The water is at the bottom backside of the dam. Initially we just thought it was runoff from the dam and the surrounding hills. But now that the water level of the pond is slowly going down, and the water at the back of the dam is not drying up, we fear that there may be a leak.
The contractor dug a trench that was the entire length of the dam. The trench was dug below the bottom of the dam. It was at this level that he hit all black dirt... no clay.
When he refilled the trench, I don't believe he compacted it. Unless driven his machinery over it a few times is considering compacting it.