INDEPENDENT ENVIRONMENTAL MONITOR AGREEMENT
DRAFT — January 30, 2025
by and among
TORCHLIGHT MINING CORP. a corporation organized under the Canada Business Corporations Act ("Respondent" or "TMC")
and
THE UNITED STATES OF AMERICA acting through the U.S. Environmental Protection Agency and the U.S. Department of Justice, Environment and Natural Resources Division ("the United States" or "Government")
and
VERDANT ANALYTICS, INC. an Oregon corporation ("Monitor" or "Verdant")
In connection with the Consent Decree entered in
United States of America and State of Montana v. Torchlight Mining Corp., et al. Civil Action No. 9:24-cv-00087-DWM U.S. District Court for the District of Montana, Missoula Division
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RECITALS
WHEREAS:
A. Background of the Consent Decree. On January 18, 2024, the United States of America, acting through the U.S. Department of Justice, Environment and Natural Resources Division, on behalf of the U.S. Environmental Protection Agency, filed a complaint in the United States District Court for the District of Montana, Missoula Division, bearing Civil Action No. 9:24-cv-00087-DWM, against Torchlight Mining Corp., Torchlight Mining (U.S.) Inc., Torchlight Specialty Chemicals, Inc., Ridgecrest Mine Holdings, LLC, and Bonanza Creek Mining, LLC (collectively, the "Defendants"), alleging violations of the Federal Water Pollution Control Act, commonly known as the Clean Water Act ("CWA"), 33 U.S.C. §§ 1251 et seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901 et seq.; and the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq., at four facilities owned and operated by the Defendants and their affiliates in the States of Montana, Nevada, and West Virginia. The States of Montana, Nevada, and West Virginia joined the action as co-plaintiffs, asserting parallel claims under their respective state environmental statutes. The complaint alleges, among other things, unpermitted discharges of pollutants to waters of the United States, failures to comply with applicable requirements under RCRA permits and corrective action orders, and liability for response costs incurred by the United States under CERCLA.
The parties to the litigation engaged in extensive negotiations over the course of 2024 and into early 2025, culminating in a consent decree the substantially final text of which was agreed upon on February 3, 2025. The consent decree is expected to be lodged with the Court on February 19, 2025, following which the United States will publish notice of the proposed consent decree in the Federal Register for a period of public comment in accordance with 28 C.F.R. § 50.7 and the requirements of CERCLA Section 122(d)(2), 42 U.S.C. § 9622(d)(2). Upon conclusion of the public comment period and any necessary revisions, the United States will move the Court for entry of the consent decree. Among the requirements of the consent decree is the appointment of an independent environmental monitor to verify the Respondent's compliance with the remedial obligations, performance standards, milestone schedules, financial assurance requirements, and supplemental environmental project commitments established therein.
B. The Four Sites Subject to Monitoring. The consent decree addresses environmental conditions and compliance obligations at four facilities, collectively referred to herein as the "Sites":
(i) Ridgecrest Copper-Molybdenum Mine, located at 14200 Ridgecrest Mine Road, Drummond, Granite County, Montana 59832. The Ridgecrest Site encompasses an active mine footprint of approximately 3,200 acres and a total site area of approximately 8,700 acres. The mine is in a closure and reclamation phase. The consent decree establishes a negotiated remediation cost for the Ridgecrest Site of $198.6 million over a thirty (30) year period, representing the single largest remediation obligation among the four Sites.
(ii) Gallatin Chemical Works, located at 8800 Industrial Park Lane, Belgrade, Gallatin County, Montana 59714. The Gallatin Site comprises approximately 145 acres and includes active specialty chemical manufacturing operations. The estimated remediation cost for the Gallatin Site is $42.8 million over a fifteen (15) year period.
(iii) Bonanza Creek Gold Mine, located at County Road 447, Mile Marker 12, Lander County, Nevada 89820. The Bonanza Creek Site encompasses an active mine footprint of approximately 5,600 acres and a total site area of approximately 12,400 acres. The mine is an active heap-leach gold mining operation. The estimated remediation cost for the Bonanza Creek Site is $63.2 million over a twenty (20) year period.
(iv) Kanawha Bend Chemical Plant, located at 2200 Chemical Valley Road, Institute, Kanawha County, West Virginia 25112. The Kanawha Bend Site comprises approximately 78 acres and includes active chemical manufacturing operations. The estimated remediation cost for the Kanawha Bend Site is $38.9 million over a twenty (20) year period.
The total nominal remediation cost across all four Sites is $343.5 million. The total net present value of these remediation obligations, calculated at a discount rate of three percent (3%), is $245.1 million.
C. Selection of Monitor. Section [__] of the consent decree provides for the appointment of a court-approved independent environmental monitor to assess, evaluate, and report on the Respondent's compliance with the consent decree's remedial obligations, performance standards, financial assurance requirements, and supplemental environmental project commitments. Verdant Analytics, Inc. was selected as the independent environmental monitor through the process outlined in the consent decree, which involved the submission of qualifications statements, the identification and screening of candidates, and the solicitation of input from both the United States and TMC. Verdant Analytics, Inc. is an Oregon corporation with its principal office located at 1550 NW Couch Street, Suite 400, Portland, Oregon 97209. Verdant has extensive expertise in environmental compliance auditing, remediation monitoring, regulatory reporting, and independent oversight of consent decree and administrative order obligations. Dr. Kamal Osei, Senior Managing Director of Verdant Analytics, Inc., has been designated to serve as the lead engagement representative for the Monitor and possesses more than twenty years of experience in environmental remediation monitoring, including prior service as an independent monitor under federal consent decrees and administrative orders.
D. Purpose of the Agreement. This Agreement sets forth the scope, duties, compensation, reporting obligations, and term of the Monitor's engagement in connection with the consent decree. The Monitor is appointed to serve as an independent third party, acting neither as an agent nor as a representative of either the Government or TMC. The Monitor's role is to provide objective, transparent, and technically rigorous oversight of TMC's compliance with the consent decree's requirements, and to prepare and publish quarterly compliance audit reports and annual public reports as required under the consent decree.
E. TMC Subsidiaries Bound. The obligations of TMC under this Agreement extend to and bind its relevant U.S. subsidiaries: Torchlight Mining (U.S.) Inc., a Delaware corporation (EIN 83-2047156); Torchlight Specialty Chemicals, Inc., a Delaware corporation (EIN 47-3819204); Ridgecrest Mine Holdings, LLC, a Montana limited liability company (MT Secretary of State ID E1042738); and Bonanza Creek Mining, LLC, a Nevada limited liability company (NV Secretary of State Entity No. E0518294731). Each of these subsidiaries has acknowledged and agreed to be bound by the terms of this Agreement, as evidenced by the signature blocks appearing at the conclusion of this document.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Agreement" means this Independent Environmental Monitor Agreement, including all Schedules attached hereto and incorporated herein by reference, as the same may be amended from time to time in accordance with Section 10.4.
"Bonanza Creek Site" means the Bonanza Creek Gold Mine, located at County Road 447, Mile Marker 12, Lander County, Nevada 89820, together with all associated infrastructure, heap-leach pads, process ponds, pit-lake areas, waste rock storage areas, and appurtenant facilities, as more fully described in Schedule B.
"Consent Decree" means the consent decree entered by the Court in United States of America and State of Montana v. Torchlight Mining Corp., et al., Civil Action No. 9:24-cv-00087-DWM, United States District Court for the District of Montana, Missoula Division, the substantially final text of which was agreed upon on February 3, 2025, and which is expected to be lodged with the Court on February 19, 2025, as the same may be modified or amended by order of the Court.
"Court" means the United States District Court for the District of Montana, Missoula Division, Civil Action No. 9:24-cv-00087-DWM, the Honorable Donald W. Molloy, Senior United States District Judge, presiding, or such successor judge as may be assigned to the case.
"DOJ" means the United States Department of Justice, Environment and Natural Resources Division, Environmental Enforcement Section. The lead DOJ trial attorney for this matter is Philip Orenstein, and the supervising attorney is Katherine Rowe-Halpern.
"Effective Date" means the date defined in Section IV of the Consent Decree as thirty (30) days after entry of the Consent Decree by the Court. Based on the expected entry date of May 15, 2025, the target Effective Date is June 14, 2025, provided that the actual Effective Date shall be determined in accordance with the terms of the Consent Decree regardless of the target date stated herein.
"EPA" means the United States Environmental Protection Agency. The lead case attorney for the Office of Enforcement and Compliance Assurance ("OECA") is Margaret Coulson. The EPA project coordinators for the relevant Sites are Dr. Samuel Tesfaye (Ridgecrest Site, Region 8) and Jennifer Whitfield (Bonanza Creek Site, Region 9). Additional EPA regional personnel may be assigned for the Gallatin Site (Region 8) and the Kanawha Bend Site (Region 3).
"Gallatin Site" means the Gallatin Chemical Works, located at 8800 Industrial Park Lane, Belgrade, Gallatin County, Montana 59714, together with all associated manufacturing facilities, solid waste management units ("SWMUs"), groundwater treatment systems, and appurtenant infrastructure, as more fully described in Schedule B.
"Government" means the United States of America, acting through the U.S. Environmental Protection Agency and the U.S. Department of Justice, Environment and Natural Resources Division.
"Government Technical Expert" means Cascade Geosciences, Inc., an environmental consulting firm located at 804 Salmon Bay Drive, Seattle, Washington 98107, engaged by the Government to provide technical expertise in connection with the Consent Decree. The lead expert for Cascade Geosciences is Dr. Patricia Voss, Ph.D.
"Kanawha Bend Site" means the Kanawha Bend Chemical Plant, located at 2200 Chemical Valley Road, Institute, Kanawha County, West Virginia 25112, together with all associated manufacturing facilities, waste treatment and storage areas, groundwater monitoring systems, and appurtenant infrastructure, as more fully described in Schedule B.
"Monitor" means Verdant Analytics, Inc., an Oregon corporation, together with its officers, employees, agents, and approved sub-consultants acting in the course of performing duties under this Agreement.
"Monitor Representative" means Dr. Kamal Osei, Senior Managing Director of Verdant Analytics, Inc., or such replacement individual as may be approved pursuant to Section 3.6 of this Agreement.
"Parties" means TMC, the Government, and the Monitor, collectively, and "Party" means any one of them.
"Quarter" means each successive three-month period commencing on the Effective Date and continuing throughout the term of this Agreement. The first Quarter shall commence on the Effective Date and end ninety (90) days thereafter; subsequent Quarters shall follow consecutively.
"Respondent" or "TMC" means Torchlight Mining Corp., a corporation organized under the Canada Business Corporations Act, together with its relevant U.S. subsidiaries: Torchlight Mining (U.S.) Inc. (a Delaware corporation), Torchlight Specialty Chemicals, Inc. (a Delaware corporation), Ridgecrest Mine Holdings, LLC (a Montana limited liability company), and Bonanza Creek Mining, LLC (a Nevada limited liability company).
"Ridgecrest Site" means the Ridgecrest Copper-Molybdenum Mine, located at 14200 Ridgecrest Mine Road, Drummond, Granite County, Montana 59832, together with all associated mine workings, tailings impoundments, waste rock storage facilities, water treatment infrastructure, and appurtenant areas, as more fully described in Schedule B.
"SEPs" means the Supplemental Environmental Projects required under the Consent Decree, consisting of: (i) the Flint Creek Watershed Restoration Project, with a total commitment of five million five hundred thousand dollars ($5,500,000); (ii) the Battle Mountain Community Drinking Water Improvement Project, with a total commitment of three million five hundred thousand dollars ($3,500,000); and (iii) the Institute Community Air Quality Monitoring Network, with a total commitment of three million dollars ($3,000,000). The total SEP commitment under the Consent Decree is twelve million dollars ($12,000,000).
"Sites" means the Ridgecrest Site, the Gallatin Site, the Bonanza Creek Site, and the Kanawha Bend Site, collectively, and "Site" means any one of them.
"State Co-Plaintiffs" means the State of Montana, acting through the Montana Department of Environmental Quality ("Montana DEQ") (lead counsel: Annika Hedstrom); the State of Nevada, acting through the Nevada Division of Environmental Protection ("NV DEP") (lead counsel: Ricardo Fuentes); and the State of West Virginia, acting through the West Virginia Department of Environmental Protection ("WV DEP") (lead counsel: Loretta May Hatcher).
"TMC Environmental Consultant" means Pinnacle Creek Environmental, LLC, located at 320 Willowbrook Drive, Suite 100, Bozeman, Montana 59715, the environmental consulting firm retained by TMC to provide technical support in connection with the Consent Decree. The engagement lead for Pinnacle Creek Environmental is Dr. Astrid Bergmann, P.E.
Section 1.2 — Rules of Construction
Terms defined in the Consent Decree and not otherwise defined in this Agreement shall have the meanings set forth in the Consent Decree. Section headings used in this Agreement are for convenience of reference only and shall not affect the interpretation or construction of any provision. The use of the word "including" or "includes" in this Agreement means "including but not limited to" or "includes but is not limited to," as applicable, and shall not be construed to limit any general statement to the specific items immediately following. Where the context so requires, words in the singular shall include the plural and vice versa, and words in any gender shall include all genders. References to Sections, Articles, and Schedules are to Sections, Articles, and Schedules of this Agreement unless otherwise indicated. The words "herein," "hereof," "hereunder," and words of similar import refer to this Agreement as a whole and not to any particular provision.
ARTICLE II — APPOINTMENT AND INDEPENDENCE OF MONITOR
Section 2.1 — Appointment
The Government and TMC hereby jointly appoint Verdant Analytics, Inc. as the Independent Environmental Monitor under Section [__] of the Consent Decree, subject to approval by the Court. The Monitor shall commence the performance of its duties and responsibilities under this Agreement upon the Effective Date. Prior to the Effective Date, the Monitor may undertake preliminary administrative and organizational activities (including the assembly of its core monitoring team, the development of audit protocols, and initial familiarization with available site data and consent decree requirements), provided that no Monitor fees or expenses incurred prior to the Effective Date shall be chargeable to TMC without prior written agreement of TMC. Upon entry of the Consent Decree by the Court and the occurrence of the Effective Date, the Monitor's appointment shall become fully operative and all rights and obligations set forth in this Agreement shall take effect.
Section 2.2 — Independence
The Monitor shall at all times act as an independent third party in the performance of its duties and responsibilities under this Agreement. The Monitor is not an agent, employee, or representative of the Government, TMC, or any State Co-Plaintiff, and nothing in this Agreement shall be construed to create any such relationship. The Monitor shall exercise its independent professional judgment in assessing compliance, preparing reports, and making recommendations. No Party shall have the right to direct, control, or influence the Monitor's conclusions, opinions, or recommendations. The Parties may provide factual information, technical data, and documentary materials to the Monitor, and may submit written comments on draft reports as provided in Article IV, but such submissions shall not be construed as an attempt to direct or constrain the Monitor's independent professional judgment. The Monitor shall perform its duties with objectivity, impartiality, and in accordance with generally accepted professional standards applicable to environmental compliance auditing and monitoring.
Section 2.3 — Conflicts of Interest
Verdant Analytics, Inc. hereby represents and warrants that, as of the date of execution of this Agreement:
(a) It has no direct or indirect financial interest in TMC, any of TMC's subsidiaries identified in Recital E, or any entity that has a material business relationship with TMC or its subsidiaries, including any ownership interest, partnership interest, joint venture interest, or contractual right to share in the revenues or profits of TMC or its subsidiaries.
(b) None of the principals, officers, directors, or employees of Verdant who will be assigned to perform duties under this Agreement has any personal financial interest in TMC or its subsidiaries, or any familial or close personal relationship with any officer, director, or senior manager of TMC or its subsidiaries.
(c) Verdant has not, within the five (5) years preceding the date of this Agreement, performed any consulting, auditing, or advisory services for TMC or its subsidiaries, or for any entity in which TMC or its subsidiaries hold a controlling interest.
Verdant shall not accept any engagement, contract, or other business arrangement from TMC or any of its affiliates (other than the engagement established by this Agreement) during the term of this Agreement without the prior written approval of the Government. Similarly, Verdant shall not accept any engagement from the Government relating to TMC, the Sites, or the subject matter of the Consent Decree without the prior written approval of TMC. In the event that any potential conflict of interest arises during the term of this Agreement, Verdant shall promptly disclose the nature and circumstances of such potential conflict in writing to all Parties and shall take such steps as may be necessary to mitigate the conflict, including the recusal of affected personnel from Monitor activities.
Section 2.4 — No Conflicts with Government Technical Expert or TMC Consultant
Verdant Analytics, Inc. confirms that it has no existing business, financial, employment, or consulting relationship with Cascade Geosciences, Inc. (the Government's technical expert) or Pinnacle Creek Environmental, LLC (TMC's environmental consultant), and that no principal, officer, or employee of Verdant who will be assigned to perform duties under this Agreement has any ownership interest, employment relationship, or contractual arrangement with either Cascade Geosciences or Pinnacle Creek Environmental. Verdant shall maintain its independence from both of these entities throughout the term of this Agreement and shall promptly disclose to all Parties any circumstance that could reasonably be perceived as impairing such independence.
ARTICLE III — SCOPE OF DUTIES AND RESPONSIBILITIES
Section 3.1 — General Scope
The Monitor shall assess, evaluate, and report on TMC's compliance with all remedial obligations, performance standards, milestone schedules, operating requirements, and other commitments established in the Consent Decree at all four Sites. Without limiting the generality of the foregoing, the Monitor's general scope of duties shall encompass the following areas:
(a) Remediation Compliance. The Monitor shall assess TMC's compliance with all remedial action requirements, corrective action obligations, work plan milestones, interim stabilization measures, and remedy construction schedules established in the Consent Decree for each Site. The Monitor shall evaluate whether TMC's remediation activities are being conducted in accordance with approved work plans, applicable performance standards, and the timeframes specified in the Consent Decree.
(b) Financial Assurance Compliance. The Monitor shall assess TMC's compliance with the financial assurance requirements of the Consent Decree. The total financial assurance obligation is two hundred forty-five million dollars ($245,000,000), consisting of a surety bond in the amount of one hundred sixty-five million dollars ($165,000,000) issued by Ironbark Surety of America, Inc. (Bond No. ISA-ENV-2025-08934) and a remediation trust fund in the amount of eighty million dollars ($80,000,000) established at Larchfield Trust Company, N.A. (Trust No. LTC-REM-2025-1177). The Monitor shall verify the continued validity, adequacy, and sufficiency of these financial assurance instruments throughout the term, including compliance with any annual adjustment mechanisms or adequacy review provisions specified in the Consent Decree.
(c) SEP Compliance. The Monitor shall assess TMC's compliance with the Supplemental Environmental Project requirements of the Consent Decree, including the timely funding and implementation of the Flint Creek Watershed Restoration Project ($5,500,000), the Battle Mountain Community Drinking Water Improvement Project ($3,500,000), and the Institute Community Air Quality Monitoring Network ($3,000,000), totaling twelve million dollars ($12,000,000).
(d) Civil Penalty Payment Compliance. The Monitor shall assess TMC's compliance with the civil penalty payment schedule established in the Consent Decree. The total civil penalty amount is thirty-one million five hundred thousand dollars ($31,500,000), payable in four installments as follows: twenty-five percent (25%) of the total amount, or seven million eight hundred seventy-five thousand dollars ($7,875,000), due within thirty (30) days after entry of the Consent Decree by the Court; and three equal installments of seven million eight hundred seventy-five thousand dollars ($7,875,000) each, due at twelve (12), twenty-four (24), and thirty-six (36) months after entry of the Consent Decree, respectively.
Section 3.2 — Quarterly Compliance Audits
The Monitor shall conduct quarterly compliance audits commencing within ninety (90) days of the Effective Date and continuing throughout the term of this Agreement. Each quarterly compliance audit shall be comprehensive in scope and shall include the following components:
(a) On-Site Inspections. The Monitor shall conduct on-site inspections of each Site during each Quarter. During the first two (2) years of the term, the Monitor shall conduct a minimum of one (1) on-site inspection of each Site per Quarter (i.e., a minimum of four (4) on-site inspections per Quarter across all four Sites). After the conclusion of the second year, the frequency of on-site inspections may be adjusted with the prior written approval of EPA, taking into account the compliance status of each Site, the progress of remediation activities, and the nature and complexity of the remaining obligations at each Site.
(b) Review of Self-Monitoring Data. The Monitor shall review TMC's self-monitoring data, sampling results, laboratory analyses, discharge monitoring reports, and other environmental reports submitted by TMC to EPA, DOJ, State Co-Plaintiffs, and relevant state regulatory agencies. The Monitor shall evaluate the completeness, accuracy, and timeliness of such data and reports, and shall assess whether the data indicate compliance with applicable discharge limits, performance standards, and other requirements of the Consent Decree.
(c) Milestone Schedule Review. The Monitor shall review work plan progress against the milestone schedules established in the Consent Decree. The key milestones to be tracked by the Monitor include, without limitation:
(i) Ridgecrest Site: Submission of the Remedial Action Work Plan, due December 14, 2025; commencement of remedy construction, due June 14, 2027; completion of the thirty (30) year remediation schedule, with a target end date of June 14, 2055.
(ii) Gallatin Site: Submission of the Corrective Measures Study, due June 14, 2026.
(iii) Bonanza Creek Site: Commencement of liner repair and containment measures, due June 14, 2026.
(iv) Kanawha Bend Site: Completion of interim stabilization measures, due December 14, 2026.
(d) Financial Assurance Verification. The Monitor shall verify the validity and adequacy of TMC's financial assurance instruments, including the surety bond and remediation trust fund identified in Section 3.1(b), and shall review compliance with any annual adjustment mechanisms specified in the Consent Decree.
(e) SEP Implementation Assessment. The Monitor shall assess the status of implementation of each Supplemental Environmental Project, including the achievement of interim and final milestones, the expenditure of committed funds, and the quality and effectiveness of project activities.
(f) Stipulated Penalty and Force Majeure Review. The Monitor shall review any stipulated penalty events that have occurred or may be occurring during the Quarter, including the factual bases for any such events and TMC's response thereto. The Monitor shall also review any force majeure notices submitted by TMC under the Consent Decree and shall assess the validity and reasonableness of such claims.
(g) Interviews. The Monitor shall conduct interviews with TMC personnel as reasonably necessary to assess compliance, including, without limitation, Gareth Linford, Vice President, Environmental Health & Safety, Torchlight Mining Corp., and other TMC officers and employees with relevant knowledge. The Monitor shall also conduct interviews with TMC's environmental consultant, Pinnacle Creek Environmental, LLC, including engagement lead Dr. Astrid Bergmann, P.E., as reasonably necessary to understand the status of ongoing remediation and compliance activities.
(h) Correspondence Review. The Monitor shall review relevant correspondence between TMC and EPA, DOJ, and the State Co-Plaintiffs regarding compliance issues, dispute notices, requests for extension, force majeure claims, and other matters material to the Monitor's assessment of TMC's compliance with the Consent Decree.
Section 3.3 — Annual Public Reports
The Monitor shall prepare and publish an annual public report summarizing its findings from the quarterly compliance audits conducted during the preceding twelve (12) month reporting period. Each annual public report shall include the following components:
(a) A site-by-site compliance status assessment for each of the four Sites, setting forth the Monitor's findings with respect to each major category of obligation under the Consent Decree.
(b) A summary of remediation progress at each Site against the milestones and schedules established in the Consent Decree, including an assessment of whether TMC is on track to meet upcoming milestones.
(c) Identification and description of any compliance deficiencies, deviations from approved work plans, or areas of concern observed by the Monitor during the reporting period.
(d) An assessment of the adequacy of TMC's financial assurance instruments, including the continued validity of the surety bond and the sufficiency of the remediation trust fund balance relative to projected remediation costs.
(e) An evaluation of TMC's progress in implementing the Supplemental Environmental Projects required under the Consent Decree.
(f) Recommendations for corrective actions, if any, to address identified compliance deficiencies or areas of concern.
(g) An overall compliance rating for each Site, expressed using the following rating categories: "In Compliance," "In Compliance with Conditions" (indicating substantial compliance with specified areas requiring attention), or "Not in Compliance" (indicating one or more material compliance deficiencies). The Monitor shall provide a narrative explanation supporting each rating.
Each annual public report shall be provided to the following recipients: (i) the Court, filed in the docket of Civil Action No. 9:24-cv-00087-DWM; (ii) the U.S. Environmental Protection Agency, Office of Enforcement and Compliance Assurance, Attention: Margaret Coulson; (iii) the U.S. Department of Justice, Environment and Natural Resources Division, Environmental Enforcement Section, Attention: Philip Orenstein; (iv) Torchlight Mining Corp., Attention: Miriam Soo-Hwan Park, General Counsel; (v) the State Co-Plaintiffs (Annika Hedstrom, Montana DEQ; Ricardo Fuentes, NV DEP; Loretta May Hatcher, WV DEP); and (vi) made available to the general public through posting on the Monitor's website and, if requested by the Court or EPA, through publication in the Federal Register or other appropriate forum.
The first annual public report shall be due within fifteen (15) months of the Effective Date. Subsequent annual reports shall be due annually thereafter on the anniversary of the first report's due date, unless otherwise ordered by the Court.
Section 3.4 — Special Reports
The Monitor may issue special reports at any time during the term of this Agreement upon discovery of any of the following circumstances:
(a) A material violation of the Consent Decree by TMC that, in the Monitor's professional judgment, warrants immediate attention by EPA, DOJ, or the Court.
(b) An imminent threat to human health or the environment arising from conditions at any of the Sites or from TMC's failure to comply with the requirements of the Consent Decree.
(c) A significant deviation from an approved work plan, remediation schedule, or performance standard that, in the Monitor's professional judgment, is likely to result in a failure to achieve the objectives of the Consent Decree or to meet one or more critical milestones.
Special reports shall be provided to EPA (OECA and the relevant regional office), DOJ (ENRD), TMC (General Counsel's office), and the Court within fifteen (15) business days of the Monitor's determination that a special report is warranted. In cases involving an imminent threat to human health or the environment, the Monitor shall provide immediate telephonic or electronic notification to EPA and DOJ, followed by the written special report within the timeframe specified above.
For purposes of this Section 3.4, material violations include, without limitation: unpermitted discharges of pollutants to waters of the United States; failure to meet remediation milestones by more than ninety (90) days beyond the applicable deadline; failure to maintain required financial assurance instruments in the amounts and forms specified in the Consent Decree; failure to make civil penalty payments when due; and any other violation that, in the Monitor's professional judgment, poses a significant risk to human health, the environment, or the integrity of the remediation program.
Section 3.5 — Site Access and Information Rights
(a) Site Access. TMC shall provide the Monitor with unrestricted access to all Sites during normal business hours (8:00 a.m. to 5:00 p.m. local time, Monday through Friday, excluding federal holidays) and at other reasonable times upon forty-eight (48) hours' advance written notice to TMC's General Counsel or designated site contact. In the event of an emergency or a suspected imminent environmental threat, the Monitor shall have the right to access any Site immediately without prior notice, provided that the Monitor shall notify TMC as soon as practicable after obtaining such access. TMC shall ensure that appropriate site health and safety orientation and personal protective equipment are available to Monitor personnel upon arrival.
(b) Document and Data Access. TMC shall provide the Monitor with timely access to all environmental records, monitoring data, sampling results, laboratory analyses, discharge monitoring reports, inspection records, correspondence with federal and state regulators, approved work plans, progress reports, financial assurance documentation, and any other documents or data reasonably requested by the Monitor in connection with the performance of its duties under this Agreement. TMC shall respond to document and data requests within ten (10) business days, or such shorter period as may be necessary to address time-sensitive matters. Electronic access to TMC's environmental data management systems shall be provided to the Monitor to the extent practicable.
(c) Cooperation of TMC's Environmental Consultant. TMC shall direct its environmental consultant, Pinnacle Creek Environmental, LLC (Dr. Astrid Bergmann, P.E., engagement lead), to cooperate fully with the Monitor and to provide information, data, and technical explanations as reasonably requested by the Monitor in connection with the performance of its duties.
(d) Government Information Access. The Government shall provide the Monitor with access to relevant EPA inspection reports, sampling data, compliance evaluation reports, and correspondence with TMC to the extent such materials are not subject to applicable legal restrictions on disclosure.
(e) Sub-Consultants. The Monitor may retain sub-consultants or specialized technical experts as necessary to fulfill its obligations under this Agreement, subject to the prior written approval of the Government and written notice to TMC. The costs of approved sub-consultants shall be included within the compensation structure set forth in Article V and shall be subject to the budgetary oversight provisions of Section 5.5.
Section 3.6 — Monitor Personnel
Dr. Kamal Osei shall serve as the Monitor Representative and primary point of contact for all matters arising under this Agreement. Dr. Osei shall be responsible for the overall direction and management of the Monitor's engagement and shall devote such time and resources as are reasonably necessary to fulfill the Monitor's obligations under this Agreement.
Verdant may assign additional qualified staff members to assist Dr. Osei in the performance of the Monitor's duties, provided that all key personnel assigned to the engagement are identified in writing to the Parties prior to commencing work on the engagement or, in the case of personnel added after the commencement of the engagement, within ten (10) business days of their assignment. Key personnel shall include, at a minimum, the individuals designated as site inspection leads for each of the four Sites and any senior analyst or project manager assigned to the engagement.
Replacement of Dr. Osei as Monitor Representative requires the prior written approval of both the Government and TMC. In the event that the Government and TMC are unable to agree on a replacement Monitor Representative, either Party may petition the Court to resolve the matter, and the Court's decision shall be final and binding. Verdant shall provide the Parties with not less than sixty (60) days' advance notice of any anticipated need to replace Dr. Osei as Monitor Representative, together with the qualifications and experience of the proposed replacement.
Verdant shall maintain a core monitoring team of at least four (4) qualified environmental professionals (including Dr. Osei) throughout the term of this Agreement. Qualified environmental professionals, for purposes of this Section, shall mean individuals with at least five (5) years of experience in environmental compliance auditing, remediation monitoring, or a closely related discipline, and who hold relevant professional certifications or advanced degrees in environmental science, environmental engineering, chemistry, geology, or a related field.
Section 3.7 — Coordination with Regulators and TMC Counsel
The Monitor shall coordinate with EPA project coordinators and other relevant agency personnel as necessary to fulfill its duties under this Agreement. Specifically, the Monitor shall maintain regular communication with Dr. Samuel Tesfaye (Ridgecrest Site, EPA Region 8), Jennifer Whitfield (Bonanza Creek Site, EPA Region 9), and such EPA Region 3 personnel as may be designated for the Kanawha Bend Site. The Monitor shall also coordinate with OECA lead case attorney Margaret Coulson on matters of general compliance oversight.
The Monitor shall coordinate as necessary with TMC's lead outside counsel, Calderwood & Harkness LLP (Harrison Wexford, Responsible Partner; Matter No. 1039-00003), and with TMC's local counsel in each jurisdiction: Holcroft, Dane & Weiss LLP (Russell Dane — Montana), sagebrush Law Group, PLLC (Denise Quartaro — Nevada), and Baxter, Tully & Crane PLLC (Nathan Tully — West Virginia). The Monitor shall also coordinate with the State Co-Plaintiffs and their designated counsel as reasonably requested.
Nothing in this Agreement creates or shall be construed to create an attorney-client relationship, a work-product relationship, or any form of privileged communication between the Monitor and TMC, TMC's counsel, the Government, or any State Co-Plaintiff. The Monitor's independent professional role is distinct from the legal representation provided by counsel to the Parties, and the Monitor's communications with any Party or its counsel shall not be subject to any privilege claim.
ARTICLE IV — REPORTING PROCEDURES
Section 4.1 — Quarterly Audit Reports
The Monitor shall prepare written quarterly audit reports for each Quarter of the engagement. Each quarterly audit report shall be due within forty-five (45) days after the close of the Quarter to which it relates. The quarterly audit report shall be formatted as a written narrative and shall include, at a minimum, the following components: data tables summarizing relevant monitoring data and sampling results; site inspection summaries for each Site visited during the Quarter; photographic documentation of site conditions and remediation progress; analyses of sampling data in relation to applicable performance standards and discharge limits; an assessment of milestone compliance; and any observations, findings, or recommendations arising from the quarterly audit.
Each quarterly audit report shall be distributed to the following recipients: EPA (OECA and the relevant regional offices with jurisdiction over the Sites), DOJ (ENRD, Environmental Enforcement Section), TMC (General Counsel's office), and the State Co-Plaintiffs.
Section 4.2 — Annual Reports
The Monitor shall prepare written annual reports for each twelve (12) month reporting period of the engagement. Each annual report shall be due within ninety (90) days after the close of the twelve-month reporting period to which it relates. Each annual report shall include, at a minimum, an executive summary; detailed site-by-site compliance analyses; compliance ratings for each Site (using the rating categories described in Section 3.3(g)); a comprehensive assessment of remediation progress against Consent Decree milestones; a financial assurance adequacy analysis; a SEP progress evaluation; and the Monitor's recommendations.
Annual reports shall be filed with the Court in the docket of Civil Action No. 9:24-cv-00087-DWM and made publicly available through the means described in Section 3.3.
Section 4.3 — TMC Comment Period
TMC shall have thirty (30) days from receipt of each draft quarterly or annual report to submit written factual comments, corrections, or supplemental information to the Monitor. TMC's comments shall be limited to factual matters and shall clearly identify the specific findings or statements to which TMC objects, together with the factual basis for any proposed correction.
The Monitor shall consider TMC's comments in good faith and shall make corrections to the extent that TMC identifies genuine factual errors. However, the Monitor retains sole discretion over the content, conclusions, opinions, and recommendations contained in its reports. TMC's comments (and the Monitor's response to any disputed factual matters that remain unresolved after consideration of TMC's comments) shall be included as an appendix to the final report.
Section 4.4 — Government Comment Period
EPA and DOJ shall have thirty (30) days from receipt of each draft quarterly or annual report to submit written comments, requests for additional information, or requests for clarification to the Monitor. The Monitor shall address Government comments in the final report, including by providing additional analyses, clarifications, or supplemental information as appropriate.
Section 4.5 — Record Retention
The Monitor shall retain all work papers, sampling data, field notes, photographs, correspondence, invoices, sub-consultant reports, internal memoranda, and final reports generated in connection with the performance of its duties under this Agreement for a period of ten (10) years following the termination of this Agreement, or such longer period as may be required by order of the Court. Upon termination of this Agreement, the Monitor shall, at the request of EPA, provide copies of all such records to EPA in an organized and indexed format.
ARTICLE V — COMPENSATION AND EXPENSES
Section 5.1 — Estimated Total Cost
The estimated total cost of the Monitor's engagement over the initial five-year term is four million eight hundred thousand dollars ($4,800,000), or approximately nine hundred sixty thousand dollars ($960,000) per year. This estimate is based on the scope of duties described in Article III and reflects the anticipated level of effort, travel, and sub-consultant support required to fulfill the Monitor's obligations. The estimate includes professional fees for Verdant personnel, travel expenses (including airfare, ground transportation, lodging, and per diem), sub-consultant costs, sampling and laboratory analysis costs (to the extent independently performed or commissioned by the Monitor), administrative overhead, and document management expenses.
The estimated total cost is provided for budgetary planning purposes and does not constitute a cap on Monitor compensation. Actual costs may vary based on the complexity of compliance issues encountered, the frequency of site inspections, the need for special reports, and other factors that cannot be fully predicted at the outset of the engagement. Any material variance from the estimated cost shall be addressed through the budgetary oversight procedures set forth in Section 5.5.
Section 5.2 — Payment Responsibility
TMC shall be solely responsible for the payment of all Monitor fees and expenses incurred in connection with the performance of the Monitor's duties under this Agreement. TMC's obligation to pay Monitor fees and expenses is separate from and in addition to TMC's obligations under the Consent Decree to pay remediation costs (estimated at $343.5 million in nominal terms), civil penalties ($31,500,000), Supplemental Environmental Project commitments ($12,000,000), financial assurance costs, and EPA past-costs reimbursement. The appointment and compensation of the Monitor shall not reduce, offset, or otherwise affect any of TMC's obligations under the Consent Decree.
Section 5.3 — Fee Schedule
Verdant's hourly rates for key personnel categories are set forth in Schedule A attached hereto and incorporated herein by reference. The fee schedule includes rates for the Monitor Representative (Dr. Kamal Osei), senior environmental professionals, mid-level environmental professionals, staff analysts, and administrative support personnel.
Hourly rates shall be subject to annual adjustment, effective on each anniversary of the Effective Date, in an amount not to exceed [__]% per year. Any rate adjustment shall be communicated to TMC and EPA in writing at least thirty (30) days prior to the effective date of the adjustment.
Out-of-pocket expenses, including travel (airfare, rental car, mileage at the then-applicable IRS standard mileage rate), lodging, meals (at the then-applicable GSA per diem rates), laboratory analysis costs, and sub-consultant fees, shall be reimbursed at actual cost upon submission of supporting documentation. Verdant shall use reasonable efforts to minimize travel and other out-of-pocket expenses consistent with the effective performance of its duties.
Section 5.4 — Invoicing and Payment
The Monitor shall submit detailed monthly invoices to TMC, directed to the General Counsel's office at the address specified in Section 10.3, with a concurrent copy to EPA (OECA). Each invoice shall include an itemized description of the services performed during the billing period, the identity and billing rate of each Verdant professional who performed services, the number of hours worked by each individual, and an itemized list of out-of-pocket expenses with supporting documentation.
Payment of each invoice shall be due within thirty (30) days of TMC's receipt thereof. TMC may dispute specific line items on an invoice in good faith, provided that TMC provides the Monitor with a written statement identifying the disputed items and the basis for the dispute within fifteen (15) days of receipt of the invoice. Undisputed amounts shall be paid in full on or before the due date notwithstanding any pending disputes regarding other items on the same invoice. Disputes over invoiced amounts that are not resolved through direct communication between the Monitor and TMC shall be resolved under the dispute resolution mechanism set forth in Article VIII. Late payments shall bear interest at the rate specified in 28 U.S.C. § 1961, calculated from the due date until the date of payment.
Section 5.5 — Budget Oversight
The Monitor shall provide EPA and TMC with an annual budget estimate at the beginning of each year of the term, setting forth the anticipated costs for the upcoming year by major cost category (professional fees, travel, sub-consultants, laboratory analysis, administrative overhead, and other expenses). The first annual budget estimate shall be provided within thirty (30) days of the Effective Date.
If, at any point during a given year, actual costs incurred or projected to be incurred are expected to exceed the annual budget estimate by more than fifteen percent (15%), the Monitor shall promptly notify EPA and TMC in writing, providing an explanation of the factors contributing to the cost increase and a revised budget estimate for the remainder of the year. EPA retains authority to approve or reject Monitor expenditures exceeding the annual budget estimate by more than fifteen percent (15%). TMC shall not be obligated to pay for Monitor expenditures that exceed the annual budget estimate by more than fifteen percent (15%) unless such expenditures have been approved by EPA.
ARTICLE VI — TERM AND TERMINATION
Section 6.1 — Initial Term
This Agreement shall become effective on the Effective Date of the Consent Decree (target: June 14, 2025) and shall continue for an initial term of five (5) years from the Effective Date (i.e., through approximately June 14, 2030), unless earlier terminated or extended as provided in this Article VI. During the initial term, the Monitor shall perform all duties and responsibilities described in this Agreement and shall remain available and prepared to fulfill its obligations continuously.
Section 6.2 — Extension
The term of this Agreement may be extended beyond the initial five-year term by mutual written agreement of the Government and TMC, or by order of the Court upon motion of any Party. Extension of the term may be sought by the Government if remediation activities are not substantially completed at any Site upon expiration of the initial term, or if the Government determines that continued monitoring is necessary to ensure TMC's compliance with the Consent Decree. The Consent Decree provides that termination of the consent decree obligations occurs on a site-by-site basis, with no Site eligible for termination sooner than five (5) years after completion of all remedial construction at that Site and certification of completion by EPA. Accordingly, the Monitor's engagement may need to be extended for one or more Sites even if monitoring is no longer necessary at other Sites. Any extension shall be on such terms and conditions as the Parties may agree, or as the Court may order, and shall include appropriate adjustments to the Monitor's compensation to reflect the scope of continuing obligations.
Section 6.3 — Early Termination
The Government or TMC may seek early termination of the Monitor's appointment by motion to the Court upon a showing that monitoring is no longer necessary. Grounds for early termination include, without limitation, a determination by EPA that all Sites have achieved the completion criteria specified in the Consent Decree and that EPA has issued a certification of completion for each Site. The Court shall rule on any motion for early termination after providing all Parties and the Monitor an opportunity to be heard.
In the event that Verdant becomes unable or unwilling to continue in its role as Monitor, Verdant shall provide not less than ninety (90) days' advance written notice to all Parties. During such notice period, Verdant shall continue to fulfill its duties to the extent practicable and shall cooperate in the orderly transition of its responsibilities to a successor monitor. A successor monitor shall be selected using the process set forth in Section 3.6 of this Agreement and in the relevant provisions of the Consent Decree.
Section 6.4 — Survival
The following obligations shall survive the termination or expiration of this Agreement: the record retention obligations set forth in Section 4.5; the confidentiality obligations set forth in Article VII; the indemnification obligations set forth in Article IX; and any other obligations that, by their nature, are intended to survive termination. Survival of these obligations shall continue for the periods specified in the relevant Sections, or indefinitely in the case of obligations for which no specific survival period is stated.
ARTICLE VII — CONFIDENTIALITY AND PRIVILEGE
Section 7.1 — Confidential Business Information
TMC may designate certain information provided to the Monitor as confidential business information ("CBI") in accordance with the procedures and standards set forth in EPA's CBI regulations at 40 C.F.R. Part 2, Subpart B. Any information so designated shall be clearly marked as "CONFIDENTIAL BUSINESS INFORMATION" at the time of its disclosure to the Monitor. The Monitor shall protect CBI from unauthorized disclosure and shall implement reasonable administrative, technical, and physical safeguards to prevent the inadvertent release of CBI to persons not authorized to receive it. The Monitor shall not include CBI in its public reports or in any documents made available to the general public, except in summary, aggregated, or anonymized form that does not reveal the specific confidential business information designated by TMC.
CBI designations by TMC shall not limit the Monitor's ability to share information, including CBI, with EPA, DOJ, or the Court in the performance of its duties under this Agreement or as required by applicable law. The Monitor may also share CBI with the State Co-Plaintiffs to the extent necessary for the performance of monitoring functions, provided that such State Co-Plaintiffs have agreed to maintain the confidentiality of the information in accordance with applicable state law.
Section 7.2 — No Attorney-Client Privilege
Communications between the Monitor and TMC, TMC's counsel (including Calderwood & Harkness LLP, Holcroft, Dane & Weiss LLP, sagebrush Law Group, PLLC, and Baxter, Tully & Crane PLLC), or TMC's environmental consultant (Pinnacle Creek Environmental, LLC) are not protected by the attorney-client privilege, the work-product doctrine, or any other legal privilege. TMC is advised to consult with its own counsel separately regarding any matters that TMC wishes to maintain as privileged, and TMC should not disclose privileged communications or work-product materials to the Monitor.
Section 7.3 — Monitor's Work Product
The Monitor's reports, work papers, analyses, data compilations, correspondence, and other materials generated in the course of performing its duties under this Agreement are the property of the Monitor and shall be made available to all Parties and the Court as provided in this Agreement. The Monitor's opinions, conclusions, and recommendations are the independent professional judgments of the Monitor and are not subject to privilege claims by any Party. No Party shall assert attorney-client privilege, work-product protection, or any other privilege or immunity with respect to the Monitor's work product.
ARTICLE VIII — DISPUTE RESOLUTION
Section 8.1 — Disputes Under This Agreement
Any dispute arising under or relating to this Agreement shall be resolved through the three-tier dispute resolution mechanism established in the Consent Decree, as follows:
(a) Informal Negotiation. The disputing Parties shall first attempt to resolve the dispute through informal negotiation conducted in good faith for a period of thirty (30) days following written notice of the dispute. During this period, the Parties shall exchange relevant information and endeavor to reach a mutually acceptable resolution.
(b) EPA Determination. If the dispute is not resolved through informal negotiation within the thirty (30) day period, any Party may request a formal written determination from EPA. EPA shall issue its determination within thirty (30) days of receipt of such request, after considering the positions of all Parties and any supporting information submitted. EPA's determination shall be binding on the Parties unless contested as provided in paragraph (c) below.
(c) Judicial Review. If any Party contests EPA's determination, such Party may petition the Court for judicial review within thirty (30) days of the date of EPA's determination. The Court shall resolve the dispute in accordance with applicable law and the terms of the Consent Decree. The standard of review applicable to EPA's determination shall be as set forth in the Consent Decree.
Section 8.2 — Monitor's Role in Disputes
The Monitor shall not be a party to disputes between the Government and TMC arising under the Consent Decree, and the Monitor shall not advocate for the position of any Party in any such dispute. However, if a dispute under this Agreement or the Consent Decree involves the Monitor's conduct, findings, or recommendations, the Monitor may participate in the informal negotiation phase described in Section 8.1(a), may submit written statements to EPA in connection with a formal determination under Section 8.1(b), and may be heard by the Court in proceedings under Section 8.1(c). The Monitor's participation in dispute resolution proceedings shall be limited to matters directly affecting the Monitor's performance of its duties, the content of its reports, or its rights and obligations under this Agreement.
ARTICLE IX — INDEMNIFICATION AND LIABILITY
Section 9.1 — TMC Indemnification of Monitor
TMC shall indemnify, defend, and hold harmless the Monitor, including Verdant Analytics, Inc. and its officers, directors, employees, agents, and approved sub-consultants, from and against any and all claims, demands, causes of action, liabilities, losses, damages, costs, and expenses (including reasonable attorneys' fees and litigation costs) arising out of or relating to the Monitor's performance of its duties under this Agreement, except to the extent that such claims, liabilities, damages, or expenses are caused by the Monitor's gross negligence, willful misconduct, or fraud. This indemnification obligation extends to claims brought by third parties, including claims by private litigants, community organizations, or governmental entities other than the United States or the State Co-Plaintiffs, arising from the Monitor's activities at the Sites or the content of the Monitor's reports.
Section 9.2 — Limitation of Monitor's Liability
The Monitor's aggregate liability under this Agreement for all claims, damages, losses, costs, and expenses of every kind and description, other than claims arising from the Monitor's gross negligence, willful misconduct, or fraud, shall not exceed the total fees actually paid to the Monitor under this Agreement as of the date on which the relevant claim accrues. This limitation shall apply regardless of whether the claim is based in contract, tort, strict liability, or any other legal theory.
Section 9.3 — Insurance
The Monitor shall maintain, at its own expense, professional liability (errors and omissions) insurance with a per-claim limit of not less than five million dollars ($5,000,000) and an aggregate limit of not less than ten million dollars ($10,000,000) throughout the term of this Agreement, including any extensions thereof. The insurance policy shall be issued by a carrier rated not less than "A-, VIII" by A.M. Best Company. The Monitor shall provide certificates of insurance evidencing the required coverage to EPA and TMC upon execution of this Agreement and annually thereafter within thirty (30) days of each policy renewal date. The Monitor shall provide EPA and TMC with not less than thirty (30) days' advance written notice of any cancellation, material modification, or non-renewal of the required insurance coverage.
ARTICLE X — GENERAL PROVISIONS
Section 10.1 — Governing Law
This Agreement shall be governed by and construed in accordance with applicable federal law, including the Clean Water Act, 33 U.S.C. §§ 1251 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601 et seq.; and the terms and provisions of the Consent Decree. To the extent that federal law does not address a particular issue arising under this Agreement, the law of the State of Montana shall apply as the law of the forum state.
Section 10.2 — Jurisdiction and Venue
The Parties irrevocably consent to the exclusive jurisdiction of the United States District Court for the District of Montana, Missoula Division, Civil Action No. 9:24-cv-00087-DWM, for the resolution of any and all disputes arising under or relating to this Agreement. The Honorable Donald W. Molloy, Senior United States District Judge (by designation), shall retain jurisdiction over this Agreement and the Consent Decree for the duration of the term and any extensions thereof, or until such