Summary of WESTMORELAND COAL CO

Entry into a Material Definitive Agreement, Financial Statements and Exhibit

Item 1.01. Entry into a Material Definitive Agreement.

As reported in Westmoreland Coal Company's most recent annual report on Form 10-K, the U.S. Minerals Management Service ("MMS") has asserted transportation and gross inequity claims against Western Energy Company, a subsidiary of Westmoreland Coal Company, for federal coal royalties allegedly due and owing on payments received by Western Energy from customers.

Transportation Claims

The MMS claimed that revenues earned by Western Energy under the transportation agreements with its customers were, in reality, payments for the production and sale of coal, and therefore royalty bearing. On July 9, 2009, MMS and Western Energy entered into a settlement agreement whereby Western Energy will pay the sum of $12.2 million to resolve all issues surrounding the transportation claims for all periods through December 31, 2007, and will pay future royalties on the transportation proceeds in accordance with the established methodology of MMS. The customers at Western Energy have agreed to reimburse 80% of the settlement amount and to pay 80% of future royalty payments owed to MMS.

Gross Inequity Claim

MMS issued a demand for a royalty payment in connection with a settlement agreement dated February 21, 1997, between Western Energy and its customer, Puget Sound Energy, which reduced the price of coal paid by Puget Sound. On July 9, 2009, MMS and Western Energy entered into a settlement agreement whereby Western Energy will pay the assessed amount of approximately $1.3 million. Puget Sound Energy has agreed to reimburse Western Energy for all of the settlement costs.

Item 9.01. Financial Statements and Exhibits

Exhibit No.                                   Description
10.1             Settlement Agreement and Mutual Release between Western Energy
                 Company, the United States Department of Justice, and the United
                 States Department of the Interior, through its agency the Minerals
                 Management Service dated July 9, 2009
10.2             Settlement Agreement and Mutual Release between Western Energy
                 Company and the United States Department of the Interior, through the
                 Minerals Management Service dated July 9, 2009