Signal Peak Mine

District Judge Jeffrey Sherlock has ruled that Yellowstone County will keep getting coal gross proceeds taxes from Signal Peak Energy, despite Musselshell County claims that it shouldn't have to share. At issue was whether Musselshell should get all tax money because the mine entrance is in that county. In this file photo Signal Peak loads its first coal train Thursday, September 10. The BNSF train, nearly a mile long, was loaded one year from the start of construction at the mine.

A judge has denied Musselshell County’s claim to all local taxes paid by Signal Peak mine, a ruling that assures Yellowstone County some coal money.

The order by District Judge Jeffrey M. Sherlock rejects Musselshell County’s argument that because the mine’s entrance is in its borders it should receive all of Signal Peak’s local tax dollars.

Underground, the coal mine crosses into Yellowstone County, which entitles Yellowstone to a share, according to Sherlock.

Signal Peak paid $126,909 to Yellowstone County in coal gross proceeds taxes in 2010 and $328,617 to Musselshell County.

Rural schools are the biggest recipients of the coal taxes, said Max Lenington, Yellowstone County treasurer and county superintendent.

“Most of it goes to school districts, which would be Shepherd, Broadview and Huntley Project would have got some,” Lenington said. “Certainly for Huntley Project School, (Signal Peak) would have been one of its largest taxpayers. No. 1 would be the railroad and then MillerCoors.”

In 2010, Musselshell County sued to keep all the coal gross proceeds taxes, arguing that Montana had a “mine mouth” rule that guaranteed all proceeds go to the host county.

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