1039-00003 · Torchlight Mining Corp · Remediation Schedules & Work Plans

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

TO: Miriam Soo-Hwan Park, General Counsel, Torchlight Mining Corp. Gareth Linford, Vice President, Environmental Health & Safety, Torchlight Mining Corp.

FROM: Harrison Wexford, Partner, Calderwood & Harkness LLP Elliot Nguyen, Associate, Calderwood & Harkness LLP Grace Nakamura, Associate, Calderwood & Harkness LLP

DATE: February 22, 2025

RE: Performance Standards, Completion Criteria, and Certification-of-Completion Requirements Under the Consent Decree — All Four Sites

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, U.S. District Court for the District of Montana, Missoula Division

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I. Executive Summary

This memorandum analyzes and summarizes the performance standards, completion criteria, and certification-of-completion process established by the consent decree (execution version dated February 19, 2025) for each of the four sites operated or formerly operated by Torchlight Mining Corp. and its affiliates. The analysis is intended to provide Torchlight Mining Corp. ("TMC" or the "Company") management and in-house counsel with a comprehensive reference document that synthesizes the operative requirements of the consent decree into a practical framework for long-term compliance planning, financial forecasting, and strategic decision-making.

The consent decree was lodged with the U.S. District Court for the District of Montana, Missoula Division, on February 19, 2025, before Senior U.S. District Judge Donald W. Molloy. Pursuant to the requirements of 28 C.F.R. § 50.7 and the applicable procedures of the Department of Justice, Environment and Natural Resources Division, the decree is subject to a 30-day public comment period that closes on March 21, 2025. Assuming no substantive public comments necessitating revision or renegotiation, the target date for entry of the decree by the Court is May 15, 2025. The Effective Date of the consent decree — the date from which all remedial obligations, milestone deadlines, and time-dependent provisions are calculated — is defined as 30 days after entry by the Court, which yields a projected Effective Date of June 14, 2025, as set forth in Decree § IV.

The named defendants in the action are Torchlight Mining Corp. (the publicly traded Canadian parent corporation), Torchlight Mining (U.S.) Inc. (the principal U.S. holding company), Torchlight Specialty Chemicals, Inc. (the Delaware-incorporated specialty chemical manufacturing subsidiary), Ridgecrest Mine Holdings, LLC (the Montana limited liability company holding the Ridgecrest copper-molybdenum mine), and Bonanza Creek Mining, LLC (the Nevada limited liability company operating the Bonanza Creek gold mine). The consent decree binds all named defendants jointly and severally with respect to all obligations, including all performance standards, completion criteria, financial assurance requirements, and monetary obligations.

The co-plaintiffs bringing the enforcement action are the United States of America, acting through the U.S. Environmental Protection Agency ("EPA") and the U.S. Department of Justice ("DOJ"), the State of Montana, the State of Nevada, and the State of West Virginia. Each state co-plaintiff has a specific regulatory interest in the site or sites located within its jurisdiction, and the consent decree preserves certain state-specific enforcement authorities and regulatory prerogatives while establishing a unified federal framework for measuring compliance.

The consent decree governs four distinct sites, each with its own remedial objectives, contaminants of concern, cleanup levels, and operational benchmarks. Despite these site-specific differences, the decree establishes a common framework for: (a) measuring performance against defined standards; (b) determining when the factual and technical conditions constituting "completion" have been satisfied; and (c) triggering the multi-step termination process that ultimately releases TMC from the decree's obligations with respect to each individual site.

A key universal principle permeating the consent decree is that termination is available only on a site-by-site basis, requires formal certification of completion by both EPA and the court-appointed independent environmental monitor — Verdant Analytics, Inc. of Portland, Oregon, acting through its Senior Managing Director, Dr. Kamal Osei — and may not occur sooner than five years after the completion of all remedial construction at the relevant site. This five-year post-completion period represents a significant constraint on TMC's ability to derecognize environmental liabilities and reduce financial assurance commitments, and its implications are discussed at length in Sections VI and VII below.

The total nominal remediation obligation across all four sites is approximately $343.5 million, broken down as follows:

When combined with the civil penalty payment obligations ($31.5 million), EPA past-costs reimbursement ($18.1 million), and supplemental environmental project ("SEP") obligations ($12.0 million), as well as ongoing monitoring, financial assurance, and independent monitor costs, the aggregate financial exposure under the consent decree is approximately $409.9 million on a nominal basis, before accounting for the time value of money.

This memorandum does not address sampling and monitoring protocols in detail; those are addressed in a separate draft memorandum dated February 24, 2025, which is currently in preparation. Nor does this memorandum replicate the comprehensive analysis of financial assurance adequacy set forth in our February 20, 2025 memorandum on that subject. Cross-references to those companion memoranda are provided where appropriate.

II. Governing Legal Framework

A. Statutory and Regulatory Authorities

The consent decree draws its authority from, and imposes obligations arising under, multiple federal and state environmental statutes and their implementing regulations. A thorough understanding of these authorities is necessary to interpret the performance standards, completion criteria, and termination provisions of the decree, as each site's remedial obligations are anchored in specific statutory provisions and regulatory standards.

Clean Water Act ("CWA"), 33 U.S.C. § 1311 (Section 301). Section 301 of the CWA prohibits the discharge of pollutants from any point source into navigable waters except in compliance with the Act's requirements, including compliance with applicable National Pollutant Discharge Elimination System ("NPDES") or state-equivalent permit effluent limitations. The performance standards established in the consent decree for each site incorporate CWA requirements to the extent that site remediation must achieve the elimination of unpermitted discharges and ensure compliance with applicable permit effluent limits. This authority is particularly relevant to the Ridgecrest site (acid mine drainage discharges to Flint Creek), the Gallatin site (MPDES permit exceedances for carbon disulfide and total suspended solids), and the Bonanza Creek site (process solution releases to an ephemeral tributary of the Reese River).

Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6924, 6925 (Sections 3004 and 3005). RCRA establishes the regulatory framework for the management, storage, treatment, and disposal of hazardous wastes, including corrective action requirements for releases from solid waste management units at RCRA-permitted facilities. The performance standards for the Gallatin and Kanawha Bend sites are governed principally by RCRA corrective action standards, including the closure and post-closure care requirements set forth in 40 C.F.R. Parts 264 and 265. The consent decree incorporates RCRA closure standards (40 C.F.R. § 264.111 et seq.) as operative benchmarks for the closure of solid waste management units at the Gallatin site and the former surface impoundment at the Kanawha Bend site.

Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9607 (Section 107). CERCLA provides the statutory basis for EPA's cost recovery and remediation authorities at sites where hazardous substances have been released or threaten release. The Ridgecrest site is the subject of a proposed National Priorities List ("NPL") listing and has been administered under an existing Administrative Order on Consent (AOC Docket No. CERCLA-08-2022-0039, executed September 15, 2022). The consent decree incorporates CERCLA remedy selection criteria under the National Contingency Plan ("NCP"), 40 C.F.R. Part 300, including the requirement that remedial actions comply with applicable or relevant and appropriate requirements ("ARARs") drawn from federal and state law. The ARARs framework is the mechanism by which Montana, Nevada, and West Virginia water quality standards and soil cleanup levels are incorporated into the consent decree as binding performance standards.

State Counterpart Statutes and Regulations. The consent decree also references and incorporates the environmental regulatory frameworks of the three states in which the four sites are located:

• Montana: Montana Water Quality Act (Mont. Code Ann. § 75-5-101 et seq.); Montana Comprehensive Environmental Cleanup and Responsibility Act ("CECRA") (Mont. Code Ann. § 75-10-701 et seq.); Montana Hazardous Waste Act (Mont. Code Ann. § 75-10-401 et seq.); Montana Pollutant Discharge Elimination System ("MPDES") regulations (ARM Title 17, Chapter 30).

• Nevada: Nevada Water Pollution Control Law (Nev. Rev. Stat. § 445A.300 et seq.); Nevada Hazardous Waste Management regulations (NAC Chapter 444); Nevada mining reclamation requirements (Nev. Rev. Stat. § 519A.010 et seq.).

• West Virginia: West Virginia Water Pollution Control Act (W. Va. Code § 22-11-1 et seq.); West Virginia Hazardous Waste Management Act (W. Va. Code § 22-18-1 et seq.); West Virginia Groundwater Protection Act (W. Va. Code § 22-12-1 et seq.).

These state authorities supply many of the specific numerical cleanup levels and water quality criteria that constitute the operative performance standards for each site, as discussed in detail in Section III below.

B. Consent Decree Structural Provisions

The consent decree is organized into twenty-six sections and multiple appendices. The provisions most directly relevant to this memorandum are summarized below.

Decree § IV (Effective Date). The Effective Date is defined as thirty (30) days after the entry of the consent decree by the Court. All milestone deadlines and time-dependent obligations in the decree are measured from the Effective Date. Based on the anticipated entry date of May 15, 2025, the projected Effective Date is June 14, 2025.

Decree § IX (Performance Standards). Section IX establishes the site-specific cleanup levels and operational benchmarks that TMC must achieve at each of the four sites. These performance standards are derived from applicable federal and state regulatory requirements and, in some instances, from site-specific risk assessments and water quality models. Section IX incorporates by reference detailed tables of contaminant-specific cleanup levels set forth in the decree appendices. The performance standards serve dual purposes: they define the remedial endpoints that TMC must achieve, and they provide the operative benchmarks against which compliance is measured for purposes of the stipulated penalty regime established in Decree § XVI.

Decree § X (Completion Criteria). Section X defines the factual and technical conditions that must be satisfied before a site may be deemed "complete" for purposes of initiating the termination process. The completion criteria encompass both physical completion of remedial construction and a period of sustained compliance with performance standards, as measured through the monitoring protocols specified in the decree appendices. Section X distinguishes between "Completion of Remedial Construction" (the point at which physical construction and system startup are finished) and "Completion" (the point at which sustained compliance has been demonstrated), a distinction with significant implications for financial assurance and liability accounting, as discussed in Sections VII and IX below.

Decree § XXIII (Termination). Section XXIII establishes the termination process for the consent decree. Termination is available only on a site-by-site basis and requires: (i) a formal Certification of Completion submitted by TMC; (ii) independent review and concurrence by the court-appointed monitor; (iii) written approval by EPA; (iv) expiration of a five-year post-completion period during which TMC must continue all monitoring and operation-and-maintenance activities; and (v) a petition to the Court for termination. The decree may not be terminated in its entirety until all four sites have individually satisfied the termination requirements.

Decree Appendices. The consent decree includes several appendices that supply the technical detail underlying the performance standards and completion criteria. The sampling and monitoring plan (addressed in our separate draft dated February 24, 2025) specifies monitoring well networks, sampling frequencies, analyte lists, method detection limits, practical quantitation limits, quality assurance/quality control requirements, and reporting formats. Other appendices include site maps, remedial design specifications, financial assurance instruments, and the independent monitor's scope of work.

C. Role of the Independent Monitor

The consent decree establishes a court-designated independent environmental monitor to provide oversight and verification of TMC's compliance with the decree's requirements. The monitor is Verdant Analytics, Inc., a Portland, Oregon-based environmental consulting and data analytics firm. The Senior Managing Director of Verdant Analytics, Dr. Kamal Osei, has been designated as the lead individual responsible for monitor activities. Dr. Osei holds a Ph.D. in Environmental Engineering from the Georgia Institute of Technology and has served as an independent monitor in several prior federal consent decree matters, including United States v. Consolidated Copper Holdings, Inc. (D. Ariz.) and United States v. Pacific Basin Refining Corp. (W.D. Wash.).

The monitor's responsibilities under the consent decree include the following:

• Conducting quarterly compliance audits at each of the four sites, including review of monitoring data, inspection of remedial systems, and assessment of TMC's compliance with performance standards and milestone deadlines.

• Preparing and filing annual public reports summarizing the status of remediation and compliance at each site, including an assessment of progress toward completion criteria.

• Providing independent concurrence (or non-concurrence) on any Certification of Completion submitted by TMC, based on the monitor's own review of supporting data and, where appropriate, independent sampling and analysis.

• Advising the Court, upon request, on any disputed compliance or performance standard issues.

The monitor's concurrence is a mandatory prerequisite for EPA's approval of any Certification of Completion. Without the monitor's affirmative recommendation, the certification process cannot advance to the EPA determination stage, effectively giving the monitor a gating function in the termination process.

The estimated cost of the independent monitor's services is $4.8 million over a five-year period, or approximately $960,000 per year. These costs are borne by TMC pursuant to Decree § XIV. It should be noted that the five-year estimate is a minimum; given the projected remediation timelines for the four sites, the monitor's engagement will extend well beyond five years, and total monitor costs over the life of the consent decree could be substantially higher. We recommend that TMC budget for monitor costs on a rolling basis, with annual adjustments based on actual activity levels and scope changes.

III. Site-Specific Performance Standards

This section examines the performance standards applicable to each of the four sites governed by the consent decree. For each site, we describe the site characteristics, identify the contaminants of concern and their applicable cleanup levels, summarize the operational performance benchmarks, reference the applicable remediation schedule, and outline the performance monitoring requirements.

A. Ridgecrest Copper-Molybdenum Mine (Ridgecrest Site)

1. Site Description

The Ridgecrest Copper-Molybdenum Mine is located at 14200 Ridgecrest Mine Road, Drummond, Granite County, Montana 59832. The mine footprint encompasses approximately 3,200 acres, with total controlled property (including buffer zones, access corridors, and ancillary facilities) totaling approximately 8,700 acres. The site is situated in the upper Flint Creek drainage basin in western Montana, approximately 12 miles east of the town of Drummond.

The Ridgecrest site is operated by Ridgecrest Mine Holdings, LLC, a Montana limited liability company (Montana Secretary of State ID: E1042738) that is wholly owned by Torchlight Mining (U.S.) Inc. The mine is an open-pit copper-molybdenum operation that has been in existence since 1978. Active mining operations ceased on December 31, 2019, and the site is currently in the closure and reclamation phase. The mine historically produced approximately 45,000 tons of copper and 8,000 tons of molybdenum concentrate annually during peak production years.

The Ridgecrest site presents the most significant environmental liability of the four sites addressed by the consent decree, both in terms of remediation cost ($198.6 million nominal) and complexity. The site has been proposed for listing on the National Priorities List under CERCLA and is currently being addressed under Administrative Order on Consent Docket No. CERCLA-08-2022-0039, which was executed on September 15, 2022, between EPA Region 8 and Ridgecrest Mine Holdings, LLC. The consent decree supersedes and replaces the AOC with respect to the performance standards and remedial obligations addressed therein, while preserving certain AOC provisions relating to access, information exchange, and interim measures that remain operative during the transition period.

The EPA Project Coordinator for the Ridgecrest site is Dr. Samuel Tesfaye of EPA Region 8 (Denver, Colorado). The government's principal technical expert for the site is Dr. Patricia Voss of Cascade Geosciences, Inc. (Seattle, Washington), a geochemist specializing in acid mine drainage characterization and treatment. TMC's environmental remediation consultant for the Ridgecrest site is Dr. Astrid Bergmann, P.E., of Pinnacle Creek Environmental, LLC (Bozeman, Montana), who has been the lead remediation engineer for the site since 2020.

2. Contaminants of Concern and Cleanup Levels

The contaminants of concern at the Ridgecrest site arise primarily from acid mine drainage ("AMD") generated by the exposure of sulfide-bearing waste rock and tailings to air and water. The principal contaminants and their applicable cleanup levels are as follows:

Acid Mine Drainage — Dissolved Copper. Dissolved copper is the primary contaminant of concern in AMD discharges from the Ridgecrest site. Current concentrations in untreated AMD average approximately 47 mg/L, with peak concentrations exceeding 85 mg/L during spring snowmelt conditions. The applicable performance standard is the Montana chronic aquatic life standard for dissolved copper, which is 0.0087 mg/L (8.7 µg/L). This standard applies at designated compliance points along Flint Creek, which receives AMD-impacted water from the mine site. The magnitude of the required reduction — from 47 mg/L to 0.0087 mg/L, a reduction of more than 99.98% — underscores the technical challenge of the Ridgecrest remediation and the need for highly effective treatment systems operating continuously over a period of decades.

Molybdenum. Dissolved molybdenum in AMD is currently averaging approximately 1.2 mg/L. The performance standard requires achievement of the applicable Montana surface water quality standard for molybdenum at the designated Flint Creek compliance points. Montana does not have a specific numeric standard for molybdenum in surface water, but the consent decree incorporates a site-specific water quality-based effluent limit derived from EPA aquatic life criteria and applied through the MPDES permitting process.

Selenium. Dissolved selenium in AMD is currently averaging approximately 0.082 mg/L (82 µg/L). The applicable performance standard is the Montana surface water quality standard for selenium, which is based on the EPA national criterion of 3.1 µg/L (chronic aquatic life criterion for lentic waters) or 1.5 µg/L (for lotic waters), as applicable to the receiving water characteristics of Flint Creek. Achievement of the selenium standard at compliance points requires a reduction of approximately 98% from current concentrations.

Sulfate. Sulfate concentrations in AMD are currently averaging approximately 3,400 mg/L, reflecting the oxidation of sulfide minerals in waste rock and tailings. Montana applies a narrative water quality standard for sulfate, which the consent decree supplements with site-specific water quality-based effluent limits developed through the MPDES permitting process. The sulfate performance standard will require significant treatment capacity, particularly given the high volume of AMD generated by the site.

Tailings Impoundment Seepage. The Ridgecrest tailings impoundment covers approximately 425 acres and contains an estimated 180 million tons of tailings. Documented seepage from the tailings impoundment to Flint Creek has been identified as a significant pathway for contaminant migration. The performance standard requires the complete elimination of documented seepage from the tailings impoundment to Flint Creek, as measured by a piezometer network and downstream monitoring wells. Achievement of this standard will require the installation and long-term maintenance of an engineered cover system, seepage collection infrastructure, and groundwater interception measures.

3. Operational Performance Benchmarks

In addition to the contaminant-specific cleanup levels described above, the consent decree establishes operational performance benchmarks for the Ridgecrest site that define the functional requirements of the remedial systems. These benchmarks are expressed as engineering specifications and operational parameters, rather than as ambient environmental concentrations, and serve as intermediate compliance measures during the remediation period.

AMD Treatment System. TMC must design, construct, and operate a continuous AMD treatment system capable of achieving greater than 99% copper removal efficiency on a sustained basis. The treatment system must be sized to handle the full range of AMD flow rates experienced at the site, including peak flows during spring snowmelt. The specific treatment technology will be selected through the Remedial Action Work Plan process, but the consent decree establishes the performance benchmark of >99% removal efficiency as a minimum design criterion regardless of the technology selected.

Tailings Impoundment Cover System. The engineered cover system for the 425-acre tailings impoundment must achieve a maximum saturated hydraulic conductivity (infiltration rate) of 1 × 10⁻⁷ cm/sec or less. This benchmark is consistent with the performance requirements typically applied to RCRA Subtitle C equivalent covers and is intended to minimize the infiltration of precipitation through the tailings, thereby reducing the generation of AMD at its source.

Groundwater Containment System. TMC must install and operate a groundwater containment system — consisting of extraction wells, permeable reactive barriers, or a combination thereof — that achieves hydraulic containment of the contaminated groundwater plume. Hydraulic containment must be demonstrated by the maintenance of an inward gradient at all perimeter monitoring wells, confirming that contaminated groundwater is being captured by the containment system and is not migrating beyond the containment boundary. The inward gradient must be demonstrated on a sustained basis through quarterly potentiometric surface mapping.

Stormwater Management System. The stormwater management system for the Ridgecrest site must be designed to capture and manage runoff from a 100-year, 24-hour precipitation event without uncontrolled discharge to Flint Creek or other receiving waters. This design standard is consistent with standard mining industry practice and EPA guidance for stormwater management at mine sites.

4. Remediation Schedule Reference

The negotiated remediation cost for the Ridgecrest site is $198.6 million over a 30-year remediation period, with a net present value of $134.9 million at a 3% discount rate. This amount was the product of extensive negotiations between TMC and the government, with TMC's original estimate of $187.5 million and EPA's estimate of $224.0 million yielding a midpoint of $205.75 million. The final negotiated amount of $198.6 million reflects concessions by both sides and incorporates certain cost-saving assumptions regarding treatment technology selection and phased implementation.

Key milestones for the Ridgecrest site include:

• Remedial Action Work Plan submission deadline: December 14, 2025 (180 days after the projected Effective Date of June 14, 2025).

• Commencement of remedy construction: June 14, 2027 (2 years after the Effective Date, and subject to prior EPA approval of the Remedial Action Work Plan).

• End of 30-year remediation obligation: June 14, 2055.

These milestones are subject to modification through the decree's work plan approval process, which permits EPA to approve extensions or modifications for good cause. However, any modification of milestones does not relieve TMC of its obligation to meet the performance standards on the schedule specified, and failure to meet milestones triggers the stipulated penalty regime discussed in Section VIII below.

5. Performance Monitoring Requirements

The consent decree and its appendices establish a comprehensive monitoring program for the Ridgecrest site, designed to measure TMC's progress toward achieving the performance standards described above and to provide the data necessary for the eventual Certification of Completion process. The monitoring program includes the following components:

Monitoring Well Network — Groundwater. TMC must conduct quarterly groundwater sampling at all perimeter and interior monitoring points within the groundwater monitoring well network. The monitoring well network is specified in the decree appendices and includes wells installed in the alluvial aquifer, the bedrock aquifer, and the tailings pore water. Analyte lists, method detection limits, and quality assurance/quality control protocols are specified in the sampling and monitoring plan and are addressed in our separate memorandum dated February 24, 2025.

Surface Water Monitoring. TMC must conduct monthly surface water sampling at designated Flint Creek compliance points, including upstream reference stations, mid-reach stations within the zone of AMD influence, and downstream stations below the confluence of all AMD-impacted tributaries. Surface water monitoring includes both grab sampling and continuous flow measurement at each station.

Tailings Impoundment Seepage Monitoring. TMC must maintain continuous piezometric monitoring of the tailings impoundment and surrounding area to detect and quantify seepage. Additionally, quarterly sampling of the seepage collection system must be conducted to characterize the quality of collected seepage water and to verify the effectiveness of seepage interception measures.

Annual Comprehensive Monitoring Report. TMC must prepare and submit an annual comprehensive monitoring report to EPA (Dr. Samuel Tesfaye, Region 8 Project Coordinator), Montana DEQ, and the independent monitor (Verdant Analytics, Dr. Kamal Osei). The annual report must include all monitoring data collected during the reporting period, trend analysis, an assessment of remedy performance against the applicable performance standards, and identification of any data gaps or quality assurance concerns.

B. Gallatin Chemical Works (Gallatin Site)

1. Site Description

The Gallatin Chemical Works is located at 8800 Industrial Park Lane, Belgrade, Gallatin County, Montana 59714. The site encompasses approximately 145 acres in the Gallatin Valley, approximately 10 miles west of Bozeman, Montana, within an established industrial park adjacent to agricultural land and residential development.

The Gallatin site is operated by Torchlight Specialty Chemicals, Inc., a Delaware corporation (EIN: 47-3819204) that is wholly owned by Torchlight Mining (U.S.) Inc. The facility manufactures specialty chemicals used in mineral processing operations, including flotation reagents, sodium xanthate, and dithiophosphate collectors. The facility has been in continuous operation since 1993 and remains an active manufacturing facility. Unlike the Ridgecrest site, which is in closure and reclamation, the Gallatin site must achieve compliance with performance standards while continuing industrial operations, presenting unique operational and logistical challenges.

The Gallatin site is designated as a RCRA Corrective Action facility under RCRA Permit No. MTD098712456. EPA and Montana DEQ have identified three solid waste management units ("SWMUs") at the facility that require corrective action: (1) a former chemical storage area with documented soil contamination; (2) a process wastewater treatment system with groundwater impacts; and (3) a former drum storage yard with subsurface soil contamination. Each SWMU is subject to the corrective action requirements of 40 C.F.R. Part 264, Subpart F, as incorporated into the consent decree.

The Montana co-plaintiff lead for the Gallatin site is Annika Hedstrom, Assistant Attorney General in the Montana Attorney General's Office. Local counsel for TMC in Montana is Russell Dane of Holcroft, Dane & Weiss LLP (Helena, Montana), who has been engaged to advise on state-specific regulatory interactions and to coordinate with the Montana DEQ on MPDES permitting matters.

2. Contaminants of Concern and Cleanup Levels

The contaminants of concern at the Gallatin site are associated with the manufacture, handling, and disposal of specialty chemical products and process residuals. The principal contaminants and their applicable cleanup levels are as follows:

Carbon Disulfide (CS₂) in Groundwater. Carbon disulfide is the primary contaminant of concern in groundwater at the Gallatin site. CS₂ is used as a precursor in the manufacture of sodium xanthate and has been detected in groundwater monitoring wells at concentrations as high as 890 µg/L. The applicable performance standard is the federal Maximum Contaminant Level ("MCL") for carbon disulfide, which is 10 µg/L. The consent decree requires achievement of the MCL at all compliance wells within the corrective action boundary. The current maximum detected concentration represents an exceedance of approximately 89 times the MCL, requiring a reduction of approximately 98.9%.

Xanthate Decomposition Products. Various decomposition products of sodium xanthate and other flotation reagents have been detected in groundwater and subsurface soils at the site. Because these compounds do not have established MCLs or Montana default cleanup values, the consent decree provides that site-specific risk-based cleanup levels will be established through the Corrective Measures Study process, based on human health risk assessment using EPA-approved exposure assumptions and toxicity values. The Corrective Measures Study must incorporate a formal risk assessment that derives protective cleanup levels for each identified decomposition product.

Volatile Organic Compounds (VOCs) in Subsurface Soils. Toluene and xylene have been detected in subsurface soils at two of the three SWMUs. The applicable performance standards are the Montana DEQ Tier 1 default cleanup values for these compounds, calculated for both residential and industrial land use scenarios. The decree specifies that the industrial scenario cleanup values apply within the active facility boundary, while the residential scenario values apply at the property boundary and beyond, reflecting the proximity of the site to residential development.

MPDES Permit Compliance. The Gallatin facility operates under Montana Pollutant Discharge Elimination System Permit No. MT-0032514, which establishes effluent limitations for discharges from the facility's process wastewater treatment system to a tributary of the East Gallatin River. Between January 2021 and June 2024, the facility experienced fourteen (14) documented exceedances of the permit effluent limits for carbon disulfide and total suspended solids. The consent decree requires the elimination of all permit effluent limit exceedances as a performance standard, with compliance measured through continuous effluent monitoring.

3. Operational Performance Benchmarks

Groundwater Treatment System. TMC must design, install, and operate a groundwater treatment system — either a conventional pump-and-treat system, an in-situ treatment system (such as enhanced bioremediation or chemical oxidation), or a combination thereof — capable of reducing CS₂ concentrations to the MCL (10 µg/L) within the corrective action boundary within 10 years of system startup. The specific treatment technology will be selected through the Corrective Measures Study process, but the consent decree establishes the 10-year timeframe as a binding performance benchmark.

SWMU Closure. All three SWMUs must be closed in accordance with the RCRA closure standards set forth in 40 C.F.R. § 264.111 et seq. Closure requires the removal or decontamination of all hazardous waste residues, contaminated containment system components, contaminated subsoils, and contaminated structures and equipment, or, where clean closure is not feasible, closure in place with an engineered cover system meeting the requirements of 40 C.F.R. § 264.310.

Process Modifications. TMC must implement process modifications at the Gallatin facility to prevent future MPDES permit exceedances. These modifications include, at a minimum, the installation of continuous effluent monitoring equipment for CS₂ at all MPDES discharge points, with automated alarm systems that trigger real-time notifications to facility operators when effluent concentrations approach permit limits. The specific process modifications will be detailed in a Process Modification Plan to be submitted to EPA and Montana DEQ within 180 days of the Effective Date.

4. Remediation Schedule Reference

The estimated remediation cost for the Gallatin site is $42.8 million over a 15-year period, with a net present value of $34.1 million at a 3% discount rate. The Gallatin site has the shortest projected remediation timeline of the four sites, reflecting the smaller geographic scale of the site and the more limited scope of the corrective action required.

The principal milestone for the Gallatin site is the deadline to submit the Corrective Measures Study, which is June 14, 2026 (one year after the projected Effective Date). The Corrective Measures Study will evaluate and compare remedial alternatives, recommend a preferred remedy, and establish detailed implementation schedules and cost estimates for EPA and Montana DEQ review and approval.

5. Performance Monitoring Requirements

Quarterly Groundwater Monitoring. TMC must conduct quarterly groundwater monitoring at all compliance wells within the corrective action boundary. The monitoring program includes sampling for CS₂, xanthate decomposition products, and VOCs, as well as standard field parameters (pH, temperature, specific conductance, dissolved oxygen, and oxidation-reduction potential).

Continuous Effluent Monitoring. TMC must install and operate continuous effluent monitoring systems at all MPDES discharge points. Continuous monitoring data must be recorded and maintained in electronic format and must be made available to EPA, Montana DEQ, and the independent monitor upon request.

Semi-Annual Soil-Vapor Monitoring. TMC must conduct semi-annual soil-vapor monitoring at each of the three SWMU locations to assess the migration of VOCs through the vadose zone and to evaluate the effectiveness of soil remediation measures.

Annual Corrective Action Progress Report. TMC must prepare and submit an annual corrective action progress report to EPA, Montana DEQ, and the independent monitor. The report must include all monitoring data, trend analyses, remedy performance assessments, and any proposed modifications to the corrective action program.

C. Bonanza Creek Gold Mine (Bonanza Creek Site)

1. Site Description

The Bonanza Creek Gold Mine is located on County Road 447, Mile Marker 12, in Lander County, Nevada 89820, approximately 28 miles south of the town of Battle Mountain. The mine footprint encompasses approximately 5,600 acres, with total controlled property — including buffer zones, haul roads, and ancillary facilities — totaling approximately 12,400 acres. The site is situated in the Basin and Range physiographic province of north-central Nevada, in an arid to semi-arid environment with annual precipitation of approximately 8 inches.

The Bonanza Creek site is operated by Bonanza Creek Mining, LLC, a Nevada limited liability company (Nevada Secretary of State Entity No.: E0518294731) that is wholly owned by Torchlight Mining (U.S.) Inc. The mine is an open-pit heap-leach gold operation that has been in production since 2001 and remains an active mining operation. The mine utilizes sodium cyanide solution applied to crushed ore on lined heap-leach pads to dissolve gold, which is then recovered from the pregnant solution through carbon adsorption and electrowinning processes.

The Bonanza Creek site is the subject of enforcement actions arising from three documented releases of process solution from the heap-leach pad to an ephemeral tributary of the Reese River, which occurred on March 17, 2022, August 9, 2022, and January 22, 2023. Each release was attributed to a tear or failure in the heap-leach pad liner system, resulting in the discharge of cyanide-bearing process solution to surface waters. The releases resulted in documented fish kills in the receiving tributary and triggered EPA Region 9 enforcement action.

The EPA Project Coordinator for the Bonanza Creek site is Jennifer Whitfield of EPA Region 9 (San Francisco, California). The Nevada co-plaintiff lead is Ricardo Fuentes, Deputy Attorney General in the Nevada Attorney General's Office. Local counsel for TMC in Nevada is Denise Quartaro of sagebrush Law Group, PLLC (Las Vegas, Nevada).

2. Contaminants of Concern and Cleanup Levels

Weak Acid Dissociable (WAD) Cyanide. WAD cyanide is the primary contaminant of concern associated with the heap-leach gold recovery process. Current WAD cyanide concentrations in the heap-leach pad underdrain are approximately 0.62 mg/L. The applicable discharge limit for WAD cyanide is 0.022 mg/L, based on the Nevada water quality criterion for cyanide in receiving waters. The consent decree requires achievement of the discharge limit at all points of compliance, including the heap-leach pad underdrain, solution conveyance channels, and any identified surface water discharge points.

Mercury. Mercury is mobilized during the heap-leach process and has been detected in process solution and receiving waters at elevated concentrations. Current mercury concentrations in receiving waters average approximately 12.4 µg/L. The applicable water quality criterion for mercury is 0.77 µg/L (based on the EPA Great Basin water quality criterion as adopted by Nevada). The performance standard requires achievement of the criterion in all receiving waters downstream of the mine site.

Selenium in Pit-Lake Water. As the open pit at the Bonanza Creek site approaches its ultimate depth, a pit lake is anticipated to form upon cessation of mining and dewatering activities. Selenium has been identified as a contaminant of concern in the anticipated pit-lake water based on geochemical modeling. The consent decree provides that a site-specific performance standard for selenium in the pit lake will be established based on a pit-lake water quality model to be developed as part of the mine closure planning process. The model must incorporate geochemical predictions, hydrologic inputs, and ecological risk assessment to derive a protective selenium concentration limit.

Documented Releases. As noted above, three documented releases of process solution from the heap-leach pad to an ephemeral tributary of the Reese River occurred between March 2022 and January 2023. These releases are the subject of the civil penalty component of the consent decree ($31.5 million total, of which a portion is allocated to the Bonanza Creek releases) and are also the factual predicate for the remedial obligations addressed in the performance standards.

3. Operational Performance Benchmarks

Liner Repair and Redundant Containment. TMC must complete the repair of all identified tears and failures in the existing heap-leach pad liner system and must install a redundant containment system consisting of a double liner system with a leak detection layer between the primary and secondary liners for all active heap-leach pads. The double liner system must be designed and constructed in accordance with EPA guidance for heap-leach pad design (EPA 530-R-94-015) and Nevada mining regulations (NAC 445A.430 et seq.).

Zero Uncontrolled Releases. The consent decree establishes a performance benchmark of zero uncontrolled releases of process solution from the heap-leach system for a minimum of 36 consecutive months. This benchmark is measured from the date of completion of the liner repair and double-liner installation. Any uncontrolled release during the 36-month period resets the clock, requiring an additional 36 consecutive months of zero releases before the benchmark is satisfied.

Bird Deterrent Systems. TMC must install and operate bird deterrent systems at all solution ponds at the Bonanza Creek site. The performance benchmark is zero avian mortalities attributable to contact with process solution in solution ponds. Between 2021 and 2023, seventeen (17) avian mortalities were documented at the Bonanza Creek solution ponds, constituting potential violations of the Migratory Bird Treaty Act, 16 U.S.C. § 703 et seq. The consent decree resolves the MBTA claims through the installation and maintenance of effective deterrent systems and the achievement of the zero-mortality benchmark.

Pit-Lake Water Quality Monitoring and Management Plan. TMC must develop and implement a pit-lake water quality monitoring and management plan in coordination with EPA Region 9 and the Nevada Division of Environmental Protection. The plan must include baseline water quality characterization, predictive geochemical modeling, monitoring protocols, and contingency measures for managing pit-lake water quality if model predictions are not met.

4. Remediation Schedule Reference

The estimated remediation cost for the Bonanza Creek site is $63.2 million over a 20-year period, with a net present value of $47.1 million at a 3% discount rate. The 20-year timeframe reflects the ongoing nature of mining operations at the site and the extended timeline for mine closure, reclamation, and post-closure monitoring.

The principal milestone for the Bonanza Creek site is the deadline to commence liner repair and redundant containment installation, which is June 14, 2026 (one year after the projected Effective Date). TMC must submit a detailed Liner Repair and Containment Upgrade Work Plan to EPA and Nevada DEP within 180 days of the Effective Date (December 11, 2025) for review and approval prior to commencement of construction.

5. Performance Monitoring Requirements

Continuous Leak-Detection Monitoring. TMC must install and operate continuous leak-detection monitoring systems in the leak-detection layer of the double liner system for all active heap-leach pads. Leak-detection data must be recorded continuously and reviewed at least daily by qualified personnel.

Monthly WAD Cyanide and Mercury Sampling. TMC must conduct monthly sampling for WAD cyanide and mercury at the heap-leach pad underdrain, all solution conveyance channels, and all receiving water compliance points. The monthly sampling frequency reflects the elevated risk profile of the site given the history of documented releases and the toxicity of the contaminants involved.

Weekly Solution-Pond Inspections and Avian Mortality Surveys. TMC must conduct weekly inspections of all solution ponds, including visual inspections of bird deterrent system integrity and systematic avian mortality surveys. All inspection and survey results must be documented and maintained in electronic format.

Quarterly Pit-Lake Water Sampling. TMC must conduct quarterly sampling of pit-lake water for a comprehensive analyte list including metals, cyanide species, selenium, pH, and standard field parameters. Sampling protocols must be consistent with the pit-lake water quality monitoring and management plan.

Annual Compliance Report. TMC must prepare and submit an annual compliance report to EPA (Jennifer Whitfield, Region 9 Project Coordinator), the Nevada Division of Environmental Protection, and the independent monitor (Verdant Analytics, Dr. Kamal Osei). The report must include all monitoring data, trend analyses, compliance assessments, and documentation of any releases, incidents, or corrective actions taken during the reporting period.

D. Kanawha Bend Chemical Plant (Kanawha Bend Site)

1. Site Description

The Kanawha Bend Chemical Plant is located at 2200 Chemical Valley Road, Institute, Kanawha County, West Virginia 25112. The site encompasses approximately 78 acres within the Kanawha Valley industrial corridor, commonly known as "Chemical Valley," which has historically been one of the most concentrated chemical manufacturing regions in the United States. The site is situated along the Kanawha River, approximately 12 miles upstream of Charleston, the state capital.

The Kanawha Bend site is operated by Torchlight Specialty Chemicals, Inc. (Delaware corporation, EIN: 47-3819204), the same entity that operates the Gallatin Chemical Works in Montana. The facility manufactures leaching agents and performs sulfuric acid regeneration services for the mining industry. The facility has been in operation since 1985 and remains an active manufacturing operation.

The Kanawha Bend site is designated as a RCRA Corrective Action facility under RCRA Permit No. WVD048823915. The site was the subject of an EPA emergency response action in 2020 following a sulfuric acid release to a tributary of the Kanawha River. EPA incurred response costs of $3.8 million in connection with the emergency action, which are the subject of a cost recovery claim included in the consent decree. The 2020 release resulted in significant environmental damage to the tributary, including documented fish kills and degradation of riparian habitat, and prompted the West Virginia Department of Environmental Protection to issue a compliance order requiring immediate corrective measures.

The West Virginia co-plaintiff lead for the Kanawha Bend site is Loretta May Hatcher, Assistant Attorney General in the West Virginia Attorney General's Office. Local counsel for TMC in West Virginia is Nathan Tully of Baxter, Tully & Crane PLLC (Charleston, West Virginia), who has been engaged to advise on state-specific regulatory compliance and to coordinate with the West Virginia DEP on corrective action matters.

2. Contaminants of Concern and Cleanup Levels

Sulfuric Acid Residuals in Soils. Soil pH values as low as 1.8 have been documented in the area of the 2020 release and in the vicinity of the former waste lagoon. The performance standard requires neutralization of acidic soils to a pH of 6.0 or greater within the corrective action boundary. This standard is consistent with EPA guidance on soil pH restoration and is designed to establish conditions suitable for revegetation and long-term ecological recovery.

Heavy Metals — Lead and Arsenic. Lead and arsenic concentrations in subsurface soils near the former waste lagoon have been documented at maximum levels of 4,200 mg/kg (lead) and 890 mg/kg (arsenic). The applicable performance standards are based on EPA Regional Screening Levels ("RSLs") for industrial soils, which are currently 800 mg/kg for lead and 3.0 mg/kg for arsenic (based on a target excess cancer risk of 1 × 10⁻⁶ for arsenic). The maximum detected arsenic concentration of 890 mg/kg exceeds the EPA RSL by a factor of approximately 297, indicating the need for substantial soil remediation, stabilization, or removal in the former waste lagoon area.

DNAPL — Chlorinated Solvents in Fractured Bedrock Aquifer. Dense non-aqueous phase liquid ("DNAPL") consisting of chlorinated solvents has been identified in the fractured bedrock aquifer beneath the site. The presence of DNAPL in fractured rock presents one of the most technically challenging remediation scenarios in environmental practice, as DNAPL tends to migrate along fracture networks in unpredictable patterns and is extremely difficult to remove or treat in situ. The consent decree establishes a performance standard requiring DNAPL source removal or containment and dissolved-phase plume reduction to applicable MCLs at the compliance well network boundary. The relevant MCLs include trichloroethylene ("TCE") at 5 µg/L, tetrachloroethylene ("PCE") at 5 µg/L, and 1,1,1-trichloroethane ("TCA") at 200 µg/L.

Former Surface Impoundment Closure. The former surface impoundment at the Kanawha Bend site was used for the storage and disposal of process wastes, including listed hazardous wastes K062 (spent pickle liquor from steel finishing operations, used in the sulfuric acid regeneration process) and D002 (corrosive waste). The consent decree requires closure of the former impoundment in accordance with RCRA closure standards (40 C.F.R. § 264.228), including proper management and disposal of all waste residues and contaminated liner materials.

3. Operational Performance Benchmarks

Soil Neutralization and Stabilization. TMC must complete the neutralization of all acidic soils within the corrective action boundary to achieve a minimum pH of 6.0, and must stabilize contaminated soils in the former waste lagoon area to reduce the leachability of lead and arsenic to levels that do not pose unacceptable risks to groundwater. The specific neutralization and stabilization technologies will be selected through the Corrective Measures Study process, but the consent decree establishes the pH 6.0 and soil RSL benchmarks as minimum design criteria.

DNAPL Recovery or In-Situ Treatment. TMC must implement DNAPL source-area treatment measures capable of achieving measurable reduction in source-area DNAPL mass. Measurable reduction is defined in the consent decree as a statistically significant declining trend in DNAPL thickness measurements in source-area wells and a corresponding decline in dissolved-phase concentrations in downgradient monitoring wells. The specific treatment technology — which may include direct DNAPL extraction, thermal treatment, chemical oxidation, or enhanced bioremediation — will be selected through the Corrective Measures Study process.

Groundwater Containment and Treatment. TMC must install and operate a groundwater containment and treatment system capable of achieving MCLs for chlorinated solvents at the compliance well network boundary within 15 years of system startup. The containment system must prevent further migration of the dissolved-phase plume beyond the compliance boundary during the treatment period.

Hazardous Waste Management. TMC must ensure the proper management of listed hazardous wastes K062 and D002 in compliance with all applicable RCRA requirements, including the land disposal restrictions of 40 C.F.R. Part 268. Any waste generated during the corrective action process that constitutes a listed or characteristic hazardous waste must be managed, treated, and disposed of in accordance with RCRA Subtitle C requirements.

4. Remediation Schedule Reference

The estimated remediation cost for the Kanawha Bend site is $38.9 million over a 20-year period, with a net present value of $29.0 million at a 3% discount rate. The 20-year timeframe reflects the technical difficulty of DNAPL remediation in fractured bedrock and the extended monitoring period required to demonstrate achievement of MCLs in a fractured-rock aquifer system.

The principal milestone for the Kanawha Bend site is the deadline to complete interim stabilization measures, which is December 14, 2026 (18 months after the projected Effective Date). Interim stabilization measures include the neutralization of the most acutely acidic soil areas, stabilization of the former waste lagoon to prevent further contaminant migration, and installation of temporary groundwater monitoring infrastructure.

5. Performance Monitoring Requirements

Quarterly Groundwater Monitoring. TMC must conduct quarterly groundwater monitoring at all wells in the compliance monitoring network for chlorinated solvents (TCE, PCE, TCA, and their degradation products), metals (lead, arsenic, and other site-related metals), and pH. Monitoring must include both the alluvial and bedrock aquifer systems.

Semi-Annual DNAPL Thickness Measurements. TMC must conduct semi-annual measurements of DNAPL thickness in all source-area monitoring wells using interface probes or equivalent measurement devices. DNAPL thickness data must be compiled and analyzed to assess trends in source-area mass reduction over time.

Soil Sampling — Neutralization Confirmation. TMC must conduct periodic soil sampling throughout the corrective action area to confirm the progress and effectiveness of neutralization activities. Sampling frequency and spatial coverage will be specified in the Corrective Measures Implementation Plan, but the consent decree requires that confirmation sampling be sufficient to demonstrate that the pH 6.0 standard has been achieved across the entire corrective action area, not merely at a limited number of sampling points.

Annual Corrective Action Progress Report. TMC must prepare and submit an annual corrective action progress report to EPA, the West Virginia Department of Environmental Protection, and the independent monitor. The report must include all monitoring data, DNAPL thickness trend analyses, soil neutralization progress assessments, groundwater plume maps, and an updated assessment of progress toward completion criteria.

IV. Completion Criteria — General Framework

The consent decree establishes a structured framework for determining when TMC's remedial obligations at a given site have been sufficiently discharged to permit the initiation of the termination process. This framework distinguishes between two critical milestones — "Completion of Remedial Construction" and "Completion" — each of which carries distinct legal and practical consequences.

A. Definition of "Completion of Remedial Construction"

"Completion of Remedial Construction" is defined in Decree § X.A as the point at which all physical remedial construction, installation, and system startup activities specified in the applicable site Remedial Action Work Plan (for CERCLA-governed sites) or Corrective Measures Implementation Plan (for RCRA-governed sites) have been finished, and the remedy is operational and functional. This definition is consistent with EPA's standard guidance on remedy completion milestones, as set forth in OSWER Directive 9320.2-09A-P (Close Out Procedures for National Priorities List Sites).

The "operational and functional" criterion requires that all remedial systems be not merely constructed and installed, but actually running and performing their intended function. A treatment system that has been physically constructed but has not been started up and demonstrated to operate at its design capacity has not achieved "Completion of Remedial Construction."

Importantly, "Completion of Remedial Construction" does not include long-term operation, maintenance, and monitoring ("O&M"), which is a separate ongoing obligation that continues throughout the sustained compliance period and the five-year post-completion period. The distinction is significant because the achievement of Completion of Remedial Construction is the starting point for the sustained compliance period, whereas long-term O&M obligations persist well beyond that milestone.

B. Definition of "Completion" (for Purposes of Decree Termination)

"Completion" is a more demanding standard than Completion of Remedial Construction and is the operative milestone for purposes of the termination process. Decree § X.B defines "Completion" as the point at which TMC has demonstrated, through the monitoring and reporting program established by the consent decree, that the remedy is performing as designed and that all applicable performance standards are being met on a sustained basis.

The sustained compliance requirement is the critical element of the Completion definition. The decree requires that performance standards be continuously met for a defined number of consecutive monitoring events, as specified site by site in the decree appendices. The required number of consecutive events varies by site and by parameter, but typically ranges from 8 to 12 consecutive quarterly monitoring events — equivalent to a minimum of 2 to 3 years of uninterrupted compliance. This sustained compliance period must be achieved without interruption, and any exceedance of a performance standard during the period resets the clock, requiring the full number of consecutive compliant events to be demonstrated anew from the date of the last exceedance.

The "no rebound" requirement is a further elaboration of the sustained compliance concept. Decree § X.B.3 provides that performance must be demonstrated without interruption or rebound following any system shutdown, reduction in remedial operations, or optimization of treatment systems. This provision is designed to prevent premature claims of completion based on performance that is dependent on the continuous operation of engineered treatment systems at their maximum capacity. If TMC reduces the intensity of treatment operations (for example, by reducing pumping rates in a groundwater extraction system) and performance standards continue to be met, that sustained compliance can count toward the required period. However, if a reduction in treatment intensity is followed by a rebound in contaminant concentrations above performance standards, the rebound event resets the sustained compliance clock and may require TMC to resume treatment at higher intensity levels.

C. Site-Specific Completion Benchmarks

The decree appendices establish site-specific completion benchmarks that elaborate on the general framework described above. These benchmarks are summarized below for each of the four sites.

1. Ridgecrest. Completion of Remedial Construction. All AMD treatment infrastructure, tailings impoundment cover system, groundwater containment system (extraction wells and/or permeable reactive barriers), and stormwater management system must be installed, operational, and functional. The achievement of this milestone will be documented through an as-bui

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
TO: Miriam Soo-Hwan Park, General Counsel, Torchlight Mining Corp. Gareth Linford, Vice President, Environmental Health & Safety, Torchlight Mining Corp.
FROM: Harrison Wexford, Partner, Calderwood & Harkness LLP Elliot Nguyen, Associate, Calderwood & Harkness LLP Grace Nakamura, Associate, Calderwood & Harkness LLP
DATE: February 22, 2025
RE: Performance Standards, Completion Criteria, and Certification-of-Completion Requirements Under the Consent Decree — All Four Sites
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, U.S. District Court for the District of Montana, Missoula Division
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I. Executive Summary
This memorandum analyzes and summarizes the performance standards, completion criteria, and certification-of-completion process established by the consent decree (execution version dated February 19, 2025) for each of the four sites operated or formerly operated by Torchlight Mining Corp. and its affiliates. The analysis is intended to provide Torchlight Mining Corp. ("TMC" or the "Company") management and in-house counsel with a comprehensive reference document that synthesizes the operative requirements of the consent decree into a practical framework for long-term compliance planning, financial forecasting, and strategic decision-making.
The consent decree was lodged with the U.S. District Court for the District of Montana, Missoula Division, on February 19, 2025, before Senior U.S. District Judge Donald W. Molloy. Pursuant to the requirements of 28 C.F.R. § 50.7 and the applicable procedures of the Department of Justice, Environment and Natural Resources Division, the decree is subject to a 30-day public comment period that closes on March 21, 2025. Assuming no substantive public comments necessitating revision or renegotiation, the target date for entry of the decree by the Court is May 15, 2025. The Effective Date of the consent decree — the date from which all remedial obligations, milestone deadlines, and time-dependent provisions are calculated — is defined as 30 days after entry by the Court, which yields a projected Effective Date of June 14, 2025, as set forth in Decree § IV.
The named defendants in the action are Torchlight Mining Corp. (the publicly traded Canadian parent corporation), Torchlight Mining (U.S.) Inc. (the principal U.S. holding company), Torchlight Specialty Chemicals, Inc. (the Delaware-incorporated specialty chemical manufacturing subsidiary), Ridgecrest Mine Holdings, LLC (the Montana limited liability company holding the Ridgecrest copper-molybdenum mine), and Bonanza Creek Mining, LLC (the Nevada limited liability company operating the Bonanza Creek gold mine). The consent decree binds all named defendants jointly and severally with respect to all obligations, including all performance standards, completion criteria, financial assurance requirements, and monetary obligations.
The co-plaintiffs bringing the enforcement action are the United States of America, acting through the U.S. Environmental Protection Agency ("EPA") and the U.S. Department of Justice ("DOJ"), the State of Montana, the State of Nevada, and the State of West Virginia. Each state co-plaintiff has a specific regulatory interest in the site or sites located within its jurisdiction, and the consent decree preserves certain state-specific enforcement authorities and regulatory prerogatives while establishing a unified federal framework for measuring compliance.
The consent decree governs four distinct sites, each with its own remedial objectives, contaminants of concern, cleanup levels, and operational benchmarks. Despite these site-specific differences, the decree establishes a common framework for: (a) measuring performance against defined standards; (b) determining when the factual and technical conditions constituting "completion" have been satisfied; and (c) triggering the multi-step termination process that ultimately releases TMC from the decree's obligations with respect to each individual site.
A key universal principle permeating the consent decree is that termination is available only on a site-by-site basis, requires formal certification of completion by both EPA and the court-appointed independent environmental monitor — Verdant Analytics, Inc. of Portland, Oregon, acting through its Senior Managing Director, Dr. Kamal Osei — and may not occur sooner than five years after the completion of all remedial construction at the relevant site. This five-year post-completion period represents a significant constraint on TMC's ability to derecognize environmental liabilities and reduce financial assurance commitments, and its implications are discussed at length in Sections VI and VII below.
The total nominal remediation obligation across all four sites is approximately $343.5 million, broken down as follows:
When combined with the civil penalty payment obligations ($31.5 million), EPA past-costs reimbursement ($18.1 million), and supplemental environmental project ("SEP") obligations ($12.0 million), as well as ongoing monitoring, financial assurance, and independent monitor costs, the aggregate financial exposure under the consent decree is approximately $409.9 million on a nominal basis, before accounting for the time value of money.
This memorandum does not address sampling and monitoring protocols in detail; those are addressed in a separate draft memorandum dated February 24, 2025, which is currently in preparation. Nor does this memorandum replicate the comprehensive analysis of financial assurance adequacy set forth in our February 20, 2025 memorandum on that subject. Cross-references to those companion memoranda are provided where appropriate.
II. Governing Legal Framework
A. Statutory and Regulatory Authorities
The consent decree draws its authority from, and imposes obligations arising under, multiple federal and state environmental statutes and their implementing regulations. A thorough understanding of these authorities is necessary to interpret the performance standards, completion criteria, and termination provisions of the decree, as each site's remedial obligations are anchored in specific statutory provisions and regulatory standards.
Clean Water Act ("CWA"), 33 U.S.C. § 1311 (Section 301). Section 301 of the CWA prohibits the discharge of pollutants from any point source into navigable waters except in compliance with the Act's requirements, including compliance with applicable National Pollutant Discharge Elimination System ("NPDES") or state-equivalent permit effluent limitations. The performance standards established in the consent decree for each site incorporate CWA requirements to the extent that site remediation must achieve the elimination of unpermitted discharges and ensure compliance with applicable permit effluent limits. This authority is particularly relevant to the Ridgecrest site (acid mine drainage discharges to Flint Creek), the Gallatin site (MPDES permit exceedances for carbon disulfide and total suspended solids), and the Bonanza Creek site (process solution releases to an ephemeral tributary of the Reese River).
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6924, 6925 (Sections 3004 and 3005). RCRA establishes the regulatory framework for the management, storage, treatment, and disposal of hazardous wastes, including corrective action requirements for releases from solid waste management units at RCRA-permitted facilities. The performance standards for the Gallatin and Kanawha Bend sites are governed principally by RCRA corrective action standards, including the closure and post-closure care requirements set forth in 40 C.F.R. Parts 264 and 265. The consent decree incorporates RCRA closure standards (40 C.F.R. § 264.111 et seq.) as operative benchmarks for the closure of solid waste management units at the Gallatin site and the former surface impoundment at the Kanawha Bend site.
Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9607 (Section 107). CERCLA provides the statutory basis for EPA's cost recovery and remediation authorities at sites where hazardous substances have been released or threaten release. The Ridgecrest site is the subject of a proposed National Priorities List ("NPL") listing and has been administered under an existing Administrative Order on Consent (AOC Docket No. CERCLA-08-2022-0039, executed September 15, 2022). The consent decree incorporates CERCLA remedy selection criteria under the National Contingency Plan ("NCP"), 40 C.F.R. Part 300, including the requirement that remedial actions comply with applicable or relevant and appropriate requirements ("ARARs") drawn from federal and state law. The ARARs framework is the mechanism by which Montana, Nevada, and West Virginia water quality standards and soil cleanup levels are incorporated into the consent decree as binding performance standards.
State Counterpart Statutes and Regulations. The consent decree also references and incorporates the environmental regulatory frameworks of the three states in which the four sites are located:
• Montana: Montana Water Quality Act (Mont. Code Ann. § 75-5-101 et seq.); Montana Comprehensive Environmental Cleanup and Responsibility Act ("CECRA") (Mont. Code Ann. § 75-10-701 et seq.); Montana Hazardous Waste Act (Mont. Code Ann. § 75-10-401 et seq.); Montana Pollutant Discharge Elimination System ("MPDES") regulations (ARM Title 17, Chapter 30).
• Nevada: Nevada Water Pollution Control Law (Nev. Rev. Stat. § 445A.300 et seq.); Nevada Hazardous Waste Management regulations (NAC Chapter 444); Nevada mining reclamation requirements (Nev. Rev. Stat. § 519A.010 et seq.).
• West Virginia: West Virginia Water Pollution Control Act (W. Va. Code § 22-11-1 et seq.); West Virginia Hazardous Waste Management Act (W. Va. Code § 22-18-1 et seq.); West Virginia Groundwater Protection Act (W. Va. Code § 22-12-1 et seq.).
These state authorities supply many of the specific numerical cleanup levels and water quality criteria that constitute the operative performance standards for each site, as discussed in detail in Section III below.
B. Consent Decree Structural Provisions
The consent decree is organized into twenty-six sections and multiple appendices. The provisions most directly relevant to this memorandum are summarized below.
Decree § IV (Effective Date). The Effective Date is defined as thirty (30) days after the entry of the consent decree by the Court. All milestone deadlines and time-dependent obligations in the decree are measured from the Effective Date. Based on the anticipated entry date of May 15, 2025, the projected Effective Date is June 14, 2025.
Decree § IX (Performance Standards). Section IX establishes the site-specific cleanup levels and operational benchmarks that TMC must achieve at each of the four sites. These performance standards are derived from applicable federal and state regulatory requirements and, in some instances, from site-specific risk assessments and water quality models. Section IX incorporates by reference detailed tables of contaminant-specific cleanup levels set forth in the decree appendices. The performance standards serve dual purposes: they define the remedial endpoints that TMC must achieve, and they provide the operative benchmarks against which compliance is measured for purposes of the stipulated penalty regime established in Decree § XVI.
Decree § X (Completion Criteria). Section X defines the factual and technical conditions that must be satisfied before a site may be deemed "complete" for purposes of initiating the termination process. The completion criteria encompass both physical completion of remedial construction and a period of sustained compliance with performance standards, as measured through the monitoring protocols specified in the decree appendices. Section X distinguishes between "Completion of Remedial Construction" (the point at which physical construction and system startup are finished) and "Completion" (the point at which sustained compliance has been demonstrated), a distinction with significant implications for financial assurance and liability accounting, as discussed in Sections VII and IX below.
Decree § XXIII (Termination). Section XXIII establishes the termination process for the consent decree. Termination is available only on a site-by-site basis and requires: (i) a formal Certification of Completion submitted by TMC; (ii) independent review and concurrence by the court-appointed monitor; (iii) written approval by EPA; (iv) expiration of a five-year post-completion period during which TMC must continue all monitoring and operation-and-maintenance activities; and (v) a petition to the Court for termination. The decree may not be terminated in its entirety until all four sites have individually satisfied the termination requirements.
Decree Appendices. The consent decree includes several appendices that supply the technical detail underlying the performance standards and completion criteria. The sampling and monitoring plan (addressed in our separate draft dated February 24, 2025) specifies monitoring well networks, sampling frequencies, analyte lists, method detection limits, practical quantitation limits, quality assurance/quality control requirements, and reporting formats. Other appendices include site maps, remedial design specifications, financial assurance instruments, and the independent monitor's scope of work.
C. Role of the Independent Monitor
The consent decree establishes a court-designated independent environmental monitor to provide oversight and verification of TMC's compliance with the decree's requirements. The monitor is Verdant Analytics, Inc., a Portland, Oregon-based environmental consulting and data analytics firm. The Senior Managing Director of Verdant Analytics, Dr. Kamal Osei, has been designated as the lead individual responsible for monitor activities. Dr. Osei holds a Ph.D. in Environmental Engineering from the Georgia Institute of Technology and has served as an independent monitor in several prior federal consent decree matters, including United States v. Consolidated Copper Holdings, Inc. (D. Ariz.) and United States v. Pacific Basin Refining Corp. (W.D. Wash.).
The monitor's responsibilities under the consent decree include the following:
• Conducting quarterly compliance audits at each of the four sites, including review of monitoring data, inspection of remedial systems, and assessment of TMC's compliance with performance standards and milestone deadlines.
• Preparing and filing annual public reports summarizing the status of remediation and compliance at each site, including an assessment of progress toward completion criteria.
• Providing independent concurrence (or non-concurrence) on any Certification of Completion submitted by TMC, based on the monitor's own review of supporting data and, where appropriate, independent sampling and analysis.
• Advising the Court, upon request, on any disputed compliance or performance standard issues.
The monitor's concurrence is a mandatory prerequisite for EPA's approval of any Certification of Completion. Without the monitor's affirmative recommendation, the certification process cannot advance to the EPA determination stage, effectively giving the monitor a gating function in the termination process.
The estimated cost of the independent monitor's services is $4.8 million over a five-year period, or approximately $960,000 per year. These costs are borne by TMC pursuant to Decree § XIV. It should be noted that the five-year estimate is a minimum; given the projected remediation timelines for the four sites, the monitor's engagement will extend well beyond five years, and total monitor costs over the life of the consent decree could be substantially higher. We recommend that TMC budget for monitor costs on a rolling basis, with annual adjustments based on actual activity levels and scope changes.
III. Site-Specific Performance Standards
This section examines the performance standards applicable to each of the four sites governed by the consent decree. For each site, we describe the site characteristics, identify the contaminants of concern and their applicable cleanup levels, summarize the operational performance benchmarks, reference the applicable remediation schedule, and outline the performance monitoring requirements.
A. Ridgecrest Copper-Molybdenum Mine (Ridgecrest Site)
1. Site Description
The Ridgecrest Copper-Molybdenum Mine is located at 14200 Ridgecrest Mine Road, Drummond, Granite County, Montana 59832. The mine footprint encompasses approximately 3,200 acres, with total controlled property (including buffer zones, access corridors, and ancillary facilities) totaling approximately 8,700 acres. The site is situated in the upper Flint Creek drainage basin in western Montana, approximately 12 miles east of the town of Drummond.
The Ridgecrest site is operated by Ridgecrest Mine Holdings, LLC, a Montana limited liability company (Montana Secretary of State ID: E1042738) that is wholly owned by Torchlight Mining (U.S.) Inc. The mine is an open-pit copper-molybdenum operation that has been in existence since 1978. Active mining operations ceased on December 31, 2019, and the site is currently in the closure and reclamation phase. The mine historically produced approximately 45,000 tons of copper and 8,000 tons of molybdenum concentrate annually during peak production years.
The Ridgecrest site presents the most significant environmental liability of the four sites addressed by the consent decree, both in terms of remediation cost ($198.6 million nominal) and complexity. The site has been proposed for listing on the National Priorities List under CERCLA and is currently being addressed under Administrative Order on Consent Docket No. CERCLA-08-2022-0039, which was executed on September 15, 2022, between EPA Region 8 and Ridgecrest Mine Holdings, LLC. The consent decree supersedes and replaces the AOC with respect to the performance standards and remedial obligations addressed therein, while preserving certain AOC provisions relating to access, information exchange, and interim measures that remain operative during the transition period.
The EPA Project Coordinator for the Ridgecrest site is Dr. Samuel Tesfaye of EPA Region 8 (Denver, Colorado). The government's principal technical expert for the site is Dr. Patricia Voss of Cascade Geosciences, Inc. (Seattle, Washington), a geochemist specializing in acid mine drainage characterization and treatment. TMC's environmental remediation consultant for the Ridgecrest site is Dr. Astrid Bergmann, P.E., of Pinnacle Creek Environmental, LLC (Bozeman, Montana), who has been the lead remediation engineer for the site since 2020.
2. Contaminants of Concern and Cleanup Levels
The contaminants of concern at the Ridgecrest site arise primarily from acid mine drainage ("AMD") generated by the exposure of sulfide-bearing waste rock and tailings to air and water. The principal contaminants and their applicable cleanup levels are as follows:
Acid Mine Drainage — Dissolved Copper. Dissolved copper is the primary contaminant of concern in AMD discharges from the Ridgecrest site. Current concentrations in untreated AMD average approximately 47 mg/L, with peak concentrations exceeding 85 mg/L during spring snowmelt conditions. The applicable performance standard is the Montana chronic aquatic life standard for dissolved copper, which is 0.0087 mg/L (8.7 µg/L). This standard applies at designated compliance points along Flint Creek, which receives AMD-impacted water from the mine site. The magnitude of the required reduction — from 47 mg/L to 0.0087 mg/L, a reduction of more than 99.98% — underscores the technical challenge of the Ridgecrest remediation and the need for highly effective treatment systems operating continuously over a period of decades.
Molybdenum. Dissolved molybdenum in AMD is currently averaging approximately 1.2 mg/L. The performance standard requires achievement of the applicable Montana surface water quality standard for molybdenum at the designated Flint Creek compliance points. Montana does not have a specific numeric standard for molybdenum in surface water, but the consent decree incorporates a site-specific water quality-based effluent limit derived from EPA aquatic life criteria and applied through the MPDES permitting process.
Selenium. Dissolved selenium in AMD is currently averaging approximately 0.082 mg/L (82 µg/L). The applicable performance standard is the Montana surface water quality standard for selenium, which is based on the EPA national criterion of 3.1 µg/L (chronic aquatic life criterion for lentic waters) or 1.5 µg/L (for lotic waters), as applicable to the receiving water characteristics of Flint Creek. Achievement of the selenium standard at compliance points requires a reduction of approximately 98% from current concentrations.
Sulfate. Sulfate concentrations in AMD are currently averaging approximately 3,400 mg/L, reflecting the oxidation of sulfide minerals in waste rock and tailings. Montana applies a narrative water quality standard for sulfate, which the consent decree supplements with site-specific water quality-based effluent limits developed through the MPDES permitting process. The sulfate performance standard will require significant treatment capacity, particularly given the high volume of AMD generated by the site.
Tailings Impoundment Seepage. The Ridgecrest tailings impoundment covers approximately 425 acres and contains an estimated 180 million tons of tailings. Documented seepage from the tailings impoundment to Flint Creek has been identified as a significant pathway for contaminant migration. The performance standard requires the complete elimination of documented seepage from the tailings impoundment to Flint Creek, as measured by a piezometer network and downstream monitoring wells. Achievement of this standard will require the installation and long-term maintenance of an engineered cover system, seepage collection infrastructure, and groundwater interception measures.
3. Operational Performance Benchmarks
In addition to the contaminant-specific cleanup levels described above, the consent decree establishes operational performance benchmarks for the Ridgecrest site that define the functional requirements of the remedial systems. These benchmarks are expressed as engineering specifications and operational parameters, rather than as ambient environmental concentrations, and serve as intermediate compliance measures during the remediation period.
AMD Treatment System. TMC must design, construct, and operate a continuous AMD treatment system capable of achieving greater than 99% copper removal efficiency on a sustained basis. The treatment system must be sized to handle the full range of AMD flow rates experienced at the site, including peak flows during spring snowmelt. The specific treatment technology will be selected through the Remedial Action Work Plan process, but the consent decree establishes the performance benchmark of >99% removal efficiency as a minimum design criterion regardless of the technology selected.
Tailings Impoundment Cover System. The engineered cover system for the 425-acre tailings impoundment must achieve a maximum saturated hydraulic conductivity (infiltration rate) of 1 × 10⁻⁷ cm/sec or less. This benchmark is consistent with the performance requirements typically applied to RCRA Subtitle C equivalent covers and is intended to minimize the infiltration of precipitation through the tailings, thereby reducing the generation of AMD at its source.
Groundwater Containment System. TMC must install and operate a groundwater containment system — consisting of extraction wells, permeable reactive barriers, or a combination thereof — that achieves hydraulic containment of the contaminated groundwater plume. Hydraulic containment must be demonstrated by the maintenance of an inward gradient at all perimeter monitoring wells, confirming that contaminated groundwater is being captured by the containment system and is not migrating beyond the containment boundary. The inward gradient must be demonstrated on a sustained basis through quarterly potentiometric surface mapping.
Stormwater Management System. The stormwater management system for the Ridgecrest site must be designed to capture and manage runoff from a 100-year, 24-hour precipitation event without uncontrolled discharge to Flint Creek or other receiving waters. This design standard is consistent with standard mining industry practice and EPA guidance for stormwater management at mine sites.
4. Remediation Schedule Reference
The negotiated remediation cost for the Ridgecrest site is $198.6 million over a 30-year remediation period, with a net present value of $134.9 million at a 3% discount rate. This amount was the product of extensive negotiations between TMC and the government, with TMC's original estimate of $187.5 million and EPA's estimate of $224.0 million yielding a midpoint of $205.75 million. The final negotiated amount of $198.6 million reflects concessions by both sides and incorporates certain cost-saving assumptions regarding treatment technology selection and phased implementation.
Key milestones for the Ridgecrest site include:
• Remedial Action Work Plan submission deadline: December 14, 2025 (180 days after the projected Effective Date of June 14, 2025).
• Commencement of remedy construction: June 14, 2027 (2 years after the Effective Date, and subject to prior EPA approval of the Remedial Action Work Plan).
• End of 30-year remediation obligation: June 14, 2055.
These milestones are subject to modification through the decree's work plan approval process, which permits EPA to approve extensions or modifications for good cause. However, any modification of milestones does not relieve TMC of its obligation to meet the performance standards on the schedule specified, and failure to meet milestones triggers the stipulated penalty regime discussed in Section VIII below.
5. Performance Monitoring Requirements
The consent decree and its appendices establish a comprehensive monitoring program for the Ridgecrest site, designed to measure TMC's progress toward achieving the performance standards described above and to provide the data necessary for the eventual Certification of Completion process. The monitoring program includes the following components:
Monitoring Well Network — Groundwater. TMC must conduct quarterly groundwater sampling at all perimeter and interior monitoring points within the groundwater monitoring well network. The monitoring well network is specified in the decree appendices and includes wells installed in the alluvial aquifer, the bedrock aquifer, and the tailings pore water. Analyte lists, method detection limits, and quality assurance/quality control protocols are specified in the sampling and monitoring plan and are addressed in our separate memorandum dated February 24, 2025.
Surface Water Monitoring. TMC must conduct monthly surface water sampling at designated Flint Creek compliance points, including upstream reference stations, mid-reach stations within the zone of AMD influence, and downstream stations below the confluence of all AMD-impacted tributaries. Surface water monitoring includes both grab sampling and continuous flow measurement at each station.
Tailings Impoundment Seepage Monitoring. TMC must maintain continuous piezometric monitoring of the tailings impoundment and surrounding area to detect and quantify seepage. Additionally, quarterly sampling of the seepage collection system must be conducted to characterize the quality of collected seepage water and to verify the effectiveness of seepage interception measures.
Annual Comprehensive Monitoring Report. TMC must prepare and submit an annual comprehensive monitoring report to EPA (Dr. Samuel Tesfaye, Region 8 Project Coordinator), Montana DEQ, and the independent monitor (Verdant Analytics, Dr. Kamal Osei). The annual report must include all monitoring data collected during the reporting period, trend analysis, an assessment of remedy performance against the applicable performance standards, and identification of any data gaps or quality assurance concerns.
B. Gallatin Chemical Works (Gallatin Site)
1. Site Description
The Gallatin Chemical Works is located at 8800 Industrial Park Lane, Belgrade, Gallatin County, Montana 59714. The site encompasses approximately 145 acres in the Gallatin Valley, approximately 10 miles west of Bozeman, Montana, within an established industrial park adjacent to agricultural land and residential development.
The Gallatin site is operated by Torchlight Specialty Chemicals, Inc., a Delaware corporation (EIN: 47-3819204) that is wholly owned by Torchlight Mining (U.S.) Inc. The facility manufactures specialty chemicals used in mineral processing operations, including flotation reagents, sodium xanthate, and dithiophosphate collectors. The facility has been in continuous operation since 1993 and remains an active manufacturing facility. Unlike the Ridgecrest site, which is in closure and reclamation, the Gallatin site must achieve compliance with performance standards while continuing industrial operations, presenting unique operational and logistical challenges.
The Gallatin site is designated as a RCRA Corrective Action facility under RCRA Permit No. MTD098712456. EPA and Montana DEQ have identified three solid waste management units ("SWMUs") at the facility that require corrective action: (1) a former chemical storage area with documented soil contamination; (2) a process wastewater treatment system with groundwater impacts; and (3) a former drum storage yard with subsurface soil contamination. Each SWMU is subject to the corrective action requirements of 40 C.F.R. Part 264, Subpart F, as incorporated into the consent decree.
The Montana co-plaintiff lead for the Gallatin site is Annika Hedstrom, Assistant Attorney General in the Montana Attorney General's Office. Local counsel for TMC in Montana is Russell Dane of Holcroft, Dane & Weiss LLP (Helena, Montana), who has been engaged to advise on state-specific regulatory interactions and to coordinate with the Montana DEQ on MPDES permitting matters.
2. Contaminants of Concern and Cleanup Levels
The contaminants of concern at the Gallatin site are associated with the manufacture, handling, and disposal of specialty chemical products and process residuals. The principal contaminants and their applicable cleanup levels are as follows:
Carbon Disulfide (CS₂) in Groundwater. Carbon disulfide is the primary contaminant of concern in groundwater at the Gallatin site. CS₂ is used as a precursor in the manufacture of sodium xanthate and has been detected in groundwater monitoring wells at concentrations as high as 890 µg/L. The applicable performance standard is the federal Maximum Contaminant Level ("MCL") for carbon disulfide, which is 10 µg/L. The consent decree requires achievement of the MCL at all compliance wells within the corrective action boundary. The current maximum detected concentration represents an exceedance of approximately 89 times the MCL, requiring a reduction of approximately 98.9%.
Xanthate Decomposition Products. Various decomposition products of sodium xanthate and other flotation reagents have been detected in groundwater and subsurface soils at the site. Because these compounds do not have established MCLs or Montana default cleanup values, the consent decree provides that site-specific risk-based cleanup levels will be established through the Corrective Measures Study process, based on human health risk assessment using EPA-approved exposure assumptions and toxicity values. The Corrective Measures Study must incorporate a formal risk assessment that derives protective cleanup levels for each identified decomposition product.
Volatile Organic Compounds (VOCs) in Subsurface Soils. Toluene and xylene have been detected in subsurface soils at two of the three SWMUs. The applicable performance standards are the Montana DEQ Tier 1 default cleanup values for these compounds, calculated for both residential and industrial land use scenarios. The decree specifies that the industrial scenario cleanup values apply within the active facility boundary, while the residential scenario values apply at the property boundary and beyond, reflecting the proximity of the site to residential development.
MPDES Permit Compliance. The Gallatin facility operates under Montana Pollutant Discharge Elimination System Permit No. MT-0032514, which establishes effluent limitations for discharges from the facility's process wastewater treatment system to a tributary of the East Gallatin River. Between January 2021 and June 2024, the facility experienced fourteen (14) documented exceedances of the permit effluent limits for carbon disulfide and total suspended solids. The consent decree requires the elimination of all permit effluent limit exceedances as a performance standard, with compliance measured through continuous effluent monitoring.
3. Operational Performance Benchmarks
Groundwater Treatment System. TMC must design, install, and operate a groundwater treatment system — either a conventional pump-and-treat system, an in-situ treatment system (such as enhanced bioremediation or chemical oxidation), or a combination thereof — capable of reducing CS₂ concentrations to the MCL (10 µg/L) within the corrective action boundary within 10 years of system startup. The specific treatment technology will be selected through the Corrective Measures Study process, but the consent decree establishes the 10-year timeframe as a binding performance benchmark.
SWMU Closure. All three SWMUs must be closed in accordance with the RCRA closure standards set forth in 40 C.F.R. § 264.111 et seq. Closure requires the removal or decontamination of all hazardous waste residues, contaminated containment system components, contaminated subsoils, and contaminated structures and equipment, or, where clean closure is not feasible, closure in place with an engineered cover system meeting the requirements of 40 C.F.R. § 264.310.
Process Modifications. TMC must implement process modifications at the Gallatin facility to prevent future MPDES permit exceedances. These modifications include, at a minimum, the installation of continuous effluent monitoring equipment for CS₂ at all MPDES discharge points, with automated alarm systems that trigger real-time notifications to facility operators when effluent concentrations approach permit limits. The specific process modifications will be detailed in a Process Modification Plan to be submitted to EPA and Montana DEQ within 180 days of the Effective Date.
4. Remediation Schedule Reference
The estimated remediation cost for the Gallatin site is $42.8 million over a 15-year period, with a net present value of $34.1 million at a 3% discount rate. The Gallatin site has the shortest projected remediation timeline of the four sites, reflecting the smaller geographic scale of the site and the more limited scope of the corrective action required.
The principal milestone for the Gallatin site is the deadline to submit the Corrective Measures Study, which is June 14, 2026 (one year after the projected Effective Date). The Corrective Measures Study will evaluate and compare remedial alternatives, recommend a preferred remedy, and establish detailed implementation schedules and cost estimates for EPA and Montana DEQ review and approval.
5. Performance Monitoring Requirements
Quarterly Groundwater Monitoring. TMC must conduct quarterly groundwater monitoring at all compliance wells within the corrective action boundary. The monitoring program includes sampling for CS₂, xanthate decomposition products, and VOCs, as well as standard field parameters (pH, temperature, specific conductance, dissolved oxygen, and oxidation-reduction potential).
Continuous Effluent Monitoring. TMC must install and operate continuous effluent monitoring systems at all MPDES discharge points. Continuous monitoring data must be recorded and maintained in electronic format and must be made available to EPA, Montana DEQ, and the independent monitor upon request.
Semi-Annual Soil-Vapor Monitoring. TMC must conduct semi-annual soil-vapor monitoring at each of the three SWMU locations to assess the migration of VOCs through the vadose zone and to evaluate the effectiveness of soil remediation measures.
Annual Corrective Action Progress Report. TMC must prepare and submit an annual corrective action progress report to EPA, Montana DEQ, and the independent monitor. The report must include all monitoring data, trend analyses, remedy performance assessments, and any proposed modifications to the corrective action program.
C. Bonanza Creek Gold Mine (Bonanza Creek Site)
1. Site Description
The Bonanza Creek Gold Mine is located on County Road 447, Mile Marker 12, in Lander County, Nevada 89820, approximately 28 miles south of the town of Battle Mountain. The mine footprint encompasses approximately 5,600 acres, with total controlled property — including buffer zones, haul roads, and ancillary facilities — totaling approximately 12,400 acres. The site is situated in the Basin and Range physiographic province of north-central Nevada, in an arid to semi-arid environment with annual precipitation of approximately 8 inches.
The Bonanza Creek site is operated by Bonanza Creek Mining, LLC, a Nevada limited liability company (Nevada Secretary of State Entity No.: E0518294731) that is wholly owned by Torchlight Mining (U.S.) Inc. The mine is an open-pit heap-leach gold operation that has been in production since 2001 and remains an active mining operation. The mine utilizes sodium cyanide solution applied to crushed ore on lined heap-leach pads to dissolve gold, which is then recovered from the pregnant solution through carbon adsorption and electrowinning processes.
The Bonanza Creek site is the subject of enforcement actions arising from three documented releases of process solution from the heap-leach pad to an ephemeral tributary of the Reese River, which occurred on March 17, 2022, August 9, 2022, and January 22, 2023. Each release was attributed to a tear or failure in the heap-leach pad liner system, resulting in the discharge of cyanide-bearing process solution to surface waters. The releases resulted in documented fish kills in the receiving tributary and triggered EPA Region 9 enforcement action.
The EPA Project Coordinator for the Bonanza Creek site is Jennifer Whitfield of EPA Region 9 (San Francisco, California). The Nevada co-plaintiff lead is Ricardo Fuentes, Deputy Attorney General in the Nevada Attorney General's Office. Local counsel for TMC in Nevada is Denise Quartaro of sagebrush Law Group, PLLC (Las Vegas, Nevada).
2. Contaminants of Concern and Cleanup Levels
Weak Acid Dissociable (WAD) Cyanide. WAD cyanide is the primary contaminant of concern associated with the heap-leach gold recovery process. Current WAD cyanide concentrations in the heap-leach pad underdrain are approximately 0.62 mg/L. The applicable discharge limit for WAD cyanide is 0.022 mg/L, based on the Nevada water quality criterion for cyanide in receiving waters. The consent decree requires achievement of the discharge limit at all points of compliance, including the heap-leach pad underdrain, solution conveyance channels, and any identified surface water discharge points.
Mercury. Mercury is mobilized during the heap-leach process and has been detected in process solution and receiving waters at elevated concentrations. Current mercury concentrations in receiving waters average approximately 12.4 µg/L. The applicable water quality criterion for mercury is 0.77 µg/L (based on the EPA Great Basin water quality criterion as adopted by Nevada). The performance standard requires achievement of the criterion in all receiving waters downstream of the mine site.
Selenium in Pit-Lake Water. As the open pit at the Bonanza Creek site approaches its ultimate depth, a pit lake is anticipated to form upon cessation of mining and dewatering activities. Selenium has been identified as a contaminant of concern in the anticipated pit-lake water based on geochemical modeling. The consent decree provides that a site-specific performance standard for selenium in the pit lake will be established based on a pit-lake water quality model to be developed as part of the mine closure planning process. The model must incorporate geochemical predictions, hydrologic inputs, and ecological risk assessment to derive a protective selenium concentration limit.
Documented Releases. As noted above, three documented releases of process solution from the heap-leach pad to an ephemeral tributary of the Reese River occurred between March 2022 and January 2023. These releases are the subject of the civil penalty component of the consent decree ($31.5 million total, of which a portion is allocated to the Bonanza Creek releases) and are also the factual predicate for the remedial obligations addressed in the performance standards.
3. Operational Performance Benchmarks
Liner Repair and Redundant Containment. TMC must complete the repair of all identified tears and failures in the existing heap-leach pad liner system and must install a redundant containment system consisting of a double liner system with a leak detection layer between the primary and secondary liners for all active heap-leach pads. The double liner system must be designed and constructed in accordance with EPA guidance for heap-leach pad design (EPA 530-R-94-015) and Nevada mining regulations (NAC 445A.430 et seq.).
Zero Uncontrolled Releases. The consent decree establishes a performance benchmark of zero uncontrolled releases of process solution from the heap-leach system for a minimum of 36 consecutive months. This benchmark is measured from the date of completion of the liner repair and double-liner installation. Any uncontrolled release during the 36-month period resets the clock, requiring an additional 36 consecutive months of zero releases before the benchmark is satisfied.
Bird Deterrent Systems. TMC must install and operate bird deterrent systems at all solution ponds at the Bonanza Creek site. The performance benchmark is zero avian mortalities attributable to contact with process solution in solution ponds. Between 2021 and 2023, seventeen (17) avian mortalities were documented at the Bonanza Creek solution ponds, constituting potential violations of the Migratory Bird Treaty Act, 16 U.S.C. § 703 et seq. The consent decree resolves the MBTA claims through the installation and maintenance of effective deterrent systems and the achievement of the zero-mortality benchmark.
Pit-Lake Water Quality Monitoring and Management Plan. TMC must develop and implement a pit-lake water quality monitoring and management plan in coordination with EPA Region 9 and the Nevada Division of Environmental Protection. The plan must include baseline water quality characterization, predictive geochemical modeling, monitoring protocols, and contingency measures for managing pit-lake water quality if model predictions are not met.
4. Remediation Schedule Reference
The estimated remediation cost for the Bonanza Creek site is $63.2 million over a 20-year period, with a net present value of $47.1 million at a 3% discount rate. The 20-year timeframe reflects the ongoing nature of mining operations at the site and the extended timeline for mine closure, reclamation, and post-closure monitoring.
The principal milestone for the Bonanza Creek site is the deadline to commence liner repair and redundant containment installation, which is June 14, 2026 (one year after the projected Effective Date). TMC must submit a detailed Liner Repair and Containment Upgrade Work Plan to EPA and Nevada DEP within 180 days of the Effective Date (December 11, 2025) for review and approval prior to commencement of construction.
5. Performance Monitoring Requirements
Continuous Leak-Detection Monitoring. TMC must install and operate continuous leak-detection monitoring systems in the leak-detection layer of the double liner system for all active heap-leach pads. Leak-detection data must be recorded continuously and reviewed at least daily by qualified personnel.
Monthly WAD Cyanide and Mercury Sampling. TMC must conduct monthly sampling for WAD cyanide and mercury at the heap-leach pad underdrain, all solution conveyance channels, and all receiving water compliance points. The monthly sampling frequency reflects the elevated risk profile of the site given the history of documented releases and the toxicity of the contaminants involved.
Weekly Solution-Pond Inspections and Avian Mortality Surveys. TMC must conduct weekly inspections of all solution ponds, including visual inspections of bird deterrent system integrity and systematic avian mortality surveys. All inspection and survey results must be documented and maintained in electronic format.
Quarterly Pit-Lake Water Sampling. TMC must conduct quarterly sampling of pit-lake water for a comprehensive analyte list including metals, cyanide species, selenium, pH, and standard field parameters. Sampling protocols must be consistent with the pit-lake water quality monitoring and management plan.
Annual Compliance Report. TMC must prepare and submit an annual compliance report to EPA (Jennifer Whitfield, Region 9 Project Coordinator), the Nevada Division of Environmental Protection, and the independent monitor (Verdant Analytics, Dr. Kamal Osei). The report must include all monitoring data, trend analyses, compliance assessments, and documentation of any releases, incidents, or corrective actions taken during the reporting period.
D. Kanawha Bend Chemical Plant (Kanawha Bend Site)
1. Site Description
The Kanawha Bend Chemical Plant is located at 2200 Chemical Valley Road, Institute, Kanawha County, West Virginia 25112. The site encompasses approximately 78 acres within the Kanawha Valley industrial corridor, commonly known as "Chemical Valley," which has historically been one of the most concentrated chemical manufacturing regions in the United States. The site is situated along the Kanawha River, approximately 12 miles upstream of Charleston, the state capital.
The Kanawha Bend site is operated by Torchlight Specialty Chemicals, Inc. (Delaware corporation, EIN: 47-3819204), the same entity that operates the Gallatin Chemical Works in Montana. The facility manufactures leaching agents and performs sulfuric acid regeneration services for the mining industry. The facility has been in operation since 1985 and remains an active manufacturing operation.
The Kanawha Bend site is designated as a RCRA Corrective Action facility under RCRA Permit No. WVD048823915. The site was the subject of an EPA emergency response action in 2020 following a sulfuric acid release to a tributary of the Kanawha River. EPA incurred response costs of $3.8 million in connection with the emergency action, which are the subject of a cost recovery claim included in the consent decree. The 2020 release resulted in significant environmental damage to the tributary, including documented fish kills and degradation of riparian habitat, and prompted the West Virginia Department of Environmental Protection to issue a compliance order requiring immediate corrective measures.
The West Virginia co-plaintiff lead for the Kanawha Bend site is Loretta May Hatcher, Assistant Attorney General in the West Virginia Attorney General's Office. Local counsel for TMC in West Virginia is Nathan Tully of Baxter, Tully & Crane PLLC (Charleston, West Virginia), who has been engaged to advise on state-specific regulatory compliance and to coordinate with the West Virginia DEP on corrective action matters.
2. Contaminants of Concern and Cleanup Levels
Sulfuric Acid Residuals in Soils. Soil pH values as low as 1.8 have been documented in the area of the 2020 release and in the vicinity of the former waste lagoon. The performance standard requires neutralization of acidic soils to a pH of 6.0 or greater within the corrective action boundary. This standard is consistent with EPA guidance on soil pH restoration and is designed to establish conditions suitable for revegetation and long-term ecological recovery.
Heavy Metals — Lead and Arsenic. Lead and arsenic concentrations in subsurface soils near the former waste lagoon have been documented at maximum levels of 4,200 mg/kg (lead) and 890 mg/kg (arsenic). The applicable performance standards are based on EPA Regional Screening Levels ("RSLs") for industrial soils, which are currently 800 mg/kg for lead and 3.0 mg/kg for arsenic (based on a target excess cancer risk of 1 × 10⁻⁶ for arsenic). The maximum detected arsenic concentration of 890 mg/kg exceeds the EPA RSL by a factor of approximately 297, indicating the need for substantial soil remediation, stabilization, or removal in the former waste lagoon area.
DNAPL — Chlorinated Solvents in Fractured Bedrock Aquifer. Dense non-aqueous phase liquid ("DNAPL") consisting of chlorinated solvents has been identified in the fractured bedrock aquifer beneath the site. The presence of DNAPL in fractured rock presents one of the most technically challenging remediation scenarios in environmental practice, as DNAPL tends to migrate along fracture networks in unpredictable patterns and is extremely difficult to remove or treat in situ. The consent decree establishes a performance standard requiring DNAPL source removal or containment and dissolved-phase plume reduction to applicable MCLs at the compliance well network boundary. The relevant MCLs include trichloroethylene ("TCE") at 5 µg/L, tetrachloroethylene ("PCE") at 5 µg/L, and 1,1,1-trichloroethane ("TCA") at 200 µg/L.
Former Surface Impoundment Closure. The former surface impoundment at the Kanawha Bend site was used for the storage and disposal of process wastes, including listed hazardous wastes K062 (spent pickle liquor from steel finishing operations, used in the sulfuric acid regeneration process) and D002 (corrosive waste). The consent decree requires closure of the former impoundment in accordance with RCRA closure standards (40 C.F.R. § 264.228), including proper management and disposal of all waste residues and contaminated liner materials.
3. Operational Performance Benchmarks
Soil Neutralization and Stabilization. TMC must complete the neutralization of all acidic soils within the corrective action boundary to achieve a minimum pH of 6.0, and must stabilize contaminated soils in the former waste lagoon area to reduce the leachability of lead and arsenic to levels that do not pose unacceptable risks to groundwater. The specific neutralization and stabilization technologies will be selected through the Corrective Measures Study process, but the consent decree establishes the pH 6.0 and soil RSL benchmarks as minimum design criteria.
DNAPL Recovery or In-Situ Treatment. TMC must implement DNAPL source-area treatment measures capable of achieving measurable reduction in source-area DNAPL mass. Measurable reduction is defined in the consent decree as a statistically significant declining trend in DNAPL thickness measurements in source-area wells and a corresponding decline in dissolved-phase concentrations in downgradient monitoring wells. The specific treatment technology — which may include direct DNAPL extraction, thermal treatment, chemical oxidation, or enhanced bioremediation — will be selected through the Corrective Measures Study process.
Groundwater Containment and Treatment. TMC must install and operate a groundwater containment and treatment system capable of achieving MCLs for chlorinated solvents at the compliance well network boundary within 15 years of system startup. The containment system must prevent further migration of the dissolved-phase plume beyond the compliance boundary during the treatment period.
Hazardous Waste Management. TMC must ensure the proper management of listed hazardous wastes K062 and D002 in compliance with all applicable RCRA requirements, including the land disposal restrictions of 40 C.F.R. Part 268. Any waste generated during the corrective action process that constitutes a listed or characteristic hazardous waste must be managed, treated, and disposed of in accordance with RCRA Subtitle C requirements.
4. Remediation Schedule Reference
The estimated remediation cost for the Kanawha Bend site is $38.9 million over a 20-year period, with a net present value of $29.0 million at a 3% discount rate. The 20-year timeframe reflects the technical difficulty of DNAPL remediation in fractured bedrock and the extended monitoring period required to demonstrate achievement of MCLs in a fractured-rock aquifer system.
The principal milestone for the Kanawha Bend site is the deadline to complete interim stabilization measures, which is December 14, 2026 (18 months after the projected Effective Date). Interim stabilization measures include the neutralization of the most acutely acidic soil areas, stabilization of the former waste lagoon to prevent further contaminant migration, and installation of temporary groundwater monitoring infrastructure.
5. Performance Monitoring Requirements
Quarterly Groundwater Monitoring. TMC must conduct quarterly groundwater monitoring at all wells in the compliance monitoring network for chlorinated solvents (TCE, PCE, TCA, and their degradation products), metals (lead, arsenic, and other site-related metals), and pH. Monitoring must include both the alluvial and bedrock aquifer systems.
Semi-Annual DNAPL Thickness Measurements. TMC must conduct semi-annual measurements of DNAPL thickness in all source-area monitoring wells using interface probes or equivalent measurement devices. DNAPL thickness data must be compiled and analyzed to assess trends in source-area mass reduction over time.
Soil Sampling — Neutralization Confirmation. TMC must conduct periodic soil sampling throughout the corrective action area to confirm the progress and effectiveness of neutralization activities. Sampling frequency and spatial coverage will be specified in the Corrective Measures Implementation Plan, but the consent decree requires that confirmation sampling be sufficient to demonstrate that the pH 6.0 standard has been achieved across the entire corrective action area, not merely at a limited number of sampling points.
Annual Corrective Action Progress Report. TMC must prepare and submit an annual corrective action progress report to EPA, the West Virginia Department of Environmental Protection, and the independent monitor. The report must include all monitoring data, DNAPL thickness trend analyses, soil neutralization progress assessments, groundwater plume maps, and an updated assessment of progress toward completion criteria.
IV. Completion Criteria — General Framework
The consent decree establishes a structured framework for determining when TMC's remedial obligations at a given site have been sufficiently discharged to permit the initiation of the termination process. This framework distinguishes between two critical milestones — "Completion of Remedial Construction" and "Completion" — each of which carries distinct legal and practical consequences.
A. Definition of "Completion of Remedial Construction"
"Completion of Remedial Construction" is defined in Decree § X.A as the point at which all physical remedial construction, installation, and system startup activities specified in the applicable site Remedial Action Work Plan (for CERCLA-governed sites) or Corrective Measures Implementation Plan (for RCRA-governed sites) have been finished, and the remedy is operational and functional. This definition is consistent with EPA's standard guidance on remedy completion milestones, as set forth in OSWER Directive 9320.2-09A-P (Close Out Procedures for National Priorities List Sites).
The "operational and functional" criterion requires that all remedial systems be not merely constructed and installed, but actually running and performing their intended function. A treatment system that has been physically constructed but has not been started up and demonstrated to operate at its design capacity has not achieved "Completion of Remedial Construction."
Importantly, "Completion of Remedial Construction" does not include long-term operation, maintenance, and monitoring ("O&M"), which is a separate ongoing obligation that continues throughout the sustained compliance period and the five-year post-completion period. The distinction is significant because the achievement of Completion of Remedial Construction is the starting point for the sustained compliance period, whereas long-term O&M obligations persist well beyond that milestone.
B. Definition of "Completion" (for Purposes of Decree Termination)
"Completion" is a more demanding standard than Completion of Remedial Construction and is the operative milestone for purposes of the termination process. Decree § X.B defines "Completion" as the point at which TMC has demonstrated, through the monitoring and reporting program established by the consent decree, that the remedy is performing as designed and that all applicable performance standards are being met on a sustained basis.
The sustained compliance requirement is the critical element of the Completion definition. The decree requires that performance standards be continuously met for a defined number of consecutive monitoring events, as specified site by site in the decree appendices. The required number of consecutive events varies by site and by parameter, but typically ranges from 8 to 12 consecutive quarterly monitoring events — equivalent to a minimum of 2 to 3 years of uninterrupted compliance. This sustained compliance period must be achieved without interruption, and any exceedance of a performance standard during the period resets the clock, requiring the full number of consecutive compliant events to be demonstrated anew from the date of the last exceedance.
The "no rebound" requirement is a further elaboration of the sustained compliance concept. Decree § X.B.3 provides that performance must be demonstrated without interruption or rebound following any system shutdown, reduction in remedial operations, or optimization of treatment systems. This provision is designed to prevent premature claims of completion based on performance that is dependent on the continuous operation of engineered treatment systems at their maximum capacity. If TMC reduces the intensity of treatment operations (for example, by reducing pumping rates in a groundwater extraction system) and performance standards continue to be met, that sustained compliance can count toward the required period. However, if a reduction in treatment intensity is followed by a rebound in contaminant concentrations above performance standards, the rebound event resets the sustained compliance clock and may require TMC to resume treatment at higher intensity levels.
C. Site-Specific Completion Benchmarks
The decree appendices establish site-specific completion benchmarks that elaborate on the general framework described above. These benchmarks are summarized below for each of the four sites.
1. Ridgecrest. Completion of Remedial Construction. All AMD treatment infrastructure, tailings impoundment cover system, groundwater containment system (extraction wells and/or permeable reactive barriers), and stormwater management system must be installed, operational, and functional. The achievement of this milestone will be documented through an as-bui

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