PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
MEMORANDUM
FROM: Harrison Wexford, Partner, Calderwood & Harkness LLP
TO: Miriam Soo-Hwan Park, General Counsel, Torchlight Mining Corp. Douglas K. Prennell, Chief Executive Officer, Torchlight Mining Corp.
CC: Beatrice Holloway, Partner, Calderwood & Harkness LLP Elliot Nguyen, Lead Associate, Calderwood & Harkness LLP Grace Nakamura, Senior Counsel, Calderwood & Harkness LLP Gareth Linford, Vice President, Environmental Health & Safety, Torchlight Mining Corp. Carolyn Bracebridge, Chief Financial Officer, Torchlight Mining Corp.
January 15, 2025
RE: Independent Environmental Monitor — Selection Process, Qualifications Criteria, and Recommendation
Matter No.: 1039-00003
Case Reference: 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 (Hon. Donald W. Molloy, Senior Judge)
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I. EXECUTIVE SUMMARY
This memorandum is prepared for the purpose of advising Torchlight Mining Corp. ("TMC") management and in-house counsel on the consent-decree requirements governing the selection of a court-appointed independent environmental monitor, setting forth our proposed qualifications criteria for such a monitor, presenting our evaluation of finalist candidate firms, and ultimately recommending the appointment of Verdant Analytics, Inc. ("Verdant"), led by Dr. Kamal Osei, Senior Managing Director, as the independent monitor for the duration of the consent decree.
As TMC management is aware, the substantially final consent decree in United States of America and State of Montana v. Torchlight Mining Corp., et al., Civil Action No. 9:24-cv-00087-DWM (D. Mont.) (the "Consent Decree"), is currently in advanced negotiation between the parties. The target date for agreement on the final text is February 3, 2025, with lodging expected on February 19, 2025. Among the principal obligations imposed upon TMC under the Consent Decree is the requirement that the parties jointly nominate an independent third-party environmental auditor and monitor (the "Independent Monitor" or "Monitor") within thirty (30) days of the Consent Decree's Effective Date. The Monitor will serve a critical oversight role throughout the life of the decree.
The Monitor's responsibilities will encompass quarterly compliance audits and annual public reports across all four TMC sites that are the subject of this enforcement action:
• Ridgecrest Copper-Molybdenum Mine — Drummond, Montana
• Gallatin Chemical Works — Belgrade, Montana
• Bonanza Creek Gold Mine — Lander County, Nevada
• Kanawha Bend Chemical Plant — Institute, West Virginia
The estimated total cost of the Monitor engagement over the initial five-year term is approximately $4.8 million (approximately $960,000 per year), all of which will be borne by TMC pursuant to the cost-allocation provisions of the Consent Decree. This cost has been incorporated into the grand total consent decree obligation of $409.9 million (nominal).
After conducting a thorough candidate identification and evaluation process — in consultation with TMC's Vice President of Environmental Health & Safety, Gareth Linford, and TMC's remediation consultant, Pinnacle Creek Environmental, LLC — Calderwood & Harkness has identified three finalist candidates. We have evaluated these candidates against the technical qualifications, independence requirements, organizational capacity, geographic coverage, cost, and regulatory acceptance criteria set forth in this memorandum.
Our recommendation is that TMC nominate Verdant Analytics, Inc., based in Portland, Oregon, and led by Dr. Kamal Osei, as the Independent Monitor. Verdant is the strongest candidate across all evaluation criteria. Dr. Osei possesses 22 years of environmental engineering experience, has served as lead monitor on two prior federal consent decrees, and Verdant maintains offices in Portland, Denver, Reno, and Charleston, West Virginia — providing direct geographic coverage for all four TMC sites. Verdant's proposed fee structure of approximately $960,000 per year is within the estimated budget and represents reasonable value given the scope of the engagement. Preliminary informal discussions with the Department of Justice ("DOJ") and the U.S. Environmental Protection Agency ("EPA") suggest that the government would likely accept Verdant's nomination, although no formal confirmation has yet been received.
The sections that follow set forth in detail the relevant Consent Decree provisions, our proposed qualifications criteria, the candidate evaluation process and results, the key terms for the Independent Monitor agreement, and a budget and financial impact analysis. We conclude with a summary of next steps and action items requiring TMC management approval.
II. CONSENT DECREE REQUIREMENTS FOR THE INDEPENDENT MONITOR
A. Governing Provisions
The Consent Decree contains detailed provisions governing the appointment, duties, term, and compensation of the Independent Monitor. These provisions are set forth principally in Section XII (Independent Environmental Monitor) of the draft Consent Decree, with cross-references to the remediation performance standards in Sections VII through XI, the financial assurance requirements in Section XVI, and the dispute resolution procedures in Section XIX. While the Consent Decree text has not yet been finalized — the parties' target date for final agreement is February 3, 2025, with the execution version expected to be dated February 19, 2025 for lodging with the Court — the monitor-related provisions are substantially agreed upon and are not among the remaining open negotiation items.
The Consent Decree requires the appointment of the Independent Monitor by joint agreement of three categories of parties:
(i) The United States, acting through the Department of Justice, Environment and Natural Resources Division, and the U.S. Environmental Protection Agency (Regions 3, 8, and 9);
(ii) The co-plaintiff States — the State of Montana (acting through the Montana Department of Environmental Quality), the State of Nevada (acting through the Nevada Division of Environmental Protection), and the State of West Virginia (acting through the West Virginia Department of Environmental Protection); and
(iii) The Torchlight defendants — Torchlight Mining Corp. (the Canadian parent entity), Torchlight Mining (U.S.) Inc. (the U.S. holding subsidiary), Torchlight Specialty Chemicals, Inc. (operator of the Gallatin and Kanawha Bend chemical facilities), Ridgecrest Mine Holdings, LLC (owner-operator of the Ridgecrest Mine), and Bonanza Creek Mining, LLC (owner-operator of the Bonanza Creek Mine).
The joint nomination is required within thirty (30) days of the Consent Decree's Effective Date. Based on the current projected timeline — with lodging on February 19, 2025, a sixty (60)-day public comment period under 28 U.S.C. § 7003(d), and entry expected by May 15, 2025 — the Effective Date (defined as thirty days after entry) would fall on or about June 14, 2025. The parties would then have until approximately July 14, 2025 to submit the joint nomination to the Court.
It is essential, however, that we identify and secure agreement on the Monitor well in advance of the Effective Date. The government has expressed its expectation that the Monitor should be identified and the Monitor agreement substantially finalized before the Consent Decree is lodged for public comment. Accordingly, our working timeline — as discussed in Section VIII below — contemplates having the Monitor agreement in execution form by February 15, 2025.
In the event that the parties cannot reach agreement on a joint nomination, the Consent Decree provides a fallback mechanism: the Court (Hon. Donald W. Molloy, Senior Judge) will appoint the Monitor from a list of three candidates submitted by the parties. Under this procedure, the United States would submit one candidate, the Torchlight defendants would submit one candidate, and either the co-plaintiff states or the Court would designate a third. TMC should be prepared to identify Verdant Analytics as its preferred candidate on any such list, although we believe the joint-nomination process is the preferable path for the reasons discussed in Section V below.
B. Scope of Monitor Duties
The Consent Decree defines the Monitor's scope of duties broadly, consistent with the practice in complex multi-site environmental consent decrees. The Monitor's principal responsibilities, as set forth in Section XII of the draft Consent Decree, are as follows:
Quarterly Compliance Audits. The Monitor will conduct quarterly compliance audits at all four TMC sites to verify compliance with (a) the remediation schedules set forth in the site-specific Statements of Work attached as Appendices A through D to the Consent Decree, (b) the performance standards established for each remedial action and interim measure, and (c) the environmental milestones and deliverable deadlines specified throughout the Consent Decree. Each quarterly audit will include site inspections, review of operational data, comparison of actual progress against scheduled milestones, and evaluation of TMC's compliance with applicable permit conditions and regulatory requirements.
Annual Public Reports. The Monitor will prepare and file annual public reports with the Court, summarizing the findings of the four quarterly audits conducted during the reporting period, assessing overall compliance status at each site, identifying any deficiencies or areas of concern, and providing recommendations for corrective actions where appropriate. These annual reports will be served on all parties to the Consent Decree and on the relevant state environmental agencies — the Montana Department of Environmental Quality ("MT DEQ"), the Nevada Division of Environmental Protection ("NV DEP"), and the West Virginia Department of Environmental Protection ("WV DEP"). The annual reports will be public documents, filed on the Court's docket, and will constitute a significant component of the transparency and accountability framework of the Consent Decree.
Data Verification. The Monitor will review and verify TMC's self-reported monitoring data, sampling results, and progress reports submitted to EPA and the co-plaintiff states pursuant to the Consent Decree's reporting requirements. This verification function is designed to ensure the accuracy and reliability of TMC's compliance reporting and to provide the government and the Court with an independent assessment of TMC's environmental performance.
Additional Sampling Authority. The Monitor will have the authority to request additional sampling, testing, or inspections at any of the four sites if, in the Monitor's professional judgment, compliance concerns arise that warrant further investigation. The costs of any such additional sampling will be borne by TMC.
Access Rights. The Monitor will have unrestricted right of access to all four TMC sites, all relevant documents (including internal environmental reports, remediation data, laboratory analyses, engineering evaluations, and financial assurance documentation), and all TMC personnel with knowledge relevant to compliance matters. TMC will be obligated to cooperate fully with the Monitor and to make available all information reasonably requested in connection with the Monitor's duties.
Independence Obligation. The Monitor is required to maintain strict independence from all parties to the Consent Decree throughout the term of the engagement. The Consent Decree specifies that the Monitor may not have had any consulting, advisory, or other professional relationship with TMC, EPA, or DOJ within the five (5) years preceding the nomination. This independence requirement extends to all affiliates, subsidiaries, and related entities of TMC.
C. Term and Termination
The initial term of the Monitor's engagement is five (5) years from the Effective Date of the Consent Decree. Based on the projected Effective Date of June 14, 2025, the initial term would expire on or about June 14, 2030.
The Consent Decree provides that the term may be extended by the Court upon motion by any party to the Consent Decree or by the Monitor itself, if the Court determines that continued independent monitoring is necessary to ensure compliance. In the context of complex multi-site remediation projects such as the one at issue here — where remedial construction timelines may extend over many years — extensions are not uncommon, and TMC should plan for the possibility that the Monitor engagement could extend beyond the initial five-year term.
Importantly, the Monitor engagement terminates on a site-by-site basis rather than on a blanket basis. The Monitor's responsibilities with respect to a particular site terminate only upon EPA's certification that all remedial construction at that site has been completed in accordance with the Consent Decree and that all performance standards have been achieved. In no event, however, will the Monitor's engagement with respect to any site terminate sooner than five (5) years after completion of all remedial construction at that site. This provision ensures that the Monitor maintains oversight through the critical post-construction monitoring period during which the effectiveness of the remedy is evaluated.
D. Cost Allocation
Pursuant to the Consent Decree's cost-allocation provisions, TMC bears all costs associated with the Independent Monitor, including professional fees, travel expenses, laboratory analysis costs, report preparation, and administrative overhead. The government does not share in these costs.
The estimated total cost of the Monitor engagement over the initial five-year term is approximately $4.8 million, or approximately $960,000 per year. This estimate is based on the preliminary fee proposals received from the finalist candidates and reflects the anticipated level of effort required for quarterly audits at four geographically dispersed sites, annual report preparation, data verification, and related activities.
The components of the estimated annual cost include:
• Senior professional time (engagement lead and senior auditors): approximately $350,000–$400,000 per year
• Mid-level professional staff (environmental scientists, engineers): approximately $250,000–$300,000 per year
• Field technicians: approximately $100,000–$125,000 per year
• Travel to all four sites (Montana, Nevada, West Virginia): approximately $100,000–$125,000 per year
• Laboratory analysis and testing: approximately $50,000–$75,000 per year
• Report preparation, administrative overhead, and quality assurance: approximately $75,000–$100,000 per year
The Monitor's annual budget is subject to review and approval by the Court, providing a mechanism for judicial oversight of the costs borne by TMC. Any significant deviation from the approved budget — whether due to unanticipated remediation complications, additional sampling requirements, or other factors — must be justified by the Monitor and approved by the Court before the costs may be charged to TMC.
III. QUALIFICATIONS CRITERIA
In order to ensure that the Independent Monitor possesses the capabilities necessary to fulfill the demanding scope of duties described above, Calderwood & Harkness has developed a comprehensive set of qualifications criteria. These criteria are designed to identify candidates who possess the technical expertise, organizational resources, independence, and credibility required for this engagement. The criteria are consistent with the requirements of the Consent Decree and reflect the expectations communicated by government counsel in our preliminary discussions.
A. Technical Qualifications
The Monitor must possess demonstrated, substantive expertise in environmental remediation monitoring, with particular emphasis on the mining and chemical manufacturing contexts that are directly relevant to the four TMC sites at issue. The sites encompass a broad range of environmental challenges — from acid mine drainage and tailings management at Ridgecrest and Bonanza Creek to chemical process residuals and groundwater contamination at Gallatin and Kanawha Bend — and the Monitor must be equipped to assess compliance across this full spectrum.
Specific technical qualifications requirements include:
Regulatory Expertise. The Monitor must possess deep familiarity with the regulatory frameworks applicable to this matter. The Consent Decree obligations arise under three principal federal environmental statutes: the Clean Water Act ("CWA"), 33 U.S.C. §§ 1251–1387; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901–6992k; and the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601–9675. The Monitor must have experience evaluating compliance under each of these statutory frameworks and with the corresponding implementing regulations and EPA guidance documents. In addition, the Monitor should be familiar with the relevant state-law equivalents in Montana, Nevada, and West Virginia, as the Consent Decree incorporates certain state remediation standards and reporting requirements.
Contaminant-Specific Expertise. The four TMC sites present a wide range of contaminant types, and the Monitor must be capable of assessing the environmental significance and remediation progress for each. The contaminants at issue include:
• Acid mine drainage ("AMD") at Ridgecrest and Bonanza Creek
• Heavy metals, including copper (Cu), molybdenum (Mo), selenium (Se), lead (Pb), and arsenic (As), at Ridgecrest and Bonanza Creek
• Weak acid dissociable cyanide ("WAD cyanide") at Bonanza Creek, associated with heap-leach gold processing operations
• Mercury (Hg) at Gallatin Chemical Works, associated with historical chlor-alkali production
• Carbon disulfide (CS₂) at Kanawha Bend Chemical Plant, associated with chemical manufacturing processes
• Volatile organic compounds ("VOCs"), including trichloroethylene (TCE), perchloroethylene (PCE), and vinyl chloride, at Gallatin and Kanawha Bend
• Dense non-aqueous phase liquids ("DNAPLs") at Kanawha Bend, associated with historical waste disposal practices
• Sulfuric acid residuals at Gallatin, associated with acid manufacturing and storage operations
Hydrogeological Expertise. Given the groundwater contamination issues present at all four sites, the Monitor must possess substantial expertise in hydrogeology, including groundwater flow modeling, contaminant fate and transport analysis, remedial system performance evaluation, and monitoring well network adequacy assessment. The Ridgecrest and Bonanza Creek mine sites, in particular, involve complex fractured-rock and alluvial aquifer systems that require specialized hydrogeological knowledge.
Mine-Site Remediation Experience. The Monitor must have specific experience with the environmental management challenges associated with mining operations, including tailings impoundment management, heap-leach pad operations and closure, pit lake water quality, waste rock pile stabilization, and surface water diversion and treatment systems. The Ridgecrest and Bonanza Creek mines present significant tailings management challenges, and the Monitor must be capable of evaluating TMC's compliance with the tailings management plans incorporated into the Consent Decree.
B. Independence and Conflict-of-Interest Requirements
The independence of the Monitor is essential to the credibility and effectiveness of the monitoring program. The Consent Decree imposes strict conflict-of-interest requirements, and our qualifications criteria reflect and in some cases exceed those requirements.
The Monitor must satisfy the following independence criteria:
• No current or recent relationship with TMC. The Monitor must have no current consulting, auditing, advisory, or other professional relationship with TMC or any TMC subsidiary, affiliate, or related entity. Additionally, the Monitor must have had no such relationship within the five (5) years preceding the nomination. This look-back period is designed to ensure that the Monitor does not have residual financial dependencies on or institutional loyalties to TMC that could compromise objectivity.
• No current or recent relationship with government parties in connection with these sites. The Monitor must have no current or recent professional relationship with EPA, DOJ, or any co-plaintiff state entity (MT DEQ, NV DEP, or WV DEP) in connection with the four sites at issue in this enforcement action. General engagements with these agencies on unrelated matters may be permissible, subject to disclosure and review, but any engagement touching on Ridgecrest, Gallatin, Bonanza Creek, or Kanawha Bend would be disqualifying.
• No financial interest in TMC. The Monitor and its principals must have no financial interest in TMC, whether in the form of equity holdings, debt instruments, or contractual arrangements beyond the Monitor agreement itself.
• Full disclosure of prior engagements. The Monitor must disclose any prior engagements with any party to the Consent Decree, including TMC, the United States (DOJ and EPA), and the co-plaintiff states, regardless of the time period or subject matter. Such disclosures will be evaluated on a case-by-case basis to determine whether they present an actual or apparent conflict of interest.
It bears noting that two firms that might otherwise have been strong candidates are disqualified by these independence requirements. Cascade Geosciences, Inc. (led by Dr. Patricia Voss), which possesses excellent technical credentials in mining remediation monitoring, currently serves as the government's technical expert and consulting firm in this matter and is therefore categorically ineligible to serve as the Independent Monitor. Similarly, Pinnacle Creek Environmental, LLC (led by Dr. Astrid Bergmann), which serves as TMC's own remediation consultant and has intimate familiarity with all four sites, is categorically ineligible because of its ongoing professional relationship with TMC. The need for independence necessarily means that the Monitor will lack the degree of site-specific familiarity that these firms possess, but TMC's cooperation obligations under the Consent Decree — including the obligation to provide unrestricted access to Pinnacle Creek's monitoring data — are designed to ensure that the Monitor can develop adequate site knowledge.
C. Organizational Capacity
Given the geographic scope and operational complexity of the monitoring engagement — quarterly audits at four sites spread across three states — the Monitor must possess sufficient organizational capacity to perform its duties reliably and efficiently.
Specific capacity requirements include:
• Staffing. The Monitor must have a sufficient number of qualified environmental scientists, engineers, and field technicians to conduct quarterly audits at four geographically dispersed sites without undue strain on its resources. In our assessment, this requires a firm with a minimum of approximately 50–60 professional staff, though larger firms with greater depth may be preferred.
• Quality Assurance/Quality Control. The Monitor must maintain robust internal QA/QC protocols for environmental data review, including chain-of-custody documentation, data validation procedures, and independent verification of laboratory results. Given that the Monitor's annual reports will be filed with a federal court and will constitute public compliance records, the highest standards of data quality are required.
• Court-Filing Experience. The Monitor must have experience preparing reports for filing with federal courts and for public dissemination. The annual reports must be drafted to a standard appropriate for judicial review and must be comprehensible to a range of stakeholders, including the Court, government regulators, TMC management, and members of the public. Prior experience with court-filed compliance documentation is essential.
• Professional Liability Insurance. The Monitor must maintain professional liability insurance adequate for an engagement of this scope and financial magnitude. We anticipate that the Consent Decree will require a minimum coverage level, which we will negotiate with the government and specify in the Monitor agreement.
D. Regulatory Acceptance
Beyond technical qualifications and independence, the Monitor must possess a track record that will engender confidence among the government parties. As a practical matter, the Monitor's effectiveness depends in part on its credibility with both the regulated party (TMC) and the government regulators (EPA, DOJ, and the co-plaintiff states).
We have identified the following regulatory acceptance factors:
• Prior appointment experience. A demonstrated track record of acceptance by EPA and DOJ as independent monitors in prior consent decrees or federal enforcement actions is a significant indicator of credibility and regulatory confidence. Firms that have been previously appointed by federal courts have demonstrated their ability to navigate the complex dynamics of multi-party oversight and have an established reputation for objectivity.
• Reputation for objectivity. The Monitor must be perceived as genuinely independent and unbiased by all parties. A firm that is viewed as too closely aligned with either industry interests or government enforcement priorities would undermine the purpose of the monitoring program. We have sought informal input from government counsel on this point and have factored their feedback into our evaluation.
EPA lead case attorney Margaret Coulson has informally indicated that the government places significant weight on prior judicial appointment experience, reflecting a preference for monitors who have navigated the specific responsibilities and expectations associated with court-appointed oversight roles. This factor has been incorporated into our comparative assessment of the finalist candidates.
IV. CANDIDATE EVALUATION
A. Candidate Identification Process
Calderwood & Harkness, in consultation with TMC's Vice President of Environmental Health & Safety, Gareth Linford, and TMC's environmental remediation consultant, Pinnacle Creek Environmental, LLC (Dr. Astrid Bergmann), undertook a systematic process to identify qualified candidate firms for the Independent Monitor role.
We began by compiling an initial list of seven potential monitor firms drawn from our knowledge of the environmental consulting industry, prior consent decree appointments in comparable matters, recommendations from Pinnacle Creek, and publicly available information regarding firms that have served in independent monitoring or auditing roles in EPA and DOJ enforcement actions. Each firm on the initial list was evaluated against the qualifications criteria described in Section III above.
Of the seven initial candidates, four were eliminated during the preliminary screening process for the following reasons:
• Three candidates were eliminated due to conflicts of interest. One firm had performed consulting work for TMC's Ridgecrest Mine within the past four years and was therefore disqualified under the five-year look-back provision. A second firm was currently engaged as a contractor to EPA Region 8 on a matter involving one of the TMC sites. A third firm had financial ties to a TMC subsidiary through a joint venture arrangement that created an impermissible appearance of partiality.
• One candidate was eliminated due to insufficient geographic coverage. This firm, while technically well-qualified, maintained offices only in the western United States and lacked any presence in or capacity to service West Virginia. Given the requirement for quarterly site audits at Kanawha Bend Chemical Plant in Institute, West Virginia, this geographic limitation was disqualifying as a practical matter.
The remaining three candidates were advanced to the detailed evaluation stage, and their profiles are presented below.
B. Finalist Candidate Profiles
Candidate 1: Verdant Analytics, Inc. (Recommended).
Engagement Lead Credentials. Dr. Kamal Osei holds a Ph.D. in Environmental Engineering from the Georgia Institute of Technology (2003) and a B.S. in Civil Engineering from Howard University (1997). He has 22 years of professional experience in environmental remediation and monitoring, with particular expertise in mining-related contamination, acid mine drainage treatment systems, and CERCLA remedy implementation. Dr. Osei is a licensed Professional Engineer (P.E.) in Oregon, Colorado, Montana, Nevada, and West Virginia, and holds the Certified Environmental Manager (CEM) and Board Certified Environmental Scientist (BCES) credentials. He has published over thirty peer-reviewed articles on mine-site remediation, groundwater contaminant transport, and environmental monitoring methodologies.
Relevant Experience. Verdant Analytics has served as a court-appointed independent monitor in three prior EPA consent decrees involving mining and chemical manufacturing sites, all within the past eight years:
1. United States v. Consolidated Copper Corp., Civil Action No. 2:17-cv-00459 (D. Ariz.) — Independent monitor for a copper mine Superfund site in southern Arizona involving acid mine drainage, tailings impoundment remediation, and RCRA corrective action compliance. Dr. Osei served as engagement lead. Engagement duration: 2017–2023 (six years). All quarterly audits and annual reports were completed on time and accepted by the Court. EPA commended the quality and thoroughness of Verdant's monitoring work.
2. United States v. Allegheny Chemical Partners, LP, Civil Action No. 1:19-cv-01234 (S.D.W.V.) — Independent monitor for a chemical manufacturing facility in West Virginia involving RCRA corrective action, DNAPL remediation, and groundwater treatment system optimization. Dr. Osei served as engagement co-lead. Engagement duration: 2019–2024 (five years). This engagement is particularly relevant given the similarity to the Kanawha Bend site.
3. United States and State of Nevada v. Great Basin Resources, Inc., Civil Action No. 3:20-cv-00678 (D. Nev.) — Independent monitor for a gold mining operation in northern Nevada involving heap-leach pad closure, WAD cyanide management, and surface water discharge compliance under the CWA. Engagement duration: 2020–present (ongoing). Dr. Osei serves in a supervisory capacity; the day-to-day engagement lead is a senior associate director in Verdant's Reno office.
In addition to these court-appointed monitor roles, Verdant has extensive experience in environmental auditing, remediation oversight, and compliance evaluation for both private-sector and government clients. The firm's environmental scientists and engineers have collective expertise spanning acid mine drainage remediation monitoring, heap-leach pad containment verification, RCRA corrective action compliance evaluation, CERCLA remedy performance assessment, groundwater modeling and contaminant transport analysis, and tailings impoundment stability evaluation.
Independence. Verdant Analytics has completed a comprehensive conflict-of-interest review and has confirmed that it has no prior engagements with TMC, any TMC subsidiary or affiliate, or any other party to the Consent Decree. Verdant has had no engagements with EPA Regions 3, 8, or 9 in connection with any of the four TMC sites within the past five years, and no current engagements that could create an actual or apparent conflict of interest. Verdant's conflict check is clean.
Geographic Coverage. Verdant maintains offices in four locations that provide direct geographic coverage for all four TMC sites:
• Portland, Oregon (principal office) — administrative headquarters and engagement management
• Denver, Colorado — provides regional coverage for the two Montana sites (Ridgecrest Mine in Drummond and Gallatin Chemical Works in Belgrade); Denver is approximately 550 miles from Drummond and 480 miles from Belgrade, well within reasonable travel distance
• Reno, Nevada — provides direct coverage for the Bonanza Creek Gold Mine in Lander County, Nevada, approximately 170 miles from Reno
• Charleston, West Virginia — provides direct coverage for the Kanawha Bend Chemical Plant in Institute, West Virginia, approximately 12 miles from Charleston
This geographic footprint is a significant advantage for Verdant, as it allows the firm to deploy local staff to each site for quarterly audits without incurring excessive travel costs or relying entirely on personnel traveling from distant offices.
Proposed Fee Structure. Verdant has provided a preliminary fee proposal with the following rate structure:
Based on Verdant's estimate of the level of effort required for quarterly audits at four sites, annual report preparation, data verification, and related activities, the proposed annual budget is approximately $960,000, for a total five-year engagement cost of approximately $4.8 million. Verdant has provided a detailed preliminary budget breakdown, which we have reviewed and consider reasonable given the scope of the engagement. A copy of Verdant's preliminary fee proposal has been provided separately to TMC's CFO, Carolyn Bracebridge, for financial review.
References. We have obtained references from government attorneys and judicial officers involved in Verdant's three prior consent decree monitoring engagements. All references are highly favorable, noting Verdant's professionalism, technical rigor, independence, and responsiveness. Of particular note, the DOJ attorney who supervised the Consolidated Copper matter described Verdant's work as "the gold standard for independent monitoring" and characterized Dr. Osei as "exceptionally competent and scrupulously objective."
Candidate 2: Ridgeline Environmental Consulting Group, LLC.
Relevant Experience. Ridgeline possesses a strong background in CERCLA monitoring, with particular expertise in mine-site remediation in the Rocky Mountain West. Dr. Thomas Havelock, the proposed engagement lead, holds a Ph.D. in Geology from the University of Montana and has 18 years of experience in environmental remediation and monitoring. Ridgeline has served as an EPA contractor for remediation oversight at three Superfund sites in EPA Region 8 (two in Montana, one in Idaho), and has performed independent environmental auditing work for several large mining companies. Ridgeline has worked extensively with MT DEQ on mine-site remediation matters, which provides relevant institutional knowledge regarding the Montana regulatory framework.
Strengths. Ridgeline offers strong CERCLA monitoring experience, particularly in the mining context, and has an established track record with EPA Region 8. Its Bozeman office provides convenient access to both Montana TMC sites, and its Reno office covers the Bonanza Creek site in Nevada. Dr. Havelock's geological expertise is well-suited to the hydrogeological challenges at the Ridgecrest and Bonanza Creek mine sites.
Weaknesses. Ridgeline does not maintain an office in West Virginia or anywhere in the eastern United States, which would require it to service the Kanawha Bend Chemical Plant entirely through personnel traveling from western offices. This limitation would likely increase travel costs and reduce response time for the West Virginia site. Additionally, Ridgeline has comparatively less experience with chemical manufacturing sites such as Gallatin Chemical Works and Kanawha Bend, as its practice is focused predominantly on mining operations. Most significantly, Ridgeline's proposed annual cost of approximately $1.15 million per year ($5.75 million total over five years) is approximately 20% above the target budget, driven in part by higher travel costs associated with the West Virginia site and a somewhat more expensive rate structure.
Independence. Ridgeline has completed a conflict-of-interest review and is clean — no prior engagements with TMC or any party to the Consent Decree. However, Ridgeline has limited prior experience as a court-appointed independent monitor; it has served primarily as an EPA contractor rather than in a judicially appointed oversight role. While Ridgeline has one prior engagement as a court-appointed technical advisor (not as a full compliance monitor) in a water-rights dispute in Idaho, this experience is less directly comparable to the role at issue here.
Candidate 3: Blackwater Environmental Services, Inc.
Relevant Experience. Blackwater has a solid track record in RCRA corrective action monitoring and compliance evaluation, with particular strength in chemical manufacturing and industrial facility contexts. Sarah J. Pellegrino, the proposed engagement lead, holds an M.S. in Environmental Science from Virginia Tech and has eight years of professional experience. Blackwater has performed RCRA facility investigations, corrective measures studies, and compliance monitoring at over twenty RCRA-regulated facilities in the Mid-Atlantic and southeastern United States, and has more limited experience in western mining contexts.
Strengths. Blackwater offers the most competitive cost proposal among the three finalists, at approximately $900,000 per year ($4.5 million total over five years), which is approximately 6% below the target budget. This cost advantage reflects Blackwater's lower overhead structure and the relative proximity of its offices to two of the four sites (the Charleston, WV office for Kanawha Bend and the Denver, CO office for the Montana sites). Blackwater's RCRA corrective action expertise is directly relevant to the Gallatin and Kanawha Bend chemical facilities.
Weaknesses. The primary concern with Blackwater is the relative inexperience of its proposed engagement lead. Ms. Pellegrino, while competent, has only eight years of professional experience — significantly less than Dr. Osei's 22 years or Dr. Havelock's 18 years. For a high-profile, multi-site federal consent decree monitorship, the engagement lead's seniority and gravitas matter considerably, both in terms of the substantive quality of the monitoring work and in terms of the credibility that the Monitor must carry with the Court, the government, and the public.
Additionally, and perhaps most critically, Blackwater has never served as a court-appointed independent monitor. Its environmental monitoring experience has been exclusively in the capacity of an EPA contractor or a private-sector consultant — roles that, while valuable, do not carry the same responsibilities, judicial accountability, or stakeholder dynamics as a court-appointed monitorship. EPA counsel Margaret Coulson has informally indicated that the government places significant weight on prior judicial appointment experience and would be unlikely to support the nomination of a candidate without such experience. This factor substantially reduces the likelihood that Blackwater would be accepted in the joint-nomination process.
Independence. Blackwater has completed a conflict-of-interest review and is clean — no prior engagements with TMC or any party to the Consent Decree.
C. Comparative Assessment Matrix
The following table presents a comparative assessment of the three finalist candidates across the key evaluation criteria:
As the comparative assessment demonstrates, Verdant Analytics scores highest across all evaluation criteria with the sole exception of cost, where Blackwater is approximately $60,000 per year less expensive. However, Verdant's cost of $960,000 per year is within the reasonable range and within the estimated budget of $4.8 million over five years. The modest cost savings offered by Blackwater do not, in our assessment, justify the significantly higher risks associated with Blackwater's lack of judicial appointment experience and its engagement lead's relative inexperience — particularly given the strong informal signal from EPA counsel that prior judicial appointment experience is a prerequisite for government acceptance.
V. RECOMMENDATION
A. Recommended Monitor: Verdant Analytics, Inc.
Based on the comprehensive evaluation described above, Calderwood & Harkness recommends that TMC nominate Verdant Analytics, Inc., with Dr. Kamal Osei, Senior Managing Director, as the engagement lead, for appointment as the Independent Environmental Monitor under the Consent Decree.
Verdant is the strongest candidate across all evaluation criteria for the following reasons:
Technical Excellence. Verdant possesses deep expertise in the full range of environmental challenges presented by the four TMC sites. Its team includes specialists in acid mine drainage remediation, heavy metals contamination, heap-leach pad management, RCRA corrective action, CERCLA remedy implementation, DNAPL remediation, groundwater modeling, and tailings impoundment management. No other candidate matches this breadth and depth of technical capability.
Proven Leadership. Dr. Kamal Osei's credentials are exceptional. With 22 years of environmental engineering experience, a Ph.D. from Georgia Tech, professional engineering licenses in five states (including all three states relevant to this matter), and prior service as engagement lead on two federal consent decree monitorships, Dr. Osei brings a level of seniority, expertise, and credibility that is unmatched among the candidates. His track record of producing timely, high-quality, court-filed compliance reports — and the uniformly favorable references from government attorneys and judicial officers — strongly supports his selection.
Prior Consent Decree Monitor Experience. Verdant's three prior court-appointed monitorships provide directly relevant institutional knowledge and demonstrated capability. The Consolidated Copper monitorship (copper mine remediation in Arizona) and the Great Basin Resources monitorship (gold mine heap-leach closure in Nevada) are closely analogous to the Ridgecrest and Bonanza Creek mining sites. The Allegheny Chemical Partners monitorship (chemical manufacturing RCRA corrective action in West Virginia) is closely analogous to the Gallatin and Kanawha Bend chemical facilities. No other candidate has comparable experience.
Geographic Coverage. Verdant's four-office footprint — Portland, Denver, Reno, and Charleston — provides efficient coverage of all four TMC sites. The Charleston, WV office, in particular, is a significant differentiator, as it allows Verdant to service the Kanawha Bend Chemical Plant (located in Institute, WV, approximately 12 miles from Charleston) with local staff. Neither Ridgeline nor Blackwater can match this level of geographic coverage across all four sites.
Reasonable Cost. Verdant's proposed annual budget of approximately $960,000 ($4.8 million over five years) is within the estimated range and represents reasonable value for the scope of the engagement. While Blackwater's proposal is approximately 6% lower, the cost savings are modest in absolute terms and do not justify accepting the materially higher risks associated with Blackwater's limitations.
Government Acceptance. Preliminary informal discussions with DOJ trial attorney Philip Orenstein and EPA lead case attorney Margaret Coulson indicate that the government would likely accept Verdant's nomination. Mr. Orenstein characterized Verdant as a "well-known and respected monitoring firm" and noted that the government had a positive experience with Verdant in the Allegheny Chemical Partners matter. While the government has not yet formally confirmed its acceptance — and will not do so until a formal proposal is submitted — these signals are encouraging and suggest that the joint-nomination process has a high likelihood of success with Verdant as the proposed Monitor.
B. Coordination with Government on Nomination
The next step in the Monitor selection process is for Calderwood & Harkness to formally propose Verdant Analytics to the government and co-plaintiff states for joint nomination. This will involve the following coordination:
Federal Government. Calderwood & Harkness will submit a formal written proposal to DOJ trial attorney Philip Orenstein and EPA lead case attorney Margaret Coulson, setting forth Verdant's qualifications, conflict-of-interest certification, proposed fee structure, and a summary of our evaluation process. We anticipate submitting this proposal by January 20, 2025, in order to allow sufficient time for government review before the target date for finalization of the Monitor agreement.
Co-Plaintiff States. Calderwood & Harkness will coordinate with local counsel in each co-plaintiff state to secure state concurrence with the Verdant nomination. Our local counsel contacts are:
• Montana: Russell Dane, HDW (Helena, MT), coordinating with the Montana Attorney General's Office and MT DEQ
• Nevada: Denise Quartaro, sagebrush Law Group (Reno, NV), coordinating with the Nevada Attorney General's Office and NV DEP
• West Virginia: Nathan Tully, BTC Legal (Charleston, WV), coordinating with the West Virginia Attorney General's Office and WV DEP
Local counsel will be provided with copies of our formal proposal to the government and will work with the respective state contacts — Montana Assistant Attorney General Annika Hedstrom, Nevada Deputy Attorney General Ricardo Fuentes, and West Virginia Assistant Attorney General Loretta May Hatcher — to obtain state-level agreement.
If the government and all co-plaintiff states agree to the Verdant nomination, the parties will prepare and submit a joint nomination to the Court, together with a draft Independent Monitor agreement setting forth the terms and conditions of the engagement.
Timeline. Calderwood & Harkness aims to have the draft Monitor agreement circulated to all parties by January 30, 2025, and in execution form by February 15, 2025, to align with the targeted Consent Decree lodging date of February 19, 2025. We believe it is important to present the Monitor selection as a completed element of the Consent Decree package at the time of lodging, as this will demonstrate to the Court that the parties have taken proactive steps to implement the decree's monitoring provisions and will reduce the likelihood of public comments questioning the adequacy of oversight mechanisms.
C. Fallback Procedure
In the event that the parties cannot reach agreement on a joint Monitor nomination — whether due to government rejection of Verdant or state-level objections — the Consent Decree provides a fallback procedure under which the Court (Hon. Donald W. Molloy) will select the Monitor from a list of three candidates submitted by the parties.
Under this procedure, the Torchlight defendants would submit one candidate, the United States would submit one candidate, and either the co-plaintiff states or the Court would designate a third. If this procedure becomes necessary, TMC should be prepared to submit Verdant Analytics, Inc. as its preferred candidate on the list. We believe that Verdant's qualifications are sufficiently strong that even in a contested selection process, Verdant would be a highly competitive candidate.
We do not, however, anticipate that the fallback procedure will be necessary. The informal signals from government counsel, combined with Verdant's strong credentials and clean conflict-of-interest record, suggest that a joint nomination should be achievable.
VI. KEY TERMS FOR THE INDEPENDENT MONITOR AGREEMENT
This section summarizes the key terms that we anticipate incorporating into the Independent Monitor Agreement between the parties and Verdant Analytics. The agreement will be subject to negotiation with the government and will require Court approval. The terms described below are based on our review of comparable monitor agreements in prior consent decree matters and on the specific requirements of this Consent Decree.
A. Scope and Duties
The Monitor Agreement will define the Monitor's scope of duties consistent with Section XII of the Consent Decree, including:
Quarterly Compliance Audits. The Monitor will conduct quarterly compliance audits at each of the four TMC sites:
1. Ridgecrest Copper-Molybdenum Mine — 14200 Ridgecrest Mine Road, Drummond, Montana 59832
2. Gallatin Chemical Works — 8800 Industrial Park Lane, Belgrade, Montana 59714
3. Bonanza Creek Gold Mine — County Road 447, Mile Marker 12, Lander County, Nevada 89820
4. Kanawha Bend Chemical Plant — 2200 Chemical Valley Road, Institute, West Virginia 25112
Each quarterly audit will include on-site inspection, review of remediation progress against the applicable Statement of Work, evaluation of compliance with performance standards and environmental milestones, assessment of monitoring well and sampling data, and identification of any areas of concern or non-compliance.
Annual Public Reports. The Monitor will prepare comprehensive annual public reports summarizing the findings from the four quarterly audits conducted during the reporting period. These reports will be filed with the Court in Civil Action No. 9:24-cv-00087-DWM, United States District Court for the District of Montana, Missoula Division, and served on all parties and relevant state environmental agencies.
Data Verification. The Monitor will review and verify TMC's self-reported monitoring data and Pinnacle Creek Environmental's monitoring reports. The Monitor will also review the status of TMC's financial assurance obligations under the Consent Decree, including the $165.0 million surety bond from Ironbark Surety of America (Bond No. ISA-ENV-2025-08934) and the $80.0 million remediation trust fund at Larchfield Trust Company (Trust Agreement No. LTC-REM-2025-1177). While the Monitor's primary function is environmental compliance rather than financial assurance compliance, the Consent Decree requires the Monitor to confirm that the requisite financial assurance instruments remain in force and to report any lapses or deficiencies to the Court and EPA.
B. Reporting Obligations
The Monitor Agreement will establish the following reporting obligations:
Quarterly Audit Reports. Quarterly audit reports will be due within forty-five (45) days of each site visit. Reports will be submitted to:
• EPA: Margaret Coulson, Lead Case Attorney, and the relevant project coordinators — Dr. Samuel Tesfaye (project coordinator for Ridgecrest Mine) and Jennifer Whitfield (project coordinator for Bonanza Creek Mine)
• DOJ: Philip Orenstein, Trial Attorney, Environment and Natural Resources Division
• Co-Plaintiff States: Montana (Annika Hedstrom), Nevada (Ricardo Fuentes), West Virginia (Loretta May Hatcher)
• TMC: Miriam Soo-Hwan Park, General Counsel, and Gareth Linford, VP Environmental Health & Safety
Annual Public Report. The annual public report will be due by January 31 of each year, covering the prior calendar year. The first annual report, covering the period from the Effective Date through December 31, 2025, will be due by January 31, 2026.
Immediate Notification. In the event that the Monitor identifies any material non-compliance with the Consent Decree or any imminent environmental threat at any of the four sites, the Monitor is obligated to provide immediate written notification to EPA, DOJ, the co-plaintiff states, TMC, and the Court. This immediate-notification provision is designed to ensure that time-sensitive compliance issues are addressed promptly and that the Court is kept informed of any developments that may require judicial intervention.
C. Access and Cooperation
The Monitor Agreement will require TMC to provide the Monitor with unrestricted access to:
• All four TMC sites, including all areas undergoing remediation, monitoring well locations, treatment system installations, storage areas, and ancillary facilities
• All documents relevant to the Monitor's duties, including internal environmental reports, sampling data, laboratory analyses, engineering evaluations, contractor reports, permit applications and modifications, and correspondence with regulatory agencies
• All relevant TMC personnel, including environmental managers, site supervisors, remediation contractors, and laboratory directors
TMC will be required to coordinate with Pinnacle Creek Environmental, LLC to ensure that all remediation data, monitoring reports, and technical analyses prepared by Pinnacle Creek in connection with the four TMC sites are made available to the Monitor in a timely manner.
The Monitor may request additional sampling, testing, or inspections at any time if, in its professional judgment, compliance concerns warrant further investigation. The cost of any such additional sampling will be borne by TMC. We anticipate that the government will seek to include a provision specifying that TMC may not unreasonably delay or obstruct the Monitor's requests for additional sampling, and that any dispute regarding the necessity of such sampling may be referred to the Court for resolution.
D. Compensation and Budget
The Monitor Agreement will provide for the following compensation and budget terms:
• Annual Budget. The Monitor's annual budget will be approximately $960,000, subject to Court approval. The budget will cover professional fees, travel expenses, laboratory analysis costs, report preparation, quality assurance, and administrative overhead.
• Payment Terms. TMC will pay the Monitor's invoices within thirty (30) days of receipt. Invoices will be submitted monthly and will include a detailed breakdown of time, expenses, and disbursements.
• Annual Budget Review. The Monitor's annual budget will be subject to review and adjustment each year. The Monitor may request budget increases to reflect changes in the scope of the engagement, unanticipated remediation complications, or other factors. TMC may request budget decreases if site conditions warrant reduced monitoring intensity. Any budget adjustment must be approved by the Court.
E. Independence Provisions
The Monitor Agreement will include robust independence provisions to ensure the Monitor's objectivity throughout the term of the engagement:
• Annual Conflict Certification. The Monitor will be required to submit an annual certification confirming that it has no conflicts of interest with any party to the Consent Decree and that it has maintained its independence throughout the prior year.
• Prohibition on TMC Engagements. The Monitor may not accept any consulting, advisory, or other professional engagement from TMC or any TMC affiliate during the term of the Monitor Agreement.
• Prohibition on Government Engagements Related to These Sites. The Monitor may not accept any engagement from EPA, DOJ, or any co-plaintiff state related to the four TMC sites during the term of the Monitor Agreement. Engagements with these agencies on unrelated matters will be permitted, subject to disclosure and review.
• Disclosure Obligation. The Monitor must promptly disclose to all parties and the Court any circumstance that could give rise to an actual or apparent conflict of interest.
F. Liability and Insurance
The Monitor Agreement will address liability and insurance as follows:
• Professional Liability Insurance. The Monitor will be required to maintain professional liability (errors and omissions) insurance with coverage limits adequate for the scope and duration of the engagement. We anticipate a minimum coverage requirement of $5 million per occurrence and $10 million in the aggregate, consistent with comparable consent decree monitor agreements.
• Limitation of Liability. The Monitor will not be liable for the environmental decisions or remediation actions of TMC or any government agency. The Monitor's role is advisory and auditing in nature; it does not direct or control TMC's remediation activities and is not responsible for the adequacy or effectiveness of the remediation itself. The Monitor's liability will be limited to damages arising from its own negligence, willful misconduct, or breach of the Monitor Agreement.