February 18, 2005

Robert J. Boyle
Vice President of Hanson Industries, Inc.
Spirit Lake East Water Company
15807 E. Indiana Avenue
Spokane, WA 99216-1864

RE: Spirit Lake East Water System Improvements

Dear Mr. Boyle:

This office received a letter from your attorney, John Hammond, Jr. with the Batt & Fisher Law Offices, dated February 10, 2005 discussing an alternative proposal for making improvements to the Spirit Lake East water system. As you know, following a depressurization episode last year, DEQ had directed the Spirit Lake East Water Company (SLE), as owner of this public drinking water system, to secure a second source of water by drilling a second ground water well.

We have reviewed the letter enclosed with your attorney's letter and which an engineering report dated January 6, 2005 from Steven Cordes, P.E. of Welch Comer and Associates. DEQ agrees with the recommendations in this report and would like to propose the following actions taken by SLE for bringing this system into compliance with the Idaho Rules for Public Drinking Water Systems as follows:

1. Storage Tank Repair & Dialer Installation: Before March 30th, the engineer submits for DEQ approval a written proposal for repairing the leak in the existing 192,000 gallon capacity reservoir and installing a dialer system that alerts the operator by telephone lines that there are system malfunctions. The repair needs to be done using NSF Standard 61 listed products and in compliance with the manufacturers recommendations. We would expect SLE to agree to have the tank repair and dialer installation completed before May 15, 2005.

In addition, DEQ has observed during recent sanitary surveys that the condition of the reservoir cover has deteriorated. There is a need to make improvements to the roofing surface in order to prevent leakage through the seams in the Span-deck precast concrete roofing panels into the tank. This can result in contamination of the drinking water. DEQ recommends that the existing asphaltic sealant material be removed and the design engineer develop a plan to place a sloping monolithic concrete slab on top of the existing roof panels. Mr. Cordes has indicated he agrees with this assessment. This roof rehabilitation action needs to be submitted for DEQ approval along with the wall leak repair proposal.

2. Standby Power and Spare Well Pump: It is reasonable to stock a replacement well pump and to install standby power capable of operating both the well pump and the booster pumps needed to maintain full service during power outages. Before March 30th, the system engineer needs to submit to DEQ evidence that requests for proposals have been issued to suppliers for a duplicate well pump and for a standby power unit capable of operating both the well pump and booster pumps at one time. DEQ would expect SLE to agree to have the spare well pump on hand and the standby power generating system in place and operational before May 15, 2005.

The letter from your attorney indicated that SLE is willing to immediately proceed with fixing the water tank, purchasing and installing a 250 KV standby generator system, installing a dialer system, and purchasing a standby well pump. Repairing the surface of the tank roof must be included with work needed to repair the water reservoir. In addition, the letter indicated that SLE will agree to start a cross-connection control program, promote proper septic tank maintenance, and develop a wellhead protection program (contact Yvonne Pettit at this office). DEQ agrees with these proposed improvements and recommends that you direct your engineering consultant to immediately proceed with the efforts as outlined above.

One point still needs to be made regarding a second source of water on this system. The engineering report indicated that a second well would cost about $200,000 and would not prevent depressurization events like those that happened in October and December of 2004. While DEQ agrees with these points, we feel that having a second water source for a public drinking water system supplying water to about 600 people in 268 homes is important to maintaining system integrity. Besides the obvious lack of water pressure, losing pressure in a water system exposes the users to health risks associated with consumption of contaminated water. This happens when the system is re-pressurized and water that had infiltrated into the system during the loss of pressure is conveyed to the users.

Since the letter from your attorney pointed out that SLE has a history of relatively low cost water charges, DEQ feels it is time that financing and funding plan be adopted by SLE to sets aside funds raised by increasing the monthly user charges and placing these funds into a dedicated account earmarked for installing the second water source. Based on the estimated costs, it would be reasonable to expect an increase in user charges to take about five years to fund a second well or source.

Prior to March 15, 2005, DEQ also expects that a written response from the engineer be provided to the sixteen comments listed in our January 24, 2005 letter on the draft preliminary engineering report.

Before March 15, 2005, DEQ would like a reply from you restating and accepting the conditions as outlined above. If you want to propose alternative compliance dates or actions to the actions outlined herein, your response should describe and justify those changes and propose reasonable and alternative compliance dates.

Failure to respond to this proposal might result in this office disapproving the SLE water system, imposing a moratorium on new connections, reimposing the sanitary restrictions on undeveloped lots in the subdivision, and referring this situation for formal enforcement actions. We prefer not to be forced into this type of approach and hope you recognize the concessions offered in this letter by providing us with an acceptable commitment for bringing this water system into compliance with the Idaho Rules for Public Drinking Water Systems.

Sincerely,


Gary J. Gaffney, P.E.

c: Steve Tanner & Anthony Davis, DEQ, CdA
Steven Cordes, Welch Comer and Associates, 1626 Lincoln Way, CdA
John Hammond, Jr., Batt & Fisher LLP, P.O. Box 1308, Boise, ID 83701
Ron Sutcliffe, Deputy AG, DEQ, Boise