Oil-shale mining activities in Piceance basin in northwestern Colorado could adversely affect the ground- and surface-water quality in the basin. This study of the hydrology and geochemistry of the area used ground-water solute-transport-modeling techniques to investigate the possible impact of the mines on water quality. Maps of the extent and structure of the aquifer were prepared and show that a saturated thickness of 2,000 feet occurs in the northeast part of the basin. Ground-water recharge in the upland areas in the east, south, and west parts of the basin moves down into deeper zones in the aquifer and laterally to the discharge areas along Piceance and Yellow Creeks. The saline zone and the unsaturated zone provide the majority of the dissolved solids found in the ground water. Precipitation, ion-exchange, and oxidation-reduction reactions are also occuring in the aquifer. Model simulations of ground-water pumpage in tracts C-a and C-b indicate that the altered direction of ground-water movement near the pumped mines will cause an improvement in ground-water quality near the mines and a degradation of water quality downgradient from the tracts. Model simulations of mine leaching in tract C-a and C-b indicate that equal rates of mine leaching in the tracts will produce much different effects on the water quality in the basin. Tract C-a, by virtue of its remote location from perennial streams, will primarily degrade the ground-water quality over a large area to the northeast of the tract. Tract C-b, by contrast, will primarily degrade the surface-water quality in Piceance Creek, with only localized effects on the ground-water quality. (USGS)