Department of Justice Seal

FOR IMMEDIATE RELEASE

CIV

MONDAY, OCTOBER 18, 1999

(202) 514-2007

WWW.USDOJ.GOV

TDD (202) 514-1888


PEABODY HOLDING COMPANY AGREES TO PAY $11 MILLION

FOR CLAIMS OF UNDERPAYMENT OF COAL ROYALTIES


WASHINGTON, D.C. -- Peabody Holding Company, Inc. based in St. Louis, Mo., one of its subsidiaries and two former affiliates, have agreed to pay $11 million to resolve claims under both the False Claims Act and administrative claims that it underpaid coal royalties due the government, the Department of Justice announced today.

David W. Ogden, Acting Assistant Attorney General for the Civil Division, said the settlement resolves claims against Peabody Holding Company, its subsidiary, Powder River Coal Company of Gillette, Wyo., as well as their former affiliates North Antelope Coal Company and Rochelle Coal Company. The United States alleges that royalties due to the government for coal produced on federal land leases at North Antelope's mine near Gillette from July 1, 1989, to September 31, 1994, and shipped directly to Rochelle's customers, were underpaid. North Antelope and Rochelle were merged into Powder River after the events in question.

The settlement agreement resolves a dispute that federal royalties were due on the additional proceeds North Antelope's affiliate Rochelle received for the coal. The coal was first sold by North Antelope to the Arkansas Power and Light Company, now Entergy Arkansas, Inc. before being re-sold by AP&L to Rochelle before delivery to Rochelle's customers. The government contended that the royalty should be based on the value of the gross proceeds received by the affiliated companies for the coal, and not solely on the initial sale.

"The Department will continue to pursue claims against corporations that underpay the government and the American taxpayer," said Ogden.

The claim was first discovered by a Department of the Interior Minerals Management Service auditor during an audit of Rochelle in 1992, and the transactions were subsequently investigated by Interior's Office of Inspector General, the United States Attorney for the District of Colorado, and the Civil Division of the Department of Justice.

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