Wow. The other shoe hitting the floor so to speak.
Seepage over time is one reason I intuitively question earthen dams - at least very large earthen dams like this one.
What’s the fix Doc?
The first step must be to investigate it. Weepage does occur at dams**, but what is unusual about this situation is that it is along a "seam area". If there is water leakage along a thin crack like defect (in the compacted clay water wall barrier), then the hydraulic erosion effects are spread. If the leakage source is a focused area in the compacted clay, then the hydraulic erosive potential notably escalates the risk factor.
The immediate prudent action to the existence of an unknown "risk factor" - in a proven long term existence of a "weepage" area with downhill erosion marks - is to lower the reservoir level below the elevation of the leak. This means, that to eliminate an unknown risk, the water level would be lowered to 660ft or below.
Then investigative procedures would be enacted to identify the saturation profile within the dam (probes). With this data, remedial repairs would be performed accordingly in the breaching area(s). (some dam remedial repair on notable leaks required excavation and replacement of the core layer defect using large volumes of mixed clay including Bentonite).
**It is normal to have some "weepage" in dams. However, if the source is not accurately investigated, this creates an unknown regarding a risk factor. What is surprising is that this seems that it was not investigated.