Lacustrine sedimentation in Eocene Fossil Lake resulted from ponding of freshwater in the southern half of Fossil Basin. Detailed stratigraphic analysis of rocks formed during this initial depositional phase revealed a well-developed lacustrine sequence south of Fossil Butte. This depositional sequence will be described as a new member in a future paper. Four major depositional facies are recognized: (1) open lacustrine, (2) marginal lacustrine, (3) carbonate mudflat and (4) marginal fluvio-deltaic. The open lacustrine facies is characterized by kerogen-rich to kerogen-poor finely laminated calcimicrites. These carbonates contain well-preserved fossil fish, ostracodes, mollusks and amorphous kerogen. These rocks grade laterally into the marginal lacustrine facies characterized by bioturbated calcimicrites and limestones containing gastropods and ostracodes. In some localized areas limestones are oolitic, contain some typical nearshore plant remains and occasionally lag deposits of vertebrate bones. The carbonate mudflat facies is mainly restricted to the eastern margin where sediments were subaerially exposed and conditions favored precipitation of dolomite. This facies is characterized by dolomitic units with mudcracks and flat pebble conglomerates. Sheet-wash events along the margins during lowstands ripped up carbonates on the mudflats and redeposited them over scoured surfaces. The marginal fluvio-deltaic facies is characterized by interbedded sandstone, siltstone, mudstone and lacustrine carbonates. Fluvial activity increased near the end of lower unit time when a Gilbert-type delta developed from the southwest. The delta virtually filled the entire lake, culminating lower unit deposition.

Palynostratigraphic analysis confirms an early Eocene (late Lostcabinian) age assignment for the onset of lacustrine sedimentation in Fossil Basin. Key taxa in the palynoflora support a warm temperate climate during this time. The nature and distribution of rocks and fossils supports a balanced to over-filled lake model for this depositional sequence.