Justice News

Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE
Tuesday, July 21, 2009
Western Energy Company Will Pay $12.2 Million to U.S. & Montana to Settle Coal Royalties Dispute

WASHINGTON—Western Energy Company, the operator of the Rosebud Mine on federal coal leases outside of Billings, Mont., has paid the United States more than $12 million in mineral royalties and accrued interest as the result of a settlement agreement announced today by the Justice Department and Department of the Interior.

Under the agreement that was filed in U.S. District Court for the District of Columbia, Western Energy has agreed to pay $12,239,538 in additional royalties and interest, 49 percent of which will be shared with the state of Montana because the production occurred on federal lands in that state. As part of the settlement, Western Energy also agrees to report and pay future royalties in accordance with Interior Department requirements.

"We are very pleased that this issue has been resolved," Secretary of the Interior Ken Salazar said. "I appreciate the work of our Minerals Management Service and especially the Department of Justice to ensure the American public is receiving a fair return on the mineral resources developed on Federal lands."

"This agreement is an excellent result that recovers mineral royalties on behalf of the Mineral Management Service and avoids further expensive and complicated litigation," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.

The additional royalties collected are the result of improper transportation allowances originally claimed by the coal producer. An added benefit of the settlement is that a portion of the additional royalties includes amounts that Interior did not seek because of a policy not to order additional royalties on production occurring more than seven years earlier. That policy was rescinded in 2007 and inclusion of this portion of the additional royalties in the settlement spares further enforcement action to collect them.

The agreement is the result of litigation brought by Western Energy against the Interior Department disputing the amount of additional royalties due on coal produced from the Rosebud Mine in southern Montana.

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