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.
My question would be, is it seeping through the dam or is it seeping in from the side via surface soil material. Your testing would certainly bear that out. Would there be an easy test to determine an alternative path?
Was the vegetation present during extreme drought when the only source of water at that level might have been through the dam? Could the moisture be coming UP from deeper down? Lots of questions that might help determine the source of the water presence.
Apparently, they've know about this for at least three years and apparently have done nothing about it. During the prolonged drought one would think the water level could easily have been taken down to 660ft to allow corrective action.
This is starting to look like a great example of government's inherent disinterest in human life by implementing a huge, potentially dangerous project and following up with little-to-no accountability and responsibility to ensure the potential danger does not become an imminent threat which this whole Oroville Dam monstrosity is starting to look like.
It is interesting that common law assigns "strict liability" to certain "abnormally dangerous" undertakings. Damming up water is one such "abnormally dangerous" undertaking. "Strict liability" means that negligence is not required for liability if damage occurs from the undertaking. One is liable simply by taking on such an abnormally dangerous activity regardless of how careful he is.
But this is government, so who is strictly liable? The government? If so, how does government pay for the damages? With their money? But government doesn't have any money. It only has OUR money. So government pays for damages with the money of those it damaged. So effectively, government isn't liable for anything.
One way of looking at this government conundrum is that because building the dam was an activity by a representative government, it means that at least theoretically that the dam was actually authorized by the collective people who wittingly or unwittingly have taken on that liability themselves.
Anyway, in this case, it looks like the people need to kick some butt to get corrective action to move this thing away from what looks like an imminent threat on a massive scale.