The Letters are "O", "L", and "I". I haven't been able to find any history to these letters. I know that Olive orchard farms, renowned for their quality olive oil, are prevalent in Oroville. These mini letter lakes or ponds had to have been made by the early dredges (my best guess). These were left "as is" when the borrow equipment gathered the dam materials. So there likely is some sort of interesting history related to these letters. - OLI also could designate "Oroville". Just a curiosity.
You noting the clay borrow pit now used for an ATV recreational area reminded me of this unanswered puzzle.
I blame abb for getting me stuck on this curiosity as he posted on the original borrow area in the Feather River Gold Dredge Tailings. :-) . The sat pic images revealed these letters in these tailing fields.
Early Dredgers left huge letters "O" "L" "I" in borrow Area
The O L I are interesting and could be as simple as the guy that ran the dredge decided to leave his initials for posterity. If someone has the time it might be worth a call to the local historic society. They often know the back round of these types of local things.
http://www.buttecountyhistoricalsociety.org/
My local historical society has three guys that hang around and between them know or can find the answer to just about any local question.