permit condition within 30 days of becoming aware of the violation, and follow certain, specific steps to investigate alert level exceedances including initiating contingency plan actions.

If there is a discharge limit violation, AMI is required to cease all discharges “as necessary to prevent further releases to the environment.”

Dr. Werkhoven’s Issue(s)

It appears that Dr. Werkhoven’s comments may not be in the record, but he filed his Notice of Appeal with the Board on August 24, 2021. In that appeal he raised four issues. ADEQ filed a motion to dismiss Dr. Werkhoven’s appeal arguing that Dr. Werkhoven did not have standing to participate in the hearing and that his appeal was deficient for failure to state the relief sought.

ADEQ’s motion was not granted, but three issues raised in Dr. Werkhoven’s comments were found to be outside the scope of the APP program and he was precluded from presenting evidence on those issues. See Case Management Order No. 5.

Dr. Werkhoven’s remaining issue was to the effect that ADEQ had not shown that the human health and environment downstream of Harshaw Creek would be protected from discharges of treated water. More specifically, he asserted that these discharges could cause metals and other toxic elements to leach out of exposed mineral rocks; that there has been an accumulation of pollutants in the soils and vegetation near Harshaw Creek resulting from previous mining; and the discharges can be expected to transport additional amounts of these materials downstream negatively affecting the human health and the environment via polluted surface water and groundwater.

The thrust of Dr. Werkhoven’s evidence and opinions is that the treated water discharged from Outfall 2 has the potential to interact with mineralized rock and legacy mining wastes, causing pollution downstream of Outfall 2. In addition, his opinion is that the additional flow from Outfall 2 will increase the transport of sediment downstream to Sonoita Creek and then to Patagonia Lake.

Dr. Werkhoven compiled existing flow data and he collected data from an automated monitor of the depth to water in a well about 80 feet from the stream near the confluence of Harshaw Creek and Sonoita Creek. Dr. Werkhoven’s opinion was that this data shows that water flowing in Harshaw Creek has an effect on groundwater levels downstream, and that the depth to water in Patagonia’s wells correlates to rainfall in the basin, with a lag of a year to a year and a half.

Dr. Werkhoven’s opinion is that this flow-data supports Dr. Lacher’s conclusion that the Harshaw Creek alluvium will become fully saturated as a result of AMI’s discharges from Outfall 2.

When mineralize rock is exposed to water, chemical reactions can produce metal acid, which can be buffered by carbon in limestone and the atmosphere, raising the pH. An increased pH can cause metals to precipitate out. The mineralized rock is what the miners are looking for.

According to Dr. Werkhoven, the water looks clean, but the metals can accumulate in the sediments. He presented the results of a “fingerprinting” study showing that sediments in Sonoita Creek originated in Harshaw Creek.

Plant life could then take up the metals, which bio-accumulate and can travel up the food chain. According to Dr. Werkhoven, even if pumped groundwater meets the standard, surface water, soil and vegetation and therefore the public health and environment are not necessarily protected.

Dr. Werkhoven acknowledged that there are no standards related to sediments and that it would be very difficult to measure the material/pollutants in those sediments.

PARA’s Issues

PARA raises nine issues in its Public Comments.

Six of PARA’s issue are based on a technical review of AMI’s application and the draft Permit prepared by Dr. Lacher and Robert Prucha, Ph.D., PE that is included with PARA’s comments. PARA also alleged that the draft permit violated Arizona law in three regards. PARA’s Comments are in evidence as Ex. PARA M.

PARA’s issues as set out in its comments are:

1. Discharge from the proposed WTP2 is an entirely NEW, significantly larger discharge than the previously permitted discharge from Outfall 1 (and Water Treatment Plant No. 1) with different water quality implications for downstream aquifers and should be handled in a separate and complete APP.

2. An assessment of the full range of hydrologic impacts for the life of the mine must be conducted in order to develop protective discharge limits and monitoring requirements.

3. The lower Harshaw Creek alluvium and Sonoita Creek alluvium are both drinking water aquifers, and therefore, may not be degraded by mine discharge in a way that impairs existing or reasonably foreseeable uses of water in those aquifers, as specified in A.A.C. R18-11-405.

4. Additional Points of Compliance (POCs) with increased monitoring frequency are necessary to protect the health of downstream well owners and others who depend on groundwater from the sole-source drinking water aquifers in Harshaw and Sonoita creek valleys.

5. EPA Secondary Drinking Water Standard contaminants should be included in the APP compliance monitoring requirements to protect the downstream aquifers and drinking water infrastructure from irreparable harm.

6. The proposed discharge and POC monitoring requirements are not consistent with Arizona Aquifer Quality Standards (A.A.C. R18-11-406) and federal EPA Safe Drinking Water standards. Failing to maintain these contaminant concentrations in mine discharge below federal and state limits could endanger public health and do irreparable harm to the existing high-quality, sole-source drinking water aquifers and related drinking water infrastructure serving Harshaw Creek and Town of Patagonia residents.

A. ADEQ’s Proposal to Process AMI’s Application as a “Significant” Amendment was in error

B. ADEQ Must Require AMI to Install Actual vs. “Conceptual” Points of Compliance

C. The Extent of the Pollution Management Area in the Permit Fails to Comply with the Requirements of A.R.S. § 49-244(1)

Water Treatment Plant 2

WTP2 is BADCT for Outfall 2. WTP2 is designed to treat to the most stringent standards, whether found in the APP program or the AZPDES program.

Design details are in an “Environmental Permitting Support Document, Water Treatment Plant 2” included with AMI’s application as Attachment A, beginning at Bates page 127.

Black & Veatch was AMI’s primary contractor responsible for engineering, detail design and procurement for WTP2. Its team included Erick Bevington, PE (Arizona) with nearly 20 years’ experience in water and wastewater treatment design and construction work, and Kevin Lee, PE (Kansas) with nearly 20 years’ experience water and wastewater treatment.

Black & Veatch hired BQE that was responsible to design the treatment trains.

Dr. Kratochvil and Mr. Bevington each sealed Attachment A, with Dr. Kratochvil being responsible for the treatment trains. Although B&V had reviewed BQE’s work and found that work to be satisfactory, it made no guarantees regarding BQE’s process design.

WTP2 is designed to meet the applicable Surface Water Quality Standards, Aquifer Water Quality Standards, and technology based effluent limit guidelines referenced in Attachment A’s Table 3.1.

Dr. Kratochvil testified to the effect that WTP2 is designed to treat the influent to meet all required standards, all constituents that are expected to be encountered, and it could treat for all the constituents that require removal based on the regulatory requirements.

WTP2 has a design flow of 4500 gallons per minute, which is about 6.48 million gallons per day, and about 10 cubic feet per second.

WTP2’s influent will consist of groundwater pumped from a well field to depressurize and dewater the fractured-rock aquifer, groundwater and operational water from underground workings, TSF seepage, January Adit water, treated water from WTP1, drilling water, core cutting water, and water from storm-water containment structures.

The composition of the influent will change over time and is likely that the flow rate will go down over time as exploration dewatering decreases. Initially, it is expected that pumped groundwater for depressurization will compose 70 to 85% of the inflow, (expected to decrease over time); TSF seepage and runoff (from the UCP) < 7%; stormwater from BMPs < 5%; and underground dewatering 15 to 20% (going up over time).

Table 3 of the Application provides the expected influent chemistry.

AMI estimated the concentration ranges of metals and other constituents expected in the influent to WTP2 based on (a) groundwater samples from a well in the area where depressurization and dewatering will take place, (b) water samples from the UCP and January Adit, (c) stormwater samples, and (d) leaching test results for the rock types in the exploration decline.

To determine how to treat the influent, BQE used the sampling data and other information provided by AMI.

BQE found that AMI’s site-specific data was within the range of contaminant concentrations encountered by BQE at other sites, but it did its due diligence by reviewing that information and requesting additional information about certain constituents. BQE also used data from other mine sites with similar characteristics to those at the Hermosa site.

With the exception of lead and arsenic, influent concentrations are expected to be below the AWQS.

BQE had discussed with AMI possible sources of various nitrogen-containing constituents and was comfortable that the ranges in AMI’s samples are valid considering the schedule for the project. BQE did not expect ammonia or nitrogen at above the regulatory threshold.

Concentrations for Nitrate-N and Nitrite-N were not estimated, but Dr. Kratochvil’s opinion was it was not necessary to include these because expected concentrations will be very low. Ammonia nitrate is not being treated for because the concentrations are very low. Blasting will produce a small amount of nitrogen residue.

WTP2 is not designed to treat cyanide but it has the inherent ability to do so and there was no cyanide detected in any of the samples. Uranium was not detected at levels that require removal.

WTP2 consists of two treatment trains; BQE conducted laboratory treatability studies for both trains.

The first treatment train will remove total suspended solids (TSS), arsenic, selenite (Se+4) and metals using pH adjustment, sulfide reagents and ferric sulfate to precipitate and flocculate metals. Dr. Kratochvil describe this as a conventional or standard process.

The second treatment train will use BQE’s proprietary Selen-IX process to remove selenate (Se+6) using ion-exchange technology and an electro-reduction process to treat ion exchange regenerant for recycling.

PARA’s witness Dr. Sobolewski took no issue with the second treatment train (for removal of selenate (Se+6)), and in fact he was considering using the Selen-IX process in a treatment plant he was designing. Dr. Sobolewski did however raise concerns related to the expected influent chemistry and the first treatment train.

WTP2’s influent will be sampled based on operational requirements. Dr. Kratochvil explained that achievable effluent quality is not really linked to the quality of the influent, but the production of solid residue, the reagent consumption, and costs to operate are related to the influent quality. So sampling will be primarily for the mine operator to anticipate costs.

There are KPIs or key process indicators in the treatment process and the influent quality; most are monitored continuously on-line. There are also target limits for some parameters.

If WTP2 produces poor quality effluent, these KPIs would be considered to determining why. In addition, if any KPI is out of tolerance for too long, the influent feed will be stopped, and the existing process water will be automatically recycled and not discharged.

WTP2 has no influent storage pond per se, and the presumption is that dewatering-pumping would be stopped if WTP2 is required to stop operation.

Mr. Chauhan reviewed the plans for WTP2 to ensure it would be capable of treating the influent to remove pollutants and meet both the AWQS as required for the Permit and the Surface Water Quality Standards for AMI’s AZPDES permit.

Mr. Chauhan acknowledged that he is not an expert in the design of water treatment plants, but he testified that he had sufficient expertise to review the process and confirm or verify that WTP2 could remove the pollutants of concern.

Mr. Reeder was required to evaluate the influent water-chemistry to understand what the pollutant loads were before treatment and then review whether the treatment train was appropriate for creating water complying with all relevant water quality criteria. Although he is not a process engineer, and he acknowledged that he is not the one to ask about how WTP2 actually works, his opinion was that he treatment train was suitable for removing metals and the suspended solids.

In forming his opinion, it was important to Mr. Reeder (1) that in line with BADCT control process, AMI incorporated a programmable logic controller in WTP2 that immediately alerts operators through an alarm if any levels get outside the monitoring parameters and allows operators to then immediately control the plant remotely if necessary, and (2) that AMI will have plant operators who are certified through a rigorous process.

Mr. Reeder also considered that the AZPDES permit imposed treatment standards or discharge limits that AMI must meet.

Ms. Jones testified that her seal on the Application does not cover BQE’s work because that is engineering. And although she is not a water treatment expert, Ms. Jones is however familiar with the BADCT requirements and she reviewed BQE’s portion of the Application (Attachment A) with the idea that they were going the meet the discharge standards. She also testified that people at AMI were also reviewing the work.

PARA’s witness Dr. Sobolewski raised concerns related to the expected influent chemistry and the first treatment train.

Regarding the influent chemistry, Dr. Sobolewski’s opinion was to the effect that there was a “striking” lack of variability in the samples used to design the treatment. He found this lack of variability to be a red flag that these samples were not properly representative of conditions that might be encountered and he opined that it was likely that samples were not taken at various depths and in various seasons.

Dr. Sobolewski testified that poor influent characterization increases the risk that the plant will not be able to achieve the discharge limitations. He acknowledged however that he did not have data showing that AMI’s sampling data was erroneous and that some of his concerns were based on speculation.

Dr. Sobolewski did not agree that BQE’s metals removal process was standard. His concern with the metals removal process was to the effect that two of the chemicals being added worked in opposition to one another, with one being an oxidizer and one a reducing agent.

Metals-removal plants typically recycle their sludge through the treatment train resulting in a greater precipitation of those metals (and cleaner water). BQE’s design calls for recycling its sludge, and Dr. Sobolewski’s concern was that with both oxidation and reduction sludge or residue in the tank, these will cancel each other, meaning that the improved result typical of recycling will not occur.

Dr. Sobolewski’s opinion was that the required sampling and testing is too infrequent and so if an upset occurs or if the discharge is out of range, the plant could be brought back into compliance before the next sample is taken. The evidence shows however, that AMI would be required to report any such upset, which could also trigger additional permit requirements.

Outfall 2 and the discharge to Harshaw Creek

Treated water will be conveyed through a pipe from WTP2 to Outfall 2.

The outfall structure was designed by Fluor as provided in Attachment B to AMI’s application, Ex. AMADEQ 23, beginning at Bates page 00205.

Mr. Chauhan testified that he reviewed this information and the outfall design to ensure it would reduce turbulence in the creek as it was meant to.

Outfall 2 will discharge to Harshaw Creek that is surrounded by a shallow aquifer system, which aquifer system is surrounded by bedrock that is for the most part impermeable. Harshaw Creek joins Sonoita Creek in the broad alluvial basin upstream of the Town of Patagonia.

The Harshaw Creek alluvial aquifer is recharged by surface water flows.

AMI was required to identify all wells within one-half mile of the project area. Section 2.4 of the Application “Well Inventory,” at Table 1 provides that information. Ex. AMADEQ 23 at Bates pages 00093 and 94.

There are residential homes with domestic wells located near the banks of Harshaw Creek. Several wells along the Creek have depths to water of less than ten feet, whereas others have depths from fifty to 150-feet deep. Some of these wells are used for drinking water, livestock, and irrigation. There are wells that may have penetrated the bedrock, but other wells are in the alluvium.

The Town of Patagonia has two wells that are located downstream of the confluence of Harshaw Creek and Sonoita Creek.

Pollutant Management Area

Ecological Resources Consultants, Inc. provided expertise to delineate the PMA in Harshaw Creek. Attachment E to AMI’s Application is ERC’s Technical Memorandum, Water Treatment Plant 2 – Pollution Management Area Evaluation. Ex. AMADEQ 23 beginning at Bates page 1167.

The PMA can be seen in Figure 6, which is in Ex. AMADEQ 23 at Bates page 01306.

“The pollutant management area is the limit projected in the horizontal plane of the area on which pollutants are or will be placed.... If the facility contains more than one discharging activity, the pollutant management area is described by an imaginary line circumscribing the several discharging activities.” Ariz. Rev. Stat. § 49-244.

As such, the PMA for AMI’s Permit was drawn to circumscribe the APP-regulated facilities, which as pertinent to this matter required estimating the extent of surface flow of the discharge from WTP2 in Harshaw Creek.

The PMA for the original three discharging facilities was delineated in the original Permit.

For point sources, ADEQ interprets the PMA as the extent of the surface-water flow created by the discharge.

In Harshaw creek, the majority of the flow will occur in the narrow channel that is bounded by bedrock along the banks and stream bed.

ERC estimated how far downstream the discharge from Outfall 2 would flow before all of that discharge had infiltrated into to the ground.

ERC’s estimate shows the discharge will flow on the surface for about 9.4 miles, which is near the point that flow from Harshaw Creek (and its alluvium) enters Sonoita Creek (and its alluvium).

ERC’s infiltration calculations and the resultant area predicted to be inundated were based on a continuous discharge at the maximum permitted rate of 4500 gpm from Outfall 2, and did not include any losses due to evapotranspiration (ET).

Therefore when WTP2 is operating at less than 4500 gpm or when ET is occurring, the extent of inundation is expected to be less than presented in ERC’s analysis.

ERC assumed that the discharge and stream flow would be constant and at steady state; and its analysis did not assess transient events or changes in streambed or aquifer storage over time.

ERC’s assumption of a steady state system was not appropriate in Dr. Lacher’s opinion because the system is dynamic and transient. She was also of the opinion that any analysis required consideration of the interaction between surface water and groundwater.

ERC’s failure to consider the capacity of the Harshaw Creek aquifer was a fatal flaw in Dr. Lacher’s opinion. Modeling conducted by Dr. Lacher and Dr. Prucha shows that a discharge of 4500 gpm will inundate the Harshaw Creek alluvium in a relatively short time, thereby causing continued discharges to remain as surface water that would flow downstream into the Sonoita Creek watershed.

Dr. Lacher testified to the effect that although a discharge of 4500 gpm is less water than many storms will produce, this situation differs from a natural rain event because rain events last for only a few days or a week, meaning that these natural events do not cause the aquifer to become or remain saturated.

Dr. Lacher did additional “back-of-the-envelope” calculations and concluded that it would take surface water less than three hours to flow from Outfall 2 to Patagonia once the aquifer is saturated.

Mr. Reeder’s opinion was that ERC’s work meets the statutes and rules for delineating the PMA.

Although Mr. Reeder testified that it is reasonable to assume that the discharge will recharge the aquifer, he did not envision the aquifer filling up (like a bathtub would) because there will be outflow from evapotranspiration, which can be quite significant, and outflow as the groundwater exits the Harshaw Creek aquifer into Sonoita Creek aquifer.

Mr. Reeder’s opinion was that it was not necessary for ERC to consider the change in groundwater levels because those elevations are not required to determine the extent of the surface flow.

Ms. Jones testified that her seal on AMI’s Application covers the work of ERC, and although Clear Creek was not hired to analyze ERC’s work, Ms. Jones was of the opinion that ERC’s methodology was sound, including the steady state assumption. She acknowledged that the aquifer will receive some of the discharge but she was of the opinion that ERC accounted for this adequately. She was of the opinion that discharged water that entered the Harshaw Creek aquifer will flow downgradient into the Sonoita Creek aquifer.

ERC’s Process

To estimate the distance that discharges from Outfall 2 would flow on the surface, (1) ERC calculated or estimated an infiltration rate; (2) it took measurements of stream cross-sections; (3) it used the Army Corp of Engineer’s HEC-RAS computer model to determine how much of the discharge would infiltrate into the alluvium in each 100 foot stretch of the Creek; and (4) it determined where the surface flow would drop to zero.

ERC used an infiltration rate of 0.57 inches per hour. This value was based on data obtained by measuring the outflow from seeps located in or near Harshaw Creek (volume per unit time) and then measuring how much surface area was wetted as the water infiltrated back into the ground. ERC then divided the flow rate by the area of infiltration, yielding an infiltration rate of 0.57 inches per hour.

ERC considered several sources of information before settling on this method and rate. It consulted standard references and it dug test pits and conducted percolation tests, but these were rejected as unrepresentative because they were greater than (1) the literature might suggest; (2) allowed for too much lateral seepage as compared to the expected conditions in the Creek.

ERC also compared Outfall 2’s discharge to the Harshaw Creek stream flow at various points, beginning at Outfall 002. ERC concluded that the potential discharges from WTP2 will inundate or wet a significantly smaller area than will natural flood events in Harshaw Creek. The process and results are in evidence as AMADEQ Ex. 99.

Mr. Reeder explained that ADEQ’s request was in response to public comments with the intention being to conduct a sensitivity analysis of how storms might affect the PMA because there are tributaries entering Harshaw Creek going downstream from Outfall 2.

ERC compared the WTP2 maximum discharge of 4500 gpm to the flow in Harshaw Creek during the 2-, 5-, 10-, 25-, and 100-year storm events using flows calculated from the USGS Stream Stats program.

At Outfall 002, the peak WTP2 discharge of 4500 gpm would represent 5 percent of natural flows during a two-year storm event and 0.4% during a 100-year event.

At Stream Stats Point 9, which is 9.5 miles downstream of Outfall 002 but upstream of Patagonia, 4500 gpm would be 1.57% of the natural two-year flow and 0.12% of the 100-year flow. This comparison is based on the assumption that none of the discharge would infiltrate into the aquifer and that the entire 4500 gpm would arrive at Point 9.

Point of Compliance

A point or points of compliance, at which compliance with the AWQS is to be determined, must be designated for all discharging facilities receiving aquifer protection permits.

By definition, the “point of compliance shall be a vertical plane downgradient of the facility that extends through the uppermost aquifers underlying that facility” and that is “the limit of the pollution management area.” Ariz. Rev. Stat. § 49-244. The Permit’s four POCs can be seen in Figure 6, which is in Ex. AMADEQ 23 at Bates page 01306.

The point of compliance for WTP2, POC 4, designated at or near the downgradient edge or limit of the PMA in Harshaw Creek, about 9.4 miles downgradient of Outfall 2.

POC 4 is conceptual, meaning that no actual well or other structure from which samples will be taken exists. Instead, the sampling and compliance will occur at Outfall 2.

ADEQ determined that a conceptual POC was adequate given the monitoring at Outfall 2 and WTP2’s BADCT controls. And ADEQ concluded that the monitoring framework in the permit meets the requirements of Ariz. Rev. Stat. section 49-244, Point of Compliance.

ADEQ has approved numerous other APPs that use a conceptual POC, a list of which is in evidence as Ex. AMADEQ 75. Some are recharge basins that have a direct connection to the groundwater and one is an AZPDES outfall. Many are lined ponds from which no actual discharge is expected.

Mr. Reeder testified that the concept and commonality among these other facilities is that if the AWQS are met through BADCT at the discharge point, then monitoring at that point will ensure no exceedances at the POC.

Mr. Reeder agreed that using a conceptual POC with discharge monitoring at Outfall 2 was appropriate because WTP2 is BADCT treating to the AWQS, which is cleaner than the influent. He also considered that there will be routine discharge monitoring at Outfall 2 and that any exceedance of the alert levels must be reported and will trigger accelerated monitoring.

AMI is also conducting monitoring at MW-9 in the DIA about 1 mile downstream of POC 4. That data will be reported to ADEQ. AMI also has a voluntary well monitoring program collecting samples in downstream wells under private ownership; that data is confidential to the well-owner but those owners can share the data if they chose to. ADEQ’s position is that this monitoring is not a substitute for what is required by statute or rule, but rather is additional information in support of the decision to use a conceptual POC.

Ms. Jones’s opinion was that a conceptual POC was appropriate because monitoring would occur at the discharge point and that this was conservative because it did not allow for any dilution in a mixing zone upstream of the point of compliance, which is not uncommon in permits.

If future conditions warrant, ADEQ can require AMI to install an actual POC, in the area of conceptual POC 4, with the precise location to be identified depending on the circumstances.

PARA argues that the applicable statutes do not allow for conceptual points of compliance.

Dr. Emerman and Dr. Werkhoven each provided testimony to the effect that the discharges from Outfall 2 could interact with existing mine waste and natural materials thereby causing pollution downstream of Outfall 2.

Ms. Jones agreed that it is possible to meet the AWQS at the point of discharge, but not meet these downstream if, for example, the discharged water flowed through contaminated material. Clear Creek considered this possibility but concluded that it was not likely in Harshaw Creek because the Creek is not impaired downstream of Outfall 2 and the surface water quality is good according to ADEQ’s work.

On January 4, 2022, Mr. Reeder walked sections of Harshaw Creek downstream of Outfall 2 to verify that the physical characteristics were as stated in AMI’s Application. Prior to that date, COVID issues had made it difficult to make a site visit, which is something he typically does.

Mr. Reeder was also looking for evidence of iron hydroxide staining or salt residues that would be indicative of acid mine drainage conditions that is common in the Alum Gulch area, but he saw none. He also looked at different stretches in the Lead Queen Mine tributary but saw no staining. He found this to be confirmation of ADEQ’s 2003 TMDL analysis showing that Harshaw Creek is not impaired downstream of Outfall 2.

That Mr. Reeder did not see staining is not dispositive because as Dr. Emerman testified these materials could be sorbed to soils in which case they would not be seen. Dr. Emerman added that if one did see metal oxides or sulfides, it would be reasonable to conclude that there was also a fairly substantial amount of sorbed material.

The Discharge Impact Area

The discharge impact area “means the potential areal extent of pollutant migration, as projected on the land surface, as the result of a discharge from a facility.” Ariz. Rev. Stat. § 49-201(13).

Ms. Jones described the DIA as the aerial extent that water molecules from the discharge will travel in groundwater over a particular period of time.

Ms. Jones and Clear Creek delineated the DIA using data from ERC, information on the hydrogeology and geomorphology of Harshaw Creek, and basic principles of hydrology to calculate the distance that the underground portion of Outfall 2’s discharge would travel in the next 30 years.

The DIA can be seen in Figure 6 in Ex. AMADEQ 26 at Bates page 01306.

The majority of the PMA is within the stream channel of Harshaw Creek that is bounded by bedrock. Because the stream channel and alluvium have relatively high hydraulic conductivity values compared to the hydraulic conductivity of the bedrock, pollutants in the surface discharge would likely follow the dominant hydraulic gradient and remain within the alluvial material. Consequently, Clear Creek defined this portion of the DIA as the lateral extent of the alluvium between the stream channel and the bedrock boundaries, as estimated from aerial imagery and USGS topographic maps.

Near the downstream limit of the discharge in Harshaw Creek, the flow is expected to enter a reach that is not bounded by bedrock, but rather overlies basin fill sediments. In this area, Clear Creek used a combination of an analytical (Theis) model and Darcy’s Law to estimate groundwater velocity and calculate the total distance of groundwater flow over a 30-year period.

Clear Creek’s analysis required the transmissivity, the specific yield and the porosity, which were obtained from Nasserredin’s thesis prepared in 1967 at the University of Arizona, and the aquifer thickness that it derived from well drillers’ logs.

ERC’s analysis showed that 132 gallons per minute would be exiting the confined Harshaw Creek channel where it enters Sonoita Creek. Clear Creek entered that information into AQTESOLV, an analytical model that gave an estimate of the amount of water mounding that 132 gpm would cause. Clear Creek then superimposed that mound on the ambient gradient and then performed a Darcy analysis to determine how far that water would travel in thirty years.

To the northwest Clear Creek estimated a velocity of 0.66 feet per day, which is 7227 feet in thirty years. In each the northeast and southwest directions, Clear Creek calculated a flow velocity of 0.13 feet per day, which is 1424 feet in each direction over thirty years. During the hearing, witnesses often referred to this area as the “paddle,” which can be seen on Figure 6.

Ms. Jones testified that thirty years is a time that ADEQ and Clear Creek have used in other matters. This was also the time period used to delineate the DIA in the prior permit. If a time shorter that thirty years was used, the DIA would be smaller, and a longer time would result in a larger DIA.

In this case, Ms. Jones was of the opinion that thirty years was a conservative value because it is expected that the discharges from Outfall 2 will not last for thirty years, considering that the project is in an exploration phase.

Mr. Reeder evaluated the DIA, prepared by Clear Creek Associates to verify that it was based on site-specific data.

Mr. Reeder found that Clear Creek’s use of the Nasserredin study was appropriate because it did provide site-specific data from a multiple-well pumping test, which tests give much more representative hydraulic parameters. In addition, Mr. Reeder has found AQTESOLV to be a very reliable tool.

Mr. Reeder also found that Clear Creek’s use of a thirty year time frame was very conservative because AMI anticipates pumping rates (and therefore discharge rates) will go down over time, this pumping may only last for four to five years, and because it included no attenuation mechanisms for pollutants (e.g., dispersion and absorption).

At ADEQ’s request, Clear Creek conducted a sensitivity analysis of what effect high natural flows or flooding in Harshaw Creek might have on the size of the “paddle.” Mr. Reeder explained that this was to see how storms might affect the groundwater mounding that the discharge will cause at the edge of the PMA.

Ex. AMADEQ 40 provides a description and the results of Clear Creek’s analysis.

Clear Creek estimated how much higher the groundwater mound at the edge of the PMA might be in seven scenarios, including in the cases of the 2-, 5-, 10-, 25, and 100-year flood return periods. In conducting these analyses, Clear Creek assumed that the mounding resulting from these flood flows would last the entire thirty years, which is a very conservative approach, because these mounds would be actually be expected to last only a matter of weeks or months.

Clear Creek’s additional analysis was a sensitivity analysis only, and as such, although Ex. 40 includes Figure 1 that shows “paddles” based on each of the seven scenarios, these are not to be construed as predictions of any actual DIA, but rather are intended only to show graphically the relative effects of the flood flows from each scenario.

The Tailings Storage Facility

NewFields was AMI’s engineering consultant for the TSF and the UCP; NewFields’ team included Craig Thompson, PE (Arizona and Colorado), and R. Michael Smith, PE (Colorado, Nevada, Alaska). NewFields’ design report is Attachment C to the Application, Ex. AMADEQ 23 beginning at Bates page 00221. Mr. Thompson sealed that document.

The TSF and UCP use prescriptive BADCT as set out in the Arizona Mining BADCT Manual. The UCP’s design incorporates enhanced discharge control measures beyond that which are in the Manual.

Under the existing permit, AMI was authorized to store the historic tailings piles, development rock from the Exploration Decline, filter cake from WTP1, core cuttings, and construction PAG, with the stacking height limited to 5110 feet above mean sea level. Currently the TSF holds 1,230,500 cubic yards, with about 506,000 CY of the original permitted storage-capacity remaining.

The amended Permit changes stacking geometry; and (1) authorizes AMI to increase by sixty-five feet to 5175 feet amsl the height to which the material may be stacked; (2) increases by 1.4 million cubic yard the volume of material allowed to be stored, which brings the permitted total volume to 2,630,500 cubic yards; and (3) allows storage of material from new sources including solids from WTP2, drill cuttings, core cutting, and sediment from storm water control features.

The amended Permit does not however allow AMI to alter the footprint of the TSF and no changes to the membrane liner were required.

NewFields provided a geotechnical evaluation, including an evaluation of stability of the proposed modifications to the TSF, concluding that the TSF would remain stable under both static and pseudostatic conditions

Mr. Chauhan concluded that the relevant sections exceeded the minimum factor of safety required by the BADCT Manual and would be safe.

ERC conducted an updated water balance addressing contact water and non-contact water using a 100-year/24-hour storm as called for in prescriptive BADCT. Mr. Chauhan’s Engineering Memo, Ex. AMADEQ 68, shows that that balance indicated that the UCP, the TSF and the external detention ponds had sufficient volume to accommodate the permitted changes to the TSF.

The storm water structures were conducted as part of AMI’s participation in the VRP with the original permit

Dr. Emerman raised a number of what he saw as potential safety issues and criticisms of the data used to determine that the TSF met prescriptive BADCT. For example, it was his opinion that the TSF is too close to the mine working and that the 10,000 year storm should have been used in sizing the storm water controls.

CONCLUSIONS OF LAW

Unless otherwise provided by law, the burden of proof at an administrative hearing falls to the party asserting a claim, right or entitlement, and the standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119.

A preponderance of the evidence is:

The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

Black’s Law Dictionary 1373 (10th ed. 2014

The scope of the hearing is limited to issues that have been properly noticed. Ariz. Rev. Stat. § 41-1092.07(F)(6).

The issues on appeal are limited to those issues raised in the parties’ comments. Ariz. Rev. Stat. § 41-1092.03(B)

PARA did not include in its comments an allegation that the Permit violated the contingency plan requirements. Its arguments to that effect are therefore beyond the scope of the issues for hearing.

PARA also did not include in its comments reference to AMI’s voluntary well monitoring program or reference to AMI’s MW-9. Consequently, PARA’s arguments that these programs cannot substitute for the legally required compliance monitoring are beyond the scope of issues for the hearing. Moreover, ADEQ has not accepted these programs in lieu of AMI meeting the applicable statutes and rules.

“Statutes shall be liberally construed to effect their objects and to promote justice.” A.R.S. §1-211(B).

The primary goal when construing statutes is to fulfill the legislature’s intent, with the entire statutory scheme being given effect. Backus v. State of Arizona, 220 Ariz. 101, 104, 203 P.3d 499, 502 (2009) (citations omitted).

Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 396, 249 P.3d 1095, 1096 (2011)(citation omitted). Statutes and rules are construed using the same principles. Id.

“An ‘arbitrary’ action is one taken ‘capriciously or at pleasure,’ or an action taken ‘without adequate determining principle.’” Maricopa County Sheriff's Office v. Maricopa County Employee Merit System Commission, 211 Ariz. 219, 222, 119 P.3d 1022, 1025 (2005)(citation omitted).

“Decisions by [ADEQ’s D]irector shall be affirmed by the [Water Quality Appeals Board] unless, considering the entire record before the [B]oard, it concludes that the [D]irector's decision is arbitrary, unreasonable, unlawful or based upon a technical judgment that is clearly invalid.” Ariz. Rev. Stat. § 49-324(C).

“An agency shall not base a licensing decision in whole or in part on a licensing requirement or condition that is not specifically authorized by statute [or] rule....” Ariz. Rev. Stat. § 41-1030(B).

Unless otherwise provided by Ariz. Rev. Stat. Title 49, Chapter 2, Article 1, any person who discharges or who owns or operates a facility that discharges shall obtain an aquifer protection permit from ADEQ’s Director. Ariz. Rev. Stat. § 49-241(A).

Ariz. Rev. Stat. section 49-201 provides in part:

***

12. "Discharge" means the direct or indirect addition of any pollutant to the waters of the state from a facility. For purposes of the aquifer protection permit program prescribed by article 3 of this chapter, discharge means the addition of a pollutant from a facility either directly to an aquifer or to the land surface or the vadose zone in such a manner that there is a reasonable probability that the pollutant will reach an aquifer.

13. "Discharge impact area" means the potential areal extent of pollutant migration, as projected on the land surface, as the result of a discharge from a facility.

14. "Discharge limitation" means any restriction, prohibition, limitation or criteria established by the director, through a rule, permit or order, on quantities, rates, concentrations, combinations, toxicity and characteristics of pollutants.

***

19. "Facility" means any land, building, installation, structure, equipment, device, conveyance, area, source, activity or practice from which there is, or with reasonable probability may be, a discharge.

ADEQ has authority to issue a single area-wide permit applicable to facilities under common ownership and located in a contiguous geographic area in lieu of an individual permit for each facility. Ariz. Rev. Stat. § 49-244(P).

Ariz. Rev. Stat. section 49-244 provides in part:

The director shall designate a point or points of compliance for each facility receiving a permit under this article. For the purposes of this chapter, the point of compliance is the point at which compliance must be determined for ... the aquifer water quality standards .... The point of compliance shall be a vertical plane downgradient of the facility that extends through the uppermost aquifers underlying that facility.... [F]or a pollutant that is a hazardous substance the point of compliance is the limit of the pollutant management area. The pollutant management area includes horizontal space taken up by any liner, dike or other barrier designed to contain pollutants in the facility. If the facility contains more than one discharging activity, the pollutant management area is described by an imaginary line circumscribing the several discharging activities.

“BADCT” means the best available demonstrated control technology, process, operating method, or other alternative to achieve the greatest degree of discharge reduction determined for a facility by the Director under Ariz. Rev. Stat. section 49-243. Ariz. Admin. Code § R18-9-101(7).

As applicable to this matter, ADEQ’s Director shall issue an aquifer protection permit to a person who demonstrates that: (1) the facility will be designed, constructed, and operated to ensure the greatest degree of discharge reduction achievable through the application of BADCT; and that (2) the pollutants discharged will not cause or contribute to a violation of AWQS at the applicable POC. Ariz. Rev. Stat. § 49-243(B).

The preponderance of the evidence shows that AMI’s Application met both conditions.

The preponderance of the evidence shows that WTP2 meets the BADCT requirements for Outfall 2. Dr. Kratochvil provided credible testimony showing that WTP2 has been designed to produce effluent meeting are required standards. WTP2 includes a programmable logic controller, KPIs are being monitored, and the operators will be certified. Mr. Chauhan, Mr. Reeder, and Ms. Jones all provided testimony to the effect that WTP2 meets the BADCT standard.

In evidence to the contrary was the testimony of Dr. Sobolewski, who testified as to his concerns that the sampling data BQE used was not properly representative and to the effect that treatment train 1(for metals and TSS) was deficient because it included both oxidation and reduction.

Regarding the influent samples, Dr. Sobolewski acknowledged that some of his testimony was speculative and that could not show that the sampling data BQE used was erroneous. Regarding the treatment train, in light of Dr. Kratochvil’s, Mr. Chauhan’s, Mr. Reeder’s, and Ms. Jones’s testimony, Dr. Sobolewski’s concerns are not sufficient to show that ADEQ’s determination that WTP2 meets the BADCT requirement was based on a technical judgment that was clearly invalid.

Through Mr. Chauhan’s, Mr. Reeder’s, and Ms. Jones’s testimony, AMI and ADEQ have shown that by meeting the AWQS at Outfall 2, the discharge will not cause a violation at POC 4. Although it is possible that water meeting the discharge standards could encounter mineralized rock or legacy mining wastes, thereby transmitting pollutant’s downstream, AMI’s and ADEQ’s witnesses provided credible evidence that this was unlikely because the downstream reach of Harshaw Creek is not impaired and there was no visual evidence of existing mineralized rock in the Creek channel. In addition, there are substantial inflows to Harshaw Creek downstream of Outfall 2 and upstream of POC 4 that could mix with, and dilute, the discharge.

The preponderance of the evidence shows that the discharge from Outfall 2 will not cause or contribute to a violation of AWQS at the applicable POC (POC 4).

It has not been proven by a preponderance of the evidence that ADEQ’s conclusion that the discharge from Outfall 2 will not cause or contribute to a violation of AWQS at the POC 4 was based on a technical judgment that was clearly invalid.

Dr. Werkhoven’s Issue

Dr. Werkhoven has not proven that the Permit fails to protect the human health and environment downstream of Harshaw Creek.

Dr. Werkhoven presented evidence that goes beyond what the APP program regulates (e.g. the bio-accumulation of metals in soils and vegetation), which information cannot be a basis to overturn ADEQ’s decision to issue the Permit.

With respect to the possibility that the discharges will encounter mineralize rock and legacy mine wastes causing pollution downstream of Outfall 2, AMI’s and ADEQ’s witnesses provided credible evidence that this was unlikely because the downstream reach of Harshaw Creek is not impaired and there was no visual evidence of existing mineralized rock in the Creek channel.

PARA Issues 1 and A

PARA asserts that ADEQ’s decision to process the Application as an amendment was arbitrary, unreasonable, unlawful or based upon a technical judgment that is clearly invalid.

The new discharging facility, Outfall 2, and the three existing discharging facilities are under AMI’s ownership and are located in one contiguous geographic area. Consequently, it was appropriate for ADE Q to issue an area-wide permit and there was no substantial evidence adduced showing that an amending the existing permit was not appropriate.

PARA has not shown that processing the Application as an amendment was was arbitrary, unreasonable, unlawful or based upon a technical judgment that is clearly invalid.

PARA Issue 2

PARA argues that ADEQ’s evaluation of the Application was arbitrary, unreasonable, unlawful or based upon a technical judgment that is clearly invalid because it did not include an assessment of the full range of hydrologic impacts for the life of the mine.

PARA acknowledges that ADEQ had authority to rely on an abbreviated hydrologic study if its decision to do so was based on the quantity and characteristics of the pollutants discharged, the methods of disposal, and the site conditions.

PARA assets that ADEQ failed to meet this requirement based on Dr. Lacher’s testimony and opinions that ERC’s delineation of the PMA was fatally flawed because that delineation was based on steady-state conditions and did not account for the interaction between groundwater and surface water. Dr. Lacher concluded that a proper analysis shows that the Harshaw Creek aquifer will become fully saturated in short order, resulting in AMI’s discharges going downstream as surface water.

But Mr. Reeder and Ms. Jones were each of the opinion that ERC’s procedure was appropriate, and ERC’s procedure was reviewed by others at Clear Creek and at AMI. PARA has not demonstrated that ADEQ’s acceptance ERC’s procedure was based on a technical judgment that was clearly technically invalid.

PARA has not proven that ADEQ’s evaluation of the Application was arbitrary, unreasonable, unlawful or based upon a technical judgment that is clearly invalid because it did not include an assessment of the full range of hydrologic impacts for the life of the mine.

PARA Issue 3

PARA has not shown by a preponderance of the evidence that the Harshaw Creek alluvium or the Sonoita Creek alluvium will be degraded by AMI’s proposed discharges. To the contrary, credible evidence shows that by meeting the AWQS as required by the Permit and the SWQS as required by AMI’s AZPDES permit, no degradation of the aquifers will occur.

PARA Issue 4

PARA asserts that additional points of compliance and additional monitoring are required to protect the health of downstream well owners.

The preponderance of the evidence shows the Permit’s discharge limitations and quarterly monitoring at Outfall 2, when coupled with BADCT at WTP2, are sufficient to protect the health of downstream well owners.

PARA has not shown by a preponderance of the evidence that additional points of compliance and additional monitoring are required to protect the health of downstream well owners.

PARA Issue 5

Because ADEQ has not adopted as part of the APP program the secondary drinking water standards, PARA has not shown that it was unlawful for ADEQ to not set discharge limitations based on these standards. PARA has not shown that it was arbitrary, unreasonable or a clearly invalid technical judgment not to include these secondary standards as Permit conditions.

PARA Issue 6

PARA has not proven by a preponderance of the evidence that the discharge and monitoring requirements are arbitrary, unreasonable, unlawful or based upon a technical judgment that is clearly invalid based on its assertion that these are not consistent with the standards in Ariz. Admin. Code section R18-11-406 and the EPA’s Safe Drinking Water standards.

PARA Issue B

PARA asserts that under a plain reading of section 49-244, it was unlawful for ADEQ designate a conceptual POC without also designating an actual POC and that it will not be possible to determine whether AMI is in compliance without a monitoring well at the POC.

ADEQ has issued over 200 APPs with conceptual POCs, but as PARA notes, the evidence does not show whether these permits also included POCs with monitoring wells. PARA also argues that the fact that ADEQ has used conceptual POCs in other matters does not alter the requirements of the statute.

ADEQ’s position is that compliance with section 49-244 does not require that there be a monitoring well for sampling and testing at the POC provided that compliance with the AWQS is being met at a more stringent location.

Although section 49-244 requires compliance at the POC, which is required to be at the limit of the PMA, that statute does not dictate how compliance must be measured. Nor does it explicitly require that a monitoring well be installed at the POC.

The preponderance of the evidence shows that requiring AMI to comply with the AWQS at the point of discharge will ensure compliance at the conceptual POC to a reasonable degree of certainty. And, because the natural inflows to Harshaw Creek downstream of Outfall 2 can have a diluting effect on any pollutants in the discharge, monitoring at Outfall 2 can be seen as more stringent than monitoring at the POC.

Considering the entire statutory scheme, ADEQ’s interpretation of 49-244 is reasonable under these circumstances. See Backus v. State of Arizona; Arizona Water Co. v. Arizona Department of Water Resources, 208 Ariz. 147, 91 P.3d 990, 997 (2004) (it is appropriate to give deference to an agency in its area of expertise).

PARA has not shown that it was unlawful for ADEQ to use a conceptual POC at which no monitor well is currently required to be installed.

PARA Issue C

PARA asserts that the PMA does not comply with Ariz. Rev. Stat. section 49-244 because the PMA extends 9.4 miles downstream, and perhaps in the alternative that the PMA does not circumscribe all discharging activities at the site.

As pertinent to this matter, the PMA has three components: (1) the area in a horizontal plane on which pollutants are or will be placed; (2) the horizontal space taken up by any liner, dike or other barrier designed to contain pollutants in the facility; and (3) because this is an area-wide permit, the area created by an imaginary line circumscribing the discharging activities.

As defined in the Permit, the PMA meets all three requirements.

The PMA circumscribes the discharging activities or facilities, which includes any liners at the property, meeting the second and third requirements.

Because the discharge from Outfall 2 will move down Harshaw Creek as surface flow, pollutants will be “placed” on the Creek’s surface until the entire flow has infiltrated into the ground. As such, it was appropriate for ADEQ to require AMI to determine where that surface flow would be fully infiltrated. ERC made that calculation using the process set out in the Findings of Fact, resulting in a distance of 9.4 miles.

Dr. Lacher’s opinion was that ERC’s work was fatally flawed because it did not account for the capacity of the Harshaw Creed aquifer, which in her opinion will become saturated in a relatively short time. But Mr. Reeder and Ms. Jones were each of the opinion that ERC’s procedure was appropriate.

PARA has not demonstrated that ADEQ’s acceptance that the PMA would extend 9.4 miles down Harshaw Creek was based on a technical judgment that was clearly invalid.

The Permit’s PMA complies with all three components of Ariz. Rev. Stat. section 49-244, and PARA has not proven otherwise.

Conclusion

Because neither Appellant has proven that ADEQ’s decision to grant the Permit was arbitrary, unreasonable, unlawful or based upon a technical judgment that is clearly invalid, and because AMI has shown that it meets the requirements of Ariz. Rev. Stat. section 49-243(B), the Board should affirm ADEQ’s Decision to Grant [to Intervenor Arizona Minerals Inc.] an Aquifer Protection Permit (APP) Significant Amendment Hermosa Project – Trench Camp Property; Inventory Number: 512235 LTF ID: 83040.

ORDER

IT IS ORDERED that ADEQ’s Decision to Grant [to Intervenor Arizona Minerals Inc.] an Aquifer Protection Permit (APP) Significant Amendment Hermosa Project – Trench Camp Property; Inventory Number: 512235 LTF ID: 83040 is affirmed.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order is the date of that certification.

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-137160-45720000Done this day, June 21, 2022.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Connie Castillo, Clerk

Water Quality Appeals Board

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-137160-45720000By Miranda Alvarez

Legal Secretary