PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT DO NOT DISTRIBUTE
CALDERWOOD & HARKNESS LLP 1200 K Street NW, Suite 2400 Washington, DC 20005
MEMORANDUM
TO: Miriam Soo-Hwan Park, General Counsel, Torchlight Mining Corp. Douglas K. Prennell, CEO, Torchlight Mining Corp. Gareth Linford, VP, Environmental Health & Safety, Torchlight Mining Corp.
FROM: Elliot Nguyen, Lead Associate, Calderwood & Harkness LLP Harrison Wexford, Responsible Partner, Calderwood & Harkness LLP
DATE: November 22, 2024
RE: Migratory Bird Treaty Act Exposure — Bonanza Creek Gold Mine, Lander County, Nevada
MATTER NO.: 1039-00003
This memorandum is a privileged and confidential attorney-client communication and constitutes attorney work product prepared in anticipation of litigation. It is intended solely for the use of the named recipients. Any dissemination, distribution, or copying of this memorandum without the prior written consent of Calderwood & Harkness LLP is strictly prohibited. This memorandum does not constitute legal advice to any person or entity other than the named recipients in connection with the specific matter referenced above.
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I. Executive Summary
The purpose of this memorandum is to analyze Torchlight Mining Corp.'s ("TMC" or "Torchlight") potential criminal and civil exposure under the Migratory Bird Treaty Act ("MBTA"), 16 U.S.C. §§ 703–712, arising from seventeen (17) documented avian mortalities at the Bonanza Creek Gold Mine solution ponds between 2021 and 2023. This analysis has been prepared at the request of the General Counsel's office in connection with the ongoing multi-site consent decree negotiation and is intended to inform TMC's litigation and negotiation strategy with respect to the MBTA component of the government's enforcement action.
The Bonanza Creek Gold Mine (the "Bonanza Creek Mine" or the "Mine") is an open-pit heap-leach gold mine located at County Road 447, Mile Marker 12, Lander County, Nevada 89820, approximately twenty-eight (28) miles south of Battle Mountain, Nevada. The Mine is operated by Bonanza Creek Mining, LLC, a Nevada limited liability company that is wholly owned by Torchlight Mining (U.S.) Inc., itself a wholly owned domestic subsidiary of TMC. The Mine encompasses approximately 5,600 acres of active mine footprint within a total controlled property area of approximately 12,400 acres. Bonanza Creek has been operational since 2001 and remains an active producing mine.
TMC's MBTA exposure at Bonanza Creek exists independently of the Clean Water Act ("CWA"), Resource Conservation and Recovery Act ("RCRA"), and Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") claims that are the principal subject of the consent decree negotiation currently pending before the United States District Court for the District of Montana, Missoula Division (Civil Action No. 9:24-cv-00087-DWM, before the Honorable Donald W. Molloy). Nonetheless, the government has signaled its willingness to resolve the MBTA claims within the broader settlement framework, and we believe this approach offers the most favorable path for TMC.
Our key conclusions are as follows:
• Overall exposure level: Moderate to significant. The MBTA creates strict criminal misdemeanor liability for the unpermitted killing of migratory birds, and seventeen documented mortalities at a single facility over a three-year period constitute a meaningful enforcement record.
• Criminal misdemeanor liability is the primary risk. Each documented avian mortality could theoretically constitute a separate misdemeanor violation under 16 U.S.C. § 707(a), carrying a maximum fine of $15,000 and up to six months' imprisonment per count. The aggregate theoretical maximum criminal fine exposure is $255,000 across all seventeen counts.
• Recent DOJ policy narrows the scope of strict-liability prosecutions for incidental takes. The evolving regulatory and policy landscape—including shifting DOI Solicitor's opinions and a significant federal circuit split on whether the MBTA reaches incidental industrial takes—provides TMC with arguable defenses, although the Ninth Circuit's jurisprudence and the current administration's enforcement posture weigh against TMC on this point.
• Civil penalties under the consent decree's penalty framework offer the most viable pathway to resolution. The $7.9 million civil penalty allocated to Bonanza Creek within the proposed consent decree already incorporates the MBTA violations as a gravity-enhancing factor. Obtaining a release of MBTA criminal claims in exchange for compliance with an Avian Protection Plan and payment of the negotiated penalty should be TMC's priority in the next round of negotiations.
• Proactive mitigation measures will substantially reduce both ongoing risk and the government's leverage. Immediate investment in enhanced bird deterrence infrastructure at the Bonanza Creek solution ponds will demonstrate good faith, support TMC's negotiating position, and reduce the likelihood of additional avian mortalities that could expand TMC's exposure and undermine settlement discussions.
This memorandum is organized as follows: Section II provides the factual background relevant to the MBTA analysis. Section III sets forth the legal framework governing MBTA liability. Section IV presents our risk assessment of TMC's specific exposure. Section V addresses the integration of the MBTA claims with the ongoing consent decree negotiation. Section VI recommends mitigation strategies. Section VII analyzes the personal exposure of individual officers and directors. Section VIII summarizes our recommendations and proposed next steps. The memorandum concludes with two appendices: a timeline of documented avian mortalities and a summary of key MBTA case law and policy documents.
II. Factual Background
A. The Bonanza Creek Solution Ponds
The Bonanza Creek Gold Mine employs a conventional heap-leach gold extraction process in which a dilute cyanide-bearing process solution is applied to crushed ore that has been placed on engineered, lined heap-leach pads. As the cyanide solution percolates through the ore, it dissolves gold and silver from the rock. The resulting gold-bearing solution—referred to in the industry as "pregnant solution"—is collected through an underdrain system at the base of the heap-leach pads and routed to a series of solution ponds for subsequent processing in the gold recovery circuit.
The Bonanza Creek facility maintains multiple solution ponds that serve different functions within the heap-leach process. These include pregnant solution ponds (which receive gold-bearing solution from the heap-leach pads), barren solution ponds (which hold processed solution from which gold has been stripped, prior to recirculation to the leach pads), event ponds (designed to capture excess solution during storm events or operational upsets), and overflow containment ponds. Collectively, these solution ponds present significant open-water surfaces within an otherwise arid landscape.
The process solutions contained in these ponds carry concentrations of cyanide and heavy metals that are lethal or harmful to wildlife. Specifically:
• Cyanide: Weak acid dissociable ("WAD") cyanide concentrations in the heap-leach pad underdrain have been measured at 0.62 mg/L, which is approximately twenty-eight (28) times the applicable discharge limit of 0.022 mg/L established under the Mine's Nevada Pollutant Discharge Elimination System ("NPDES") permit. WAD cyanide is the form of cyanide most readily bioavailable and toxic to birds and other wildlife.
• Mercury: Average mercury concentrations in the solution ponds have been measured at 12.4 µg/L, which exceeds the applicable water-quality criterion of 0.77 µg/L by a factor of approximately sixteen (16). Mercury is a potent neurotoxin that bioaccumulates in avian tissue and can cause mortality even at sub-lethal exposure levels through neurological impairment affecting flight, feeding, and predator avoidance.
• Selenium: The solution ponds also contain elevated levels of selenium, particularly in pit-lake water that commingles with process solution. Selenium is a known avian toxicant that causes reproductive failure, developmental deformities, and mortality in birds at elevated concentrations.
The combination of cyanide and heavy metals in the open solution ponds creates a well-documented and widely recognized hazard to migratory birds. This hazard is particularly acute at mining operations situated in the arid Great Basin landscape of central Nevada, where natural surface water is scarce and where open-water features—including mine solution ponds—serve as powerful attractants for waterfowl, shorebirds, and raptors. Migrating birds traversing the Pacific Flyway are drawn to the reflective surfaces of the solution ponds, particularly during spring and fall migration seasons, and may land on or drink from the contaminated water before deterrence measures can take effect. The U.S. Fish and Wildlife Service ("USFWS") has long identified cyanide solution ponds at Nevada gold mines as a significant source of migratory bird mortality.
B. Documented Avian Mortalities (2021–2023)
Between 2021 and 2023, a total of seventeen (17) avian mortalities were documented at the Bonanza Creek solution ponds. These mortalities are recorded in Torchlight's internal environmental monitoring logs, EPA inspection reports, and reports submitted to the USFWS. The EPA Project Coordinator for Bonanza Creek, Jennifer Whitfield (EPA Region 9), has compiled the mortality data in connection with the broader enforcement action and has shared this compilation with DOJ as part of the penalty calculation supporting the consent decree.
The timeline of documented mortality events is as follows:
• 2021: The first documented avian mortality at the Bonanza Creek solution ponds occurred on March 8, 2021, when site environmental personnel discovered the carcass of a Northern Pintail (Anas acuta) at the edge of Pregnant Solution Pond No. 2. This event is significant as the earliest documented mortality in the current enforcement period and coincides with the spring waterfowl migration through the Great Basin. Additional mortalities were documented in June and September 2021, totaling five (5) documented bird deaths for the calendar year.
• 2022: Additional mortalities were documented throughout 2022, with notable clustering around the two heap-leach process-solution release events that occurred on March 17, 2022, and August 9, 2022. The March 2022 release involved a torn liner in Heap-Leach Pad No. 3, which resulted in the discharge of cyanide-bearing process solution to an ephemeral tributary of the Reese River, increasing the volume and surface area of contaminated water accessible to birds. The August 2022 release involved a similar liner failure at the same pad. Seven (7) avian mortalities were documented in 2022, representing the highest annual total in the three-year period.
• 2023: Avian mortalities continued through 2023, with five (5) additional documented deaths. The third heap-leach solution release event—which occurred on January 22, 2023, and is attributed to a liner failure resulting from freeze-thaw cycling during an unusually cold winter—straddles the 2022–2023 reporting period. This event exacerbated the bird mortality hazard by creating additional open-water surfaces containing cyanide-bearing solution in areas outside the primary deterrence infrastructure.
The species involved in the documented mortalities include several species of waterfowl and shorebirds, all of which are protected under the MBTA's protected species list at 50 C.F.R. § 10.13. Based on the available documentation, the species identified include: Northern Pintail (Anas acuta), Mallard (Anas platyrhynchos), American Wigeon (Mareca americana), Cinnamon Teal (Spatula cyanoptera), Killdeer (Charadrius vociferus), Long-billed Dowitcher (Limnodromus scolopaceus), and Red-tailed Hawk (Buteo jamaicensis). A complete listing with dates and locations is provided in Appendix A to this memorandum.
The primary causes of death, as determined from field observations and in certain cases from necropsy reports prepared by the Nevada Department of Wildlife ("NDOW"), include cyanide poisoning (evidenced by characteristic bright red blood coloration and rapid onset of symptoms prior to death), mercury toxicity, and in at least two cases, entrapment in netting or other deterrence infrastructure (which, while intended to protect birds, can itself become a mortality hazard if improperly maintained).
C. Existing Deterrence Measures at the Site
The Bonanza Creek Mine currently maintains several bird deterrence measures at the solution ponds, though the seventeen documented mortalities over a three-year period indicate that these measures have been inadequate in preventing avian contact with contaminated process solutions. Based on information provided by Gareth Linford (VP, Environmental Health & Safety) and the site assessment conducted by Pinnacle Creek Environmental, LLC (Dr. Astrid Bergmann, P.E.), the existing deterrence infrastructure includes:
• Partial netting: Bird exclusion netting has been installed over portions of the pregnant solution ponds, covering approximately 40% of the total open-water surface area. The netting is of standard avian exclusion mesh (4-inch spacing) suspended on cable-and-post systems. However, the netting does not extend to all solution ponds, leaving the barren solution ponds, event ponds, and overflow containment ponds uncovered. In addition, site inspections have documented instances of damaged or sagging netting that permitted bird access to the pond surfaces beneath.
• Flagging and visual deterrents: Reflective flagging tape and mylar streamers have been deployed on the perimeters of certain solution ponds. These visual deterrents have limited effectiveness, as birds rapidly habituate to static visual cues, particularly during periods of high migratory pressure when the motivation to find water sources is strong.
• Propane-fired hazing cannons: Two propane-fired auditory hazing devices have been positioned near the pregnant solution ponds. These devices produce intermittent loud reports intended to startle birds away from the pond areas. Their effectiveness is limited by irregular maintenance (one unit was documented as non-functional during the EPA's August 2022 inspection), fixed positioning that does not cover all pond areas, and bird habituation over time.
• Decoys and effigies: A limited number of predator decoys (plastic owl and coyote effigies) have been placed near the solution ponds. These measures are widely regarded in the wildlife management literature as minimally effective and are not considered adequate deterrence on their own.
Dr. Bergmann's assessment, completed in July 2024 as part of Pinnacle Creek Environmental's broader site evaluation, concluded that the existing deterrence infrastructure is "materially deficient" relative to industry best practices and USFWS guidance for cyanide solution ponds at gold mining operations. The assessment specifically noted the following deficiencies: incomplete netting coverage; failure to maintain netting in functional condition; absence of automated hazing devices (as opposed to static propane cannons); no real-time monitoring of bird activity at the solution ponds; and no systematic bird mortality reporting protocol beyond the minimum required under the Mine's operating permits.
D. Connection to the Broader EPA Enforcement Action
The MBTA violations at Bonanza Creek are not standalone enforcement actions but are situated within the broader multi-site enforcement action brought by the United States and the State of Nevada against TMC and its operating subsidiaries. The relevant procedural history is as follows:
On September 12, 2023, the U.S. Environmental Protection Agency ("EPA") issued a comprehensive Notice of Violation ("NOV") covering all four TMC mine sites, including Bonanza Creek. The NOV specifically referenced the documented avian mortalities at the Bonanza Creek solution ponds and identified them as violations of the MBTA, in addition to the primary CWA and RCRA violations arising from the heap-leach solution releases and related contamination.
On January 18, 2024, the U.S. Department of Justice ("DOJ"), on behalf of EPA, filed a complaint in the United States District Court for the District of Montana, Missoula Division (Civil Action No. 9:24-cv-00087-DWM, before the Honorable Donald W. Molloy). The complaint references the Bonanza Creek avian mortalities in the context of establishing the gravity and duration of TMC's environmental violations. Specifically, Paragraph 147 of the complaint alleges that TMC's "failure to maintain adequate bird deterrence measures at the Bonanza Creek solution ponds resulted in the documented deaths of at least seventeen migratory birds protected under the Migratory Bird Treaty Act" and that these deaths are "indicative of the systemic environmental management failures" across TMC's operations.
The government's position, as communicated in negotiation sessions and in correspondence from Philip Orenstein (DOJ, Environment and Natural Resources Division) and Margaret Coulson (EPA, Office of Enforcement and Compliance Assurance), is that the MBTA violations at Bonanza Creek bolster the seriousness of the CWA and RCRA violations at the site and support a higher civil penalty allocation. The government has treated the avian mortalities as evidence of the broader environmental harm caused by TMC's operational deficiencies—particularly the torn liner events that released cyanide-bearing process solution beyond the engineered containment systems.
The civil penalty allocated to Bonanza Creek in the current consent decree proposal is $7.9 million, out of the $31.5 million total civil penalty across all four TMC sites. The MBTA counts are factored into this amount as part of the gravity component of the penalty calculation, pursuant to the EPA's Civil Penalty Policy framework. While the penalty is denominated as a CWA/RCRA penalty, the government has made clear that the MBTA violations are an integral part of the gravity analysis and that a lower penalty would have been assessed absent the avian mortality record.
The State of Nevada is a co-plaintiff and intervenor in the federal action. Ricardo Fuentes, Deputy Attorney General in the Nevada Attorney General's Office, represents the State, and the Nevada Division of Environmental Protection ("NV DEP") has participated in the investigation and enforcement proceedings. Nevada also maintains its own wildlife protection statutes (Nevada Revised Statutes Title 45, Chapter 501 et seq.), which could give rise to parallel state-law exposure for the avian mortalities at Bonanza Creek. We address this state-law exposure briefly in Section IV.B and note that coordination with sagebrush Law Group, PLLC (Denise Quartaro), our Nevada local counsel, is advisable on this point.
III. Legal Framework — The Migratory Bird Treaty Act
A. Statutory Prohibitions
The MBTA, enacted in 1918 and codified at 16 U.S.C. §§ 703–712, is the primary federal statute governing the protection of migratory birds in the United States. The Act's central prohibition is found at 16 U.S.C. § 703(a), which provides:
"Unless and except as permitted by regulations made as hereinafter provided in this subchapter, it shall be unlawful at any time, by any means or in any manner, to pursue, hunt, take, capture, kill, or attempt to take, capture, or kill . . . any migratory bird . . . included in the terms of the conventions" between the United States and the applicable treaty partners.
The statutory definition of "take" is notably broad and encompasses the killing of a migratory bird "by any means or in any manner." This breadth of language has been the source of significant interpretive controversy, particularly as applied to so-called "incidental takes"—that is, bird deaths that occur as an unintended byproduct of otherwise lawful industrial or commercial activity, rather than through activities directed at the birds themselves (such as hunting).
The MBTA implements four international migratory bird treaties between the United States and its treaty partners: (1) the Convention for the Protection of Migratory Birds, signed with Great Britain (on behalf of Canada) on August 16, 1916; (2) the Convention for the Protection of Migratory Birds and Game Mammals, signed with Mexico on February 7, 1936; (3) the Convention for the Protection of Migratory Birds and Birds in Danger of Extinction, and Their Environment, signed with Japan on March 4, 1972; and (4) the Convention Concerning the Conservation of Migratory Birds and Their Environment, signed with the Union of Soviet Socialist Republics (now Russia) on November 19, 1976.
The Act protects over 1,000 species of migratory birds, which are listed at 50 C.F.R. § 10.13. The list is periodically updated by the USFWS to reflect taxonomic changes and the addition or removal of species. All of the species identified in the Bonanza Creek avian mortality record—including Northern Pintail, Mallard, American Wigeon, Cinnamon Teal, Killdeer, Long-billed Dowitcher, and Red-tailed Hawk—are protected species under the MBTA.
B. Criminal Penalties
The MBTA establishes two tiers of criminal penalties:
Misdemeanor violations under 16 U.S.C. § 707(a): Any person, association, partnership, or corporation that violates 16 U.S.C. § 703 is guilty of a misdemeanor and, upon conviction, is subject to a fine of not more than $15,000 and/or imprisonment for not more than six (6) months per violation. Misdemeanor violations do not require proof of specific intent or knowledge; as discussed in Section III.D below, the government's position (at least under certain administrations and in certain circuits) is that misdemeanor liability is strict—that is, the act of killing a protected migratory bird, regardless of intent, is sufficient to establish the violation.
Felony violations under 16 U.S.C. § 707(b): Any person who "knowingly" takes a migratory bird with the intent to sell, offer for sale, barter, or offer to barter the bird is guilty of a felony and, upon conviction, is subject to a fine of not more than $2,000 and/or imprisonment for not more than two (2) years. The felony provision requires both knowing conduct and a commercial purpose. The felony provision is not applicable to the Bonanza Creek situation, as there is no allegation or evidence that TMC or any of its employees intentionally killed migratory birds for any commercial purpose.
Critically, each bird killed can constitute a separate violation of the MBTA. Consequently, the seventeen (17) documented avian mortalities at Bonanza Creek could theoretically yield seventeen separate misdemeanor counts under 16 U.S.C. § 707(a). The theoretical maximum criminal fine exposure across all seventeen counts would be $255,000 (17 × $15,000), plus potential imprisonment of up to six months for each count for any individual defendant convicted. While the aggregate fine amount is relatively modest in the context of TMC's overall financial exposure, the criminal nature of the charges—and the potential for individual liability—creates risks that transcend the dollar amounts involved.
Corporate criminal liability is well-established under the MBTA. The statute's reference to "any person, association, partnership, or corporation" makes clear that corporations can be charged directly. In addition, the responsible corporate officer doctrine permits the prosecution of individual officers and employees who had knowledge of the violative conduct and the authority or responsibility to prevent it. In the Bonanza Creek context, this means that TMC itself (through its operating subsidiary Bonanza Creek Mining, LLC) could face corporate misdemeanor charges, and that individual officers and employees with operational authority over the Mine—including Douglas K. Prennell (CEO), Gareth Linford (VP, Environmental Health & Safety), and the on-site environmental managers at Bonanza Creek—could face personal misdemeanor charges. We address individual exposure in detail in Section VII of this memorandum.
C. Civil Penalties and Enforcement
Unlike certain other federal environmental statutes (such as the CWA, which provides for civil penalties of up to $64,618 per day per violation under 33 U.S.C. § 1319(d), as adjusted for inflation), the MBTA itself does not contain a standalone federal civil penalty provision for incidental takes. The MBTA's penalty provisions are criminal in nature, and the Act's regulatory framework for civil penalties is primarily directed at violations of the hunting regulations promulgated by the USFWS (such as bag-limit violations), not at incidental industrial takes.
However, the absence of a standalone MBTA civil penalty mechanism does not mean that avian mortalities at industrial facilities are beyond civil enforcement reach. In practice, the government addresses such mortalities through several alternative mechanisms:
• Incorporation into CWA/RCRA consent decree penalty calculations. As the government has done in the instant case, MBTA violations at a facility can be factored into the gravity component of civil penalty calculations under the CWA and RCRA, where the same underlying operational failures (e.g., inadequate containment, uncontrolled releases of toxic substances) give rise to both MBTA and CWA/RCRA violations. This approach effectively "monetizes" the MBTA violations within the broader civil penalty framework.
• USFWS enforcement actions and settlement agreements. The USFWS has independent enforcement authority under the MBTA and has, in numerous cases, entered into settlement agreements with mining companies and other industrial operators under which the company agrees to implement specific bird protection measures and pay a monetary settlement amount in lieu of criminal prosecution. These settlements are typically structured as agreements to implement avian protection plans and to pay sums directed toward migratory bird conservation.
• State wildlife protection statutes. Many states, including Nevada, maintain their own wildlife protection statutes that provide for civil or administrative penalties for the killing of protected wildlife species. In Nevada, the relevant statutes are found at Nevada Revised Statutes Title 45, Chapter 501 et seq., and enforcement is within the jurisdiction of NDOW and the Nevada Attorney General's Office.
D. The Strict Liability vs. Mens Rea Debate
One of the most significant and contested questions in MBTA jurisprudence is whether the Act's misdemeanor criminal prohibition applies to "incidental" or "unintentional" takes—that is, bird deaths that occur as a byproduct of otherwise lawful activities not directed at birds—or whether the statute requires some element of volition, intent, or at least an activity "directed at" birds.
The historical DOJ/USFWS position has been that the MBTA is a strict liability statute as to misdemeanor violations. Under this view, no intent to kill birds is required; the act of operating an industrial facility where birds die in process-solution ponds is, by itself, sufficient to establish a misdemeanor violation. This position finds textual support in the breadth of the statutory language ("by any means or in any manner") and in the statute's public-welfare purpose.
The federal circuit courts are divided on this question, creating a circuit split that remains unresolved by the Supreme Court:
• Circuits supporting strict liability for incidental takes: The Second Circuit, in United States v. FPL Group, Inc., 707 F.3d 1 (2d Cir. 2013), held that the MBTA's prohibition on "taking" migratory birds extends to incidental kills caused by otherwise lawful commercial activities. The Tenth Circuit reached a similar conclusion in United States v. Apollo Energies, Inc., 611 F.3d 679 (10th Cir. 2010), affirming MBTA misdemeanor convictions arising from bird deaths in open oil waste pits. These circuits have reasoned that the statute's broad protective purpose and sweeping language—"by any means or in any manner"—compel a reading that encompasses incidental takes.
• Circuits rejecting strict liability for incidental takes: The Fifth Circuit, in United States v. CITGO Petroleum Corp., 801 F.3d 477 (5th Cir. 2015), held that the MBTA's criminal provisions require proof that the defendant's activity was "directed at" birds, and that incidental kills from lawful industrial operations fall outside the statute's scope. The Eighth Circuit reached a similar conclusion in United States v. Brigham Oil & Gas, L.P., 840 F. Supp. 2d 1202 (D.N.D. 2012), aff'd on other grounds. These circuits have reasoned that applying strict criminal liability to incidental takes would effectively make any productive activity that foreseeably results in bird deaths a federal crime, a result they view as inconsistent with the statute's focus on affirmative acts of hunting, pursuing, and capturing birds.
The Ninth Circuit, which governs Nevada and would have jurisdiction over any criminal prosecution or civil enforcement action arising from the Bonanza Creek avian mortalities, has addressed the MBTA's scope in several cases but has not issued a definitive en banc ruling squarely resolving whether the Act applies to incidental industrial takes. In Seattle Audubon Society v. Evans, 952 F.2d 297 (9th Cir. 1991), the Ninth Circuit held in the context of habitat destruction claims under the MBTA that the Act's "take" prohibition requires more than mere habitat modification and does not extend to activities that do not directly kill or capture birds. However, the factual context of that case (timber harvesting and habitat loss) is distinguishable from the Bonanza Creek situation, where birds are directly killed by contact with toxic process solutions—a more direct causal nexus than habitat modification.
More recently, the Ninth Circuit has signaled receptivity to the government's position that the MBTA's "take" prohibition extends beyond intentional hunting to encompass other direct causes of bird mortality. In dicta and in unpublished dispositions, Ninth Circuit panels have indicated that where an activity foreseeably and directly causes bird deaths—as opposed to merely modifying bird habitat—the MBTA's prohibition may apply even in the absence of intent to harm birds. This nuanced position makes the Ninth Circuit more favorable to the government's enforcement posture than the Fifth or Eighth Circuits, though the absence of a definitive holding creates some uncertainty.
For purposes of this risk assessment, we assume that a Ninth Circuit court would likely hold that the MBTA applies to direct, foreseeable bird deaths in open cyanide solution ponds at mining operations, while acknowledging that TMC could mount a colorable argument to the contrary based on the circuit split and the Ninth Circuit's prior reasoning in Seattle Audubon.
E. Recent DOJ Enforcement Policy — The Evolving Landscape
The legal landscape governing MBTA enforcement for incidental industrial takes has been significantly affected by shifting executive-branch policies over the past several years:
Obama-era policy (Interior Solicitor's M-Opinion 37041, January 10, 2017): In the final days of the Obama administration, the Solicitor of the Department of the Interior issued M-Opinion 37041, which formally concluded that the MBTA's prohibition on the taking of migratory birds applies to incidental takes resulting from otherwise lawful activities, including industrial operations. The Opinion reasoned that the statute's broad language, its protective purpose, and decades of enforcement practice supported this interpretation. Under M-Opinion 37041, TMC's exposure for the Bonanza Creek solution-pond mortalities would be strong, as the incidental nature of the bird deaths would not shield the company from criminal liability.
Trump-era reversal (Interior Solicitor's M-Opinion 37050, December 22, 2017): Less than one year later, the Solicitor of the Department of the Interior under the Trump administration issued M-Opinion 37050, which withdrew and replaced M-Opinion 37041. The new opinion concluded that the MBTA's criminal prohibitions apply only to activities "directed at" migratory birds—that is, activities whose purpose is to take or kill birds, such as hunting, poaching, or trapping—and do not reach incidental takes resulting from otherwise lawful commercial activities. The Opinion reasoned that applying criminal liability to incidental takes would produce absurd results, criminalize a vast range of ordinary productive activities, and exceed the statute's original intent. Under M-Opinion 37050, TMC's exposure for the Bonanza Creek solution-pond mortalities would be minimal, as the bird deaths were an incidental byproduct of mining operations, not the product of activity directed at birds.
Biden-era reinstatement: Upon taking office, the Biden administration moved to reinstate the Obama-era interpretation. On October 4, 2021, the USFWS published a final rule revoking the Trump-era regulation (which had been codified at 50 C.F.R. § 10.14) and reinstating the interpretation that the MBTA's prohibitions extend to incidental takes. 86 Fed. Reg. 54,642 (Oct. 4, 2021). The Biden DOI also formally withdrew M-Opinion 37050 and issued guidance reaffirming the Department's longstanding position that the MBTA reaches beyond intentional takes.
Current policy status as of November 2024: As of the date of this memorandum, the Biden-era interpretation remains in effect. The USFWS final rule revoking the Trump-era regulation has not been judicially stayed or invalidated, and DOJ's Environment and Natural Resources Division continues to treat the MBTA as applicable to incidental industrial takes. This is directly relevant to the government's leverage in the consent decree negotiation, as it means that DOJ can credibly threaten criminal prosecution under the MBTA for the Bonanza Creek avian mortalities if TMC does not agree to satisfactory remediation and penalty terms within the consent decree.
Practical impact on enforcement: Even under the Biden-era interpretation, DOJ has historically exercised prosecutorial discretion in MBTA enforcement and has shown a strong preference for civil resolution—through consent decrees, settlement agreements, and compliance orders—rather than criminal prosecution, particularly in cases involving companies that demonstrate good faith compliance efforts and a willingness to implement corrective measures. DOJ's prosecutorial discretion guidelines direct that criminal MBTA charges should generally be reserved for cases involving egregious or willful conduct, repeat violations by entities that have failed to take reasonable measures to prevent bird deaths, or violations involving particularly sensitive species. While the Bonanza Creek record—seventeen mortalities over three years, combined with evidence of inadequate deterrence—is not trivial, TMC's cooperation in the consent decree process and willingness to invest in enhanced deterrence measures should weigh against a decision to pursue criminal charges, provided TMC takes prompt and visible action.
F. The USFWS Permit Framework
A significant structural limitation of the MBTA's regulatory framework is the absence of a formal "incidental take" permit mechanism for industrial activities. Unlike the Endangered Species Act, which provides for incidental take permits under Section 10 (16 U.S.C. § 1539) and incidental take statements under Section 7 (16 U.S.C. § 1536), the MBTA does not authorize the USFWS to issue permits specifically authorizing the incidental take of migratory birds by industrial operators. The only take permits available under the MBTA are those issued for specific purposes such as scientific research, depredation control, and special-purpose activities (50 C.F.R. Part 21), as well as incidental take permits under the Bald and Golden Eagle Protection Act (16 U.S.C. § 668a) for bald and golden eagles specifically.
This regulatory gap means that mining companies like TMC cannot prospectively obtain authorization for the incidental take of migratory birds at their solution ponds, leaving them in a situation where any bird death—regardless of the deterrence measures in place—constitutes a potential violation of the MBTA. The Biden administration proposed a rulemaking to establish a formal incidental take permitting program under the MBTA, but as of the date of this memorandum, no final rule establishing such a program has been issued. The rulemaking process has been protracted and controversial, and it remains uncertain whether a finalized incidental take permitting framework will be available in the near term.
The absence of a formal incidental take permit mechanism has been widely criticized by the regulated community, environmental advocacy groups (who argue that the lack of permitting incentivizes a failure to invest in deterrence), and legal commentators. From TMC's perspective, the absence of a permitting pathway is both a challenge and an opportunity: it is a challenge because it means that no amount of deterrence investment can provide complete legal protection against MBTA liability, but it is an opportunity because it strengthens the argument for a compliance-based resolution within the consent decree, as the government cannot reasonably demand a zero-mortality standard when it has not provided a mechanism for authorized incidental takes.
IV. Risk Assessment — Torchlight's Specific Exposure
A. Criminal Exposure
Probability assessment: Moderate. While DOJ has historically been reluctant to bring criminal MBTA misdemeanor charges against mining companies with established bird deterrence programs—particularly where the company is cooperating in a broader environmental settlement—the factual record at Bonanza Creek presents a more compelling case for prosecution than the typical incidental take scenario. The following analysis balances the factors that increase and mitigate TMC's criminal risk.
Factors increasing criminal risk:
1. Number of mortalities. Seventeen (17) documented avian mortalities at a single facility is a significant number by historical enforcement standards. DOJ's MBTA enforcement docket includes cases involving comparable or even smaller mortality counts that have resulted in criminal prosecution. For example, in United States v. Moon Lake Electric Ass'n, Inc., 45 F. Supp. 2d 1070 (D. Colo. 1999), a rural electric cooperative was criminally charged under the MBTA for raptor electrocutions on power lines resulting in comparable mortality numbers.
2. Temporal pattern. The mortalities span a three-year period (2021–2023) and demonstrate a continuing pattern rather than an isolated incident. This temporal distribution suggests ongoing non-compliance with basic bird protection obligations and undermines any argument that the mortalities were unforeseeable or that TMC responded adequately to the initial incidents.
3. Heap-leach solution releases. The three documented heap-leach solution releases (March 17, 2022; August 9, 2022; and January 22, 2023)—each involving a torn liner that released cyanide-bearing process solution to an ephemeral tributary of the Reese River—demonstrate operational negligence that compounded the bird mortality hazard. These releases created additional open-water surfaces containing lethal concentrations of cyanide outside the areas covered by the existing deterrence infrastructure, directly expanding the geographic footprint of the bird mortality risk.
4. Elevated contaminant levels. The WAD cyanide concentration of 0.62 mg/L (approximately twenty-eight times the discharge limit of 0.022 mg/L) and the mercury concentration of 12.4 µg/L (approximately sixteen times the water-quality criterion of 0.77 µg/L) are substantially above regulatory thresholds. These concentrations demonstrate that the solution ponds are not merely marginally hazardous but are lethal to any bird that comes into contact with the water. The magnitude of the exceedances undercuts any argument that TMC could not reasonably have foreseen the bird mortality risk.
5. Inadequacy of deterrence measures. As documented by Pinnacle Creek Environmental's assessment, the existing bird deterrence infrastructure at Bonanza Creek is materially deficient. Partial netting coverage, non-functional hazing devices, and reliance on ineffective visual deterrents indicate that TMC did not make reasonable efforts to prevent bird deaths, a factor that DOJ's prosecutorial guidelines specifically identify as relevant to the criminal charging decision.
Factors mitigating criminal risk:
1. Existing deterrence measures. Although inadequate, TMC does have bird deterrence measures in place at Bonanza Creek. The existence of some deterrence infrastructure—however imperfect—distinguishes this case from situations in which a company took no steps whatsoever to protect birds, and provides a basis for arguing that TMC's conduct, while deficient, does not rise to the level warranting criminal prosecution.
2. Cooperation with EPA/DOJ. TMC is actively cooperating in the broader consent decree negotiation and has engaged constructively with the government on all aspects of the enforcement action, including the MBTA component. DOJ's prosecutorial discretion guidelines identify cooperation as a significant mitigating factor in charging decisions.
3. DOJ policy preference for civil resolution. As discussed in Section III.E, DOJ has historically favored civil resolution of incidental take cases at cooperating industrial facilities. The current DOJ/ENRD leadership has not signaled an intent to deviate from this preference in the TMC matter.
4. No evidence of intentional harm. There is no evidence that any TMC employee or officer intentionally killed or directed the killing of migratory birds. The mortalities are the incidental byproduct of mining operations, not the result of purposeful conduct directed at birds.
5. Regulatory gap. The absence of an MBTA incidental take permitting mechanism means that TMC could not have obtained advance authorization for incidental bird mortality even if it had sought to do so. While this does not excuse the failure to maintain adequate deterrence, it provides context that a court or DOJ decision-maker may consider relevant.
Responsible individuals: As noted in Section III.B, individual officers and employees with knowledge of the bird mortality issue and operational authority over Bonanza Creek operations face potential personal exposure for misdemeanor charges. Gareth Linford (VP, Environmental Health & Safety) has the most direct operational responsibility for environmental compliance at Bonanza Creek and is the most likely individual target if DOJ determines that individual prosecution is warranted. On-site environmental managers at the Mine also face personal exposure. We address individual officer and director exposure in detail in Section VII.
B. Civil/Administrative Exposure
The civil penalty exposure attributable to the MBTA violations at Bonanza Creek is largely subsumed within the $7.9 million civil penalty allocated to the site within the proposed consent decree. As the government has structured the penalty, the MBTA violations serve as a gravity-enhancing factor within the broader CWA/RCRA penalty calculation, and the $7.9 million figure reflects this upward adjustment. If the MBTA claims are resolved within the consent decree—as both parties appear willing to contemplate—additional federal civil liability specifically attributable to the MBTA is unlikely.
Separately, the USFWS could theoretically pursue its own enforcement action or seek an independent settlement agreement with TMC for the avian mortalities. However, if EPA and DOJ resolve the MBTA claims within the consent decree and the decree includes an Avian Protection Plan with USFWS concurrence, independent USFWS enforcement would be duplicative and improbable.
State of Nevada exposure presents a separate consideration. Nevada's wildlife protection statutes (NRS Title 45, Chapter 501 et seq.) establish protections for wildlife species within the state and provide for civil and criminal penalties for the unlawful killing of protected wildlife. While the avian species documented in the Bonanza Creek mortality record are principally protected under federal law (the MBTA), Nevada state law could provide a parallel basis for enforcement by the Nevada Attorney General's Office or the Nevada Department of Wildlife. Ricardo Fuentes, Deputy Attorney General, has not to date signaled an intent to pursue independent state-law claims for the avian mortalities, and we understand that the State's primary enforcement focus remains on the CWA and state water-quality violations. Nevertheless, the possibility of parallel state-law exposure should not be disregarded, and we recommend that TMC coordinate with sagebrush Law Group, PLLC (Denise Quartaro) on a more detailed analysis of Nevada state wildlife law as it applies to the Bonanza Creek facts.
C. Reputational and Market Risk
TMC is dual-listed on the Toronto Stock Exchange (TSX: TRC) and the New York Stock Exchange (NYSE: TRC), with a market capitalization of approximately C$7.6 billion as of October 2024. The company's public profile and the scrutiny attendant to its dual listing amplify the reputational risks associated with the MBTA exposure at Bonanza Creek.
SEC reporting obligations. Criminal MBTA charges against TMC or any of its officers would constitute material legal proceedings requiring disclosure under Item 8.A.7 of Form 20-F (for TMC's annual report filed with the SEC) and potentially under applicable Canadian securities regulations as well. Even if the criminal charges were misdemeanor in nature and the potential fines were modest, the public disclosure of criminal environmental charges—particularly charges arising from the killing of migratory birds—could adversely affect TMC's share price, investor confidence, and ability to access capital markets.
Media and advocacy scrutiny. Environmental advocacy groups and media outlets may focus on the avian mortality issue at Bonanza Creek, particularly given the evocative nature of bird deaths and the connection to cyanide-bearing solution releases. The intersection of bird mortality, cyanide contamination, and gold mining in the Nevada desert has historically attracted significant media attention, and TMC should anticipate that any criminal charges or even the public filing of the consent decree with its MBTA-related provisions could generate negative press coverage.
D&O insurance implications. TMC maintains a directors' and officers' liability insurance policy with Clearwater Mutual Insurance, Ltd. (Policy No. CMI-DO-2023-10221). If individual officers face criminal MBTA charges, the D&O policy could be implicated for defense costs, subject to the policy's terms, conditions, and exclusions. We recommend that TMC coordinate with Brendan Forsythe (Account Manager, Clearwater Mutual Services, Inc.) to analyze the D&O policy's coverage provisions as they apply to criminal environmental charges and to ensure that timely notice is provided if criminal charges become a realistic possibility.
D. Financial Exposure Summary
The following table summarizes TMC's estimated financial exposure attributable to the MBTA violations at Bonanza Creek:
In absolute financial terms, the MBTA-specific exposure is modest relative to TMC's overall obligation in the consent decree (grand total of approximately $409.9 million across all four sites). However, the qualitative dimensions of the risk—particularly the potential for criminal charges against the company and individual officers, and the reputational harm associated with bird deaths at a cyanide operation—justify a level of attention and investment that is disproportionate to the dollar figures alone.
V. Integration with Consent Decree Negotiation
A. Government's Position on MBTA Resolution
Based on our communications with Philip Orenstein (DOJ, Environment and Natural Resources Division) and Margaret Coulson (EPA, Office of Enforcement and Compliance Assurance), the government has indicated a willingness to resolve the MBTA claims at Bonanza Creek civilly within the consent decree framework rather than pursuing separate criminal prosecution. This position is contingent on TMC's commitment to the following:
1. Implementation of enhanced bird deterrence measures at the Bonanza Creek solution ponds, as specified in an Avian Protection Plan to be incorporated into the consent decree;
2. Payment of the negotiated civil penalty for Bonanza Creek ($7.9 million), which, as noted above, already reflects an upward adjustment for the MBTA violations; and
3. Ongoing compliance monitoring and reporting to demonstrate the effectiveness of the enhanced deterrence measures.
The government's willingness to pursue civil resolution rather than criminal prosecution is consistent with DOJ's general prosecutorial discretion policies for incidental take cases, as discussed in Section III.E. However, the government has not provided a formal commitment or written assurance that criminal prosecution will be foregone, and the decision to defer criminal charges is inherently discretionary and could be revisited if TMC fails to comply with the consent decree's avian protection provisions or if additional mortalities occur during the negotiation or implementation period.
The $7.9 million civil penalty allocated to Bonanza Creek reflects the government's assessment that the MBTA violations add meaningful gravity to the site's overall enforcement profile. In our view, the MBTA-related increment within the $7.9 million figure is likely in the range of $500,000 to $1.5 million, based on our analysis of comparable consent decree settlements involving MBTA violations at mining operations. While we believe there is room to negotiate this increment downward—particularly if TMC can demonstrate that it has already begun implementing enhanced deterrence measures—the government's overall penalty demand for Bonanza Creek is not unreasonable given the severity of the CWA and RCRA violations.
B. USFWS Coordination
The USFWS has been consulted by Jennifer Whitfield (EPA Region 9) regarding the avian mortalities at Bonanza Creek. The USFWS's Pacific Southwest Regional Office (Region 8), which has jurisdiction over Nevada, has reviewed the mortality data and provided input to EPA and DOJ on the appropriate enforcement response.
Resolution of the MBTA claims within the consent decree will require, at minimum, USFWS concurrence or non-objection. The USFWS is not a party to the consent decree, but DOJ typically coordinates with the USFWS on any settlement that purports to resolve MBTA claims, and the USFWS's buy-in is essential to ensure that the consent decree's avian protection provisions are adequate from a biological and conservation standpoint.
We recommend that TMC proactively engage with the USFWS—through Calderwood & Harkness and sagebrush Law Group—to demonstrate TMC's good faith commitment to enhanced bird protection at Bonanza Creek. Early engagement with the USFWS will serve several purposes: (i) it will demonstrate to DOJ that TMC is taking the MBTA issue seriously and is not merely seeking to "check a box" within the consent decree; (ii) it will allow TMC to influence the design of the Avian Protection Plan to ensure that its requirements are technically feasible and cost-effective; and (iii) it will reduce the risk that the USFWS objects to the consent decree or seeks to pursue independent enforcement action.
C. Recommended Consent Decree Provisions
Based on our analysis of comparable consent decrees involving MBTA violations at mining operations and our assessment of the government's likely requirements, we recommend that the consent decree include the following provisions related to avian protection at Bonanza Creek:
1. Avian Protection Plan. The consent decree should include, as an appendix or exhibit, a comprehensive Avian Protection Plan ("APP") for the Bonanza Creek solution ponds. The APP should specify the following elements:
(a) Upgraded physical deterrence systems. The APP should require TMC to install and maintain bird exclusion netting over all solution ponds containing WAD cyanide concentrations above 50 mg/L (the USFWS's informal threshold for lethal hazard to waterfowl), automated acoustic and visual hazing devices with coverage of all uncovered pond areas, and partial or full pond cover systems where netting is not feasible due to operational constraints.
(b) Regular monitoring and mortality reporting. The APP should require TMC to conduct daily visual inspections of all solution ponds for avian carcasses or distressed birds, to report any avian mortality to the USFWS and EPA within 24 hours of discovery, and to submit quarterly summary reports of monitoring results and any mortality events.
(c) Annual third-party audits. The APP should require TMC to retain a qualified third-party auditor—potentially Verdant Analytics, Inc., as part of the independent monitor's scope under the consent decree—to conduct an annual assessment of the deterrence system's effectiveness and to recommend any necessary modifications.
(d) Adaptive management provisions. The APP should include adaptive management provisions that allow—and require—TMC to modify its deterrence measures based on monitoring results. If mortality events continue despite the upgraded deterrence systems, TMC should be required to implement additional measures identified by the third-party auditor or by the USFWS.
2. Release of MBTA criminal claims. In exchange for TMC's compliance with the Avian Protection Plan and payment of the negotiated civil penalty, the consent decree should include a release of MBTA criminal claims arising from the documented avian mortalities at Bonanza Creek during the 2021–2023 period. The release should be structured as a covenant not to sue rather than a formal dismissal with prejudice, to preserve the government's ability to pursue criminal charges for any future MBTA violations that occur outside the scope of the consent decree or in the event of material non-compliance with the APP.
3. Stipulated penalties for APP non-compliance. The consent decree should include stipulated penalties for non-compliance with the Avian Protection Plan, consistent with the decree's general stipulated penalty framework. We recommend the following graduated penalty structure:
• $1,500 per day for each day of non-compliance during the first thirty (30) days following notice of non-compliance;
• $3,000 per day for each day of non-compliance from day thirty-one (31) through day sixty (60); and
• $5,500 per day for each day of non-compliance from day sixty-one (61) and thereafter.
These stipulated penalties are intended to provide a meaningful deterrent against non-compliance with the APP while remaining proportionate to the nature of the obligation. They are consistent with the stipulated penalty levels established elsewhere in the consent decree for comparable compliance obligations.
VI. Recommended Mitigation Strategies
A. Immediate Operational Measures (Pre-Consent Decree Entry)
We strongly recommend that TMC take the following immediate steps to enhance bird deterrence at Bonanza Creek, even before the consent decree is finalized and entered. Taking prompt action will serve multiple purposes: it will reduce the ongoing risk of additional avian mortalities (which would expand TMC's MBTA exposure and undermine its negotiating position), it will demonstrate good faith to DOJ and EPA, and it will create a documented record of proactive compliance that can be cited in any future defense or sentencing mitigation argument.
1. Engage Pinnacle Creek Environmental for immediate assessment. TMC should direct Pinnacle Creek Environmental, LLC (Dr. Astrid Bergmann, P.E.) to conduct an immediate, focused assessment of the existing bird deterrence systems at Bonanza Creek and to recommend specific upgrades. Dr. Bergmann's team has already conducted a preliminary assessment as part of the broader site evaluation; the immediate assessment should build on that work and provide actionable recommendations within thirty (30) days.
2. Install supplemental netting and hazing devices. Based on the preliminary assessment, TMC should install supplemental bird exclusion netting and automated hazing devices over the highest-risk solution ponds within sixty (60) days. Priority should be given to the pregnant solution ponds, which have the highest WAD cyanide concentrations and the greatest documented mortality rates. Automated hazing devices—including programmable auditory deterrents and motion-activated visual deterrents—should replace or supplement the existing static propane cannons, which have demonstrated limited effectiveness.
3. Implement daily monitoring and mortality reporting protocols. TMC should immediately implement a protocol requiring daily visual inspections of all solution ponds by trained environmental personnel, with same-day documentation of any avian mortality or distressed bird observations. Mortality events should be reported to the USFWS and EPA within 24 hours of discovery. This protocol should be documented in a written standard operating procedure and communicated to all site personnel.
4. Train site personnel. TMC should conduct training sessions for all Bonanza Creek site personnel on bird deterrence best practices, mortality reporting requirements, and the legal significance of MBTA compliance. Training should be documented and records maintained.
5. Document all mitigation efforts meticulously. Every step taken to improve bird deterrence at Bonanza Creek—from equipment purchases to personnel training to monitoring logs—should be documented with dates, descriptions, photographs, and responsible personnel. This documentation will serve as TMC's primary evidence of good faith in any future interaction with DOJ, EPA, USFWS, or a court.
B. Long-Term Measures (Post-Consent Decree Entry)
Following entry of the consent decree, TMC should implement the following long-term measures to ensure sustained MBTA compliance and minimize ongoing bird mortality risk at Bonanza Creek:
1. Full implementation of the Avian Protection Plan. TMC should comply with all requirements of the APP as incorporated into the consent decree, including upgraded deterrence systems, monitoring and reporting protocols, annual third-party audits, and adaptive management.
2. Engineering controls to reduce solution-pond hazard. TMC should evaluate engineering controls that would reduce the overall bird mortality hazard at the source, rather than relying solely on deterrence measures to prevent bird contact with contaminated water. Potential engineering controls include: (a) reduction of open solution-pond surface area through consolidation of ponds or conversion from open ponds to covered tanks; (b) accelerated cyanide destruction in process solutions (e.g., through enhanced oxidation or treatment systems) to reduce WAD cyanide concentrations to levels that are less acutely lethal to birds; and (c) installation of floating covers or balls on pond surfaces to reduce the visual attractiveness of the water surface to birds.
3. Coordination with broader remediation. TMC should ensure that the Bonanza Creek liner repair and containment plan—which is required to commence by June 14, 2026, under the consent decree's scope-of-work provisions—is designed and implemented in a manner that also reduces t