STATE OF CALIFORNIA Budget Change Proposal - Cover Sheet DF-46(REV 08/16)

Fiscal Year Business Unit Department Priority No. 2017-18 3790 Parks and Recreation 4

Budget Request Name Program Subprogram 3790-091-BCP-2017-GB 2840

Budget Request Description Hazardous Mine Remediation

Budget Request Summary The Department of Parks and Recreation requests $14,522,000 in Fiscal Year 2017-18 and $2,079,000 in ongoing funding from the General Fund for permit monitoring, sampling, study, evaluation, alternative analysis, implementation, and maintenance of remedial actions to abate contamination of water resulting from historic mining activities at three state parks. All three parks are currently under orders issued by the Central Valley Regional Water Quality Control Board to protect human health and the environment. The Department does not have available resources to be compliant with the multiple orders. This request consists of: $2,079,000 for the ongoing sampling and monitoring, maintenance of prior cleanup actions undertaken by the State, and may include limited cleanup activities required at Empire Mine State Historic Park; a one-time appropriation of $8,201,000 available for two years to implement the remediation plan being developed at Malakoff Diggins State Historic Park; and a one-time appropriation of $4,242,000 available for two years to remediate mine tailings deposited on Mount Diablo State Park, which is a small portion of the entire mercury mine remediation being performed on adjacent private lands.

Requires Legislation

• Yes IE! No

Code Section(s) to be Added/Amended/Repealed

Does this BCP contain information technology (IT) components? Q Yes |EI No

If yes, departmental Chief Information Officer must sign.

Department CIO Date

For IT requests, specify the project number, the most recent project approval document (FSR, SPR, S1BA, S2AA, S3SD, S4PRA), and the approval date.

Project No. Project Approval Document: Approval Date:

If proposal affects another department, does other department concur with proposal? • Yes • No Attach comments of affected department, signed and dated by the department director or designee.

Prepared By Date Reviewed By Date Dan Millsap 01/09/17

Department Director Date Agency Secretary Date

Department of Finance Use Only

Additional Review: • Capital Outlay • ITCU • FSCU • OSAE • CALSTARS • Dept. of Technology

BCP Type: • Policy ' • Workload Budget per Government Code 13308.05

Original Signed By Stephen Benson PPBA Date submitted to the LegislatureJAN 1 0 2017

Analysis of Problem

A. Budget Request Summary

The Department of Parks and Recreation (Department) requests $14,522,000 in Fiscal Year (FY) 2017-18 and $2,079,000 in ongoing funding from the General Fund for permit monitoring, sampling, study, evaluation, alternative analysis, implementation, and maintenance of remedial actions to abate contamination of water resulting from historic mining activities at three state parks. All three parks are currently under orders issued by the Central Valley Regional Water Quality Control Board (Regional Board) to protect human health and the environment. The Department does not have available resources to be compliant with the multiple orders.

This request consists of: $2,079,000 for the ongoing sampling and monitoring, maintenance of prior cleanup actions undertaken by the State, and may include limited cleanup activities required at Empire Mine State Historic Park (SHP); a one-time appropriation of $8,201,000 available for two years to implement the remediation plan being developed at Malakoff Diggins State Historic Park; and a one­time appropriation of $4,242,000 available for two years to remediate mine tailings deposited on Mount Diablo State Park, which is a small portion on the entire mercury mine remediation being performed on adjacent private lands.

B. Background/History

These state parks bring their own respective uniqueness to the State Parks System. Mount Diablo SP located in Contra Costa County in Northern California at the eastern fringe of the San Francisco Bay Region, is a unique 19,600 + acre "Island Mountain" girdled by suburban development. Rising 3,849 feet above the neighboring lowlands. Mount Diablo SP offers 360 degree views that, on clear days, can take in 35 counties and 200 miles. In 1851, the mountaintop was selected as the starting point for a survey of the public domain and is used to this day in official land surveys. This proposal is a one-time request to remove the contaminated materials from the park to an appropriate disposal facility. It will include bringing a consultant on board to assist with the implementation.

Malakoff Diggins SHP is a Historic Park Unit and is subject to Public Resources Code (PRC) 5024. PRC 5024 requires state agencies to take a number of actions to ensure preservation of state-owned historical resources under their jurisdiction. Malakoff Diggins SHP is also listed on the National Register of Historic Places and subject to Secretary of the Interior's Standards for historic preservation. The North Bloomfield Historic District at Malakoff Diggins SHP is a National Historic Landmark and, by direct association, the Diggins pit itself could be considered a significant contributing historic feature. Proposed remedial solutions may impact protected cultural resources and risk delisting. In light of this, the Department has completed a park-wide cultural resources inventory which is the first step in obtaining a better understanding of the vast resources at the park and provides a baseline to assist in determining impacts. Tasks in this proposal will build from the previous appropriation and initiate consultation with permitting agencies, control agencies, continuing the water monitoring and sampling and implement approved remedial alternatives.

Located in Grass Valley, Empire Mine SHP is the site of one of the oldest, largest, deepest, longest, and richest gold mines in California. In operation for more than 100 years, the mine produced 5,600,000 ounces of gold before it closed in 1956. The park consists of 856 acres, including forested backcountry and 14 miles of trails. Additionally, the park contains many of the mine's original buildings, the mine owner's home with restored gardens, and the main shaft entrance to 367 miles of abandoned and flooded mine shafts. Attendance at the park exceeds 110,000 visitors each year. Recreational opportunities at the park include picnicking, hiking, biking, horseback riding, and guided tours. The requested funds for Empire Mine SHP is the Department's estimate of what will be needed each year to fund continued evaluation, analysis, design, and maintenance of remedial action projects required. This proposal excludes the construction costs of future remediation projects because the timing and cost of these projects cannot be meaningfully anticipated at this time.

As a result of historic mining activities and operations, there are environmental hazards which are violating the Clean Water Act at these parks. The Regional Board has issued Waste Discharge Requirements to Malakoff Diggins SHP and Empire Mine SHP; and also issued a Cleanup and

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Analysis of Problem

Abatement Order for Mount Diablo SP and Empire Mine SHP. Funding this proposal will assist the Department to move towards being compliant with these orders.

C. State Level Considerations

This proposal meets the Department's Core Program Elements of Public Safety and Recreation and Cultural and Natural Resource Protection by providing for public health and safety and addressing resource impacts.

Resource History (Dollars in thousands)

Program Budget P Y - 4 P Y - 2 P Y - 2 PY -1 PY Authorized Expenditures Empire Mine 4,594 5,189 4,950 2,067* 220

Actual Expenditures Empire Mine 4,567 5,198 846 695 TBD

*$1,847 of this amount is available for two years

Jte D. Justification

Mount Diablo SP has the potential for acid mine drainage to flow from the contaminated mine tailings into a water storage impoundment which could impact Dunn Creek, contaminating waters of the State with elevated concentrations of mercury and other heavy metals. This park is currently under a Clean­up and Abatement Order, Order No. R5-2014-0124, issued by the Regional Board. One of the requirements in this order is to remediate the site in such a way to prevent future releases to surface and ground waters of mercury and other pollutants in compliance with the California Code of Regulations, Title 27, Sections 22470 through 22510. Implementation of these measures would satisfy conditions of the order by implementing an approved removal action by removing the contaminated materials and disposing at an appropriate disposal facility.

Ongoing erosion from Diggins pit causes turbid surface water runoff containing particulate-bound metals, including mercury, to discharge to Humbug Creek, a tributary to the South Fork Yuba River. Humbug Creek is listed, pursuant to the Federal Clean Water Act, as impaired for sedimentation/siltation, mercury, copper, and zinc. Mine-related discharges from the pit are currently regulated by the Regional Board Order 76-258 adopted in 1976. Implementation of this proposal will continue to move the Department towards compliance, which will reduce the potential for the Regional Board to enforce noncompliance by the assessment of fines as well as limit the potential for third party lawsuits, such as what was previously filed at Empire Mine SHP.

Empire Mine SHP's ongoing request is mandated by current orders:

• Consent Decree for the lawsuit, Waterkeepers Northern California v. California Department of Parks and Recreation, Civil Case No. CIV. S-04-2647 KJM.

• Clean up and Abatement Order by the State of California Environmental Protection Agency Department of Toxic Substances Control (DTSC) & Central Valley Regional Water Quality Control Board, Cleanup and Abatement Order, Imminent and/or Substantial Endangerment Determination and Partial Consent Order, DTSC Docket No. HAS-CO 11/12-008 and Regional Board Order No. R5-2011-0705.

• Order issued by the Regional Board under California Water Code Section 13267 (Order to Submit Technical Reports and Industrial Storm Water General Permit Order 2014-0057-DWO) (Industrial General Permit).

• Order issued by the Regional Board under California Water Code Section 13050, National Pollutant Discharge Elimination System Permit Waste Discharge Requirements Order Number R5-2012-0050.

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Analysis of Problem

• Settlement Agreement and Mutual Release entered into by the Department and Newmont USA Limited effective December 15, 2014.

The settlement agreement resolved past costs associated with the project, $14,920,000 which was deposited into the General Fund, of which $1,120,000 was specifically established for the operation and maintenance of the treatment system for the Magenta Drain discharge. Additionally, the settlement agreement outlined roles and responsibilities between parties moving fonvard with each project as each party is solely responsible for all associated costs to remediate and then maintain their respective operable unit moving forward.

The Department estimates approximately $2,079,000 will be needed each year to fund ongoing sampling and monitoring, as well as the maintenance of prior cleanup actions undertaken by the State, and may include limited cleanup activities required at Empire Mine SHP. This proposal excludes the construction costs of future remediation projects because the timing and cost of these projects cannot be meaningfully anticipated at this time. Therefore, this plan assumes that one-time funding would need to be requested on a case-by-case basis in the future as these projects are developed. Implementation of these measures is critical to the protection of public health and safety, the environment, waters of the State, and for the protection of diverse natural and cultural resources on both State Park land and adjacent properties. These measures will take steps to position the Department to be able to be compliant with the many respective orders.

E. Outcomes and Accountability

Funding these measures for Mount Diablo SP will result with the selection of a consultant and the oversight of the removal actions for the contaminated material at the park. This will satisfy the conditions in the Order R5-2014-0124 for the park ensuring the Department is compliant.

Measures for Malakoff Diggins SHP will continue the next steps towards being compliant with the order 76-258 and implement the remediation plan currently being developed to mitigate and control sediment transport. Interim measures established by the Regional Board will be met preventing the potential to be assessed penalties and third party lawsuits.

Continuing the ongoing sampling and monitoring, as well as the maintenance of prior cleanup actions undertaken by the State, which may include limited cleanup activities required at Empire Mine SHP, will satisfy the multiple orders at the park, as well as move forward with the remaining evaluation and alternatives analysis for contaminated areas at the park.

Management of the multiple contracts and general oversight will be carried out by the Department's Acquisition and Development Division along with coordination and support from the Department's Operations.

Projected Outcomes

Workload Measure CY BY BY+1 BY+2 BY+3 BY+4

Mt. Diablo - Removal Action $4,242,000

Malakoff - Study, Evaluation and Testing

$1,221,000 $8,201,000

Empire Mine - Ongoing Cleanup Prior BCP amount $220

$2,079,000

$220

$2,079,000

$220

$2,079,000

$220

$2,079,000

$220

$2,079,000

$220

F. Analysis of All Feasible Alternatives

Alternative 1: Approve this proposal as described. This alternative will provide $14,522,000 in FY 2017-18 and $2,079,000 in ongoing funding from the General Fund for the necessary steps to move towards compliance, and maintain current compliance, with the various orders to provide for public health and safety, and protect the Park's adjacent natural and cultural resources. Two year funding availability is requested for $12,443,000.

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Analysis of Problem

Alternative 2: Do not fund the implementation of remedial actions. The Department will be in violation of the orders if the necessary steps to be compliant are not taken. Failure to comply with the orders would result in an assessment of penalties and/or imposition of sanctions by the court.

Alternative 3: Fund this request at a lower level. This would result with the department prioritizing based on funding. It would increase the duration until the Department would be compliant with the orders resulting from continued exposure to third party lawsuits and will likely result in increased total costs with the work stretched out over a longer duration.

Alternative 4: Fund the estimated ongoing annual cost for Empire Mine SHP, the implementation remedial plan being developed for Malakoff SHP, and the remediation and disposal of contaminates at Mount Diablo SP, but at a lower level. This would increase the duration until the Department would be compliant at Mount Diablo SP, but would continue the ongoing efforts at Empire Mine SHP and Malakoff Diggins SHP.

G. Implementation Plan

Due to potential impacts to public health and safety, waters of the State, and natural and cultural resources, and the multiple orders it is crucial that this proposal be effective July 1, 2017, to continue to remain compliant with orders and to continue to move towards compliance with other orders for the Department.

H. Supplemental Information

Attachment 1 - Proposed 2017/2018 Budget Attachment 2 - Provisional Language

I. Recommendation

Alternative 1: Approve this proposal as described. This alternative will provide $14,522,000 in FY 2017-18 and $2,079,000 in ongoing funding from the General Fund for the necessary steps to move towards compliance, and maintain current compliance, with the various orders to provide for public health and safety, and protect the Park's adjacent natural and cultural resources. Two year funding availability is requested for $12,443,000.

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Attachment 2

Provisional Language

Due to the need for two-year funding availability, the Department is requesting the following provisional language for these funds:

3790-003-0001 - For support of the Department of Parks and Recreation $12,443,000

1. The funds appropriated in this item shall be available for encumbrance or expenditure until June 30, 2019.

BCP Title: Hazardous Mine Remediation

Budget Request Summary

Operating Expenses and Equipment 5340 - Consuiting and Professionai Services -

Externai 5340 - Consulting and Professional Services -

interdepartmental Total Operating Expenses and Equipment

Total Budget Request

Fund Summary Fund Source - State Operations

0001 - General Fund Total State Operations Expenditures

Total All Funds

Program Summary Program Funding

2840 - Support of tfie Department of Parks and Total All Programs

BCP Fiscal Detail Sheet BR Name: 3790-004-BCP-2017-GB

FY17 CY BY BY+1 BY+2 BY+3 BY+4

0 12,090 1,200 1,200 1,200 1,200

0 2,432 879 879 879 879

$0 $14,522 $2,079 $2,079 $2,079 $2,079

$0 $14,522 $2,079 $2,079 $2,079 $2,079

_0 14,522 2,079 2,079 2,079 2,079 $0 $14,522 $2,079 $2,079 $2,079 $2,079

$0 $14,522 $2,079 $2,079 $2,079 $2,079

_0 14,522 2,079 2,079 2,079 2,079 $0 $14,522 $2,079 $2,079 $2,079 $2,079