PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS:

CONSOL Energy has non-contributory defined benefit retirement plans covering substantially all employees not covered by multi-employer plans. The benefits for these plans are based primarily on years of service and employee's pay near retirement. CONSOL Energy's salaried plan allows for lump-sum distributions of benefits earned up until December 31, 2005, at the employees' election. The Restoration Plan was frozen effective December 31, 2006 and was replaced prospectively with the CONSOL Energy Supplemental Retirement Plan. CONSOL Energy's Restoration Plan allows only for lump-sum distributions earned up until December 31, 2006. Effective September 8, 2009, the Supplemental Retirement Plan was amended to include employees of CNX Gas. The Supplemental Retirement Plan was frozen effective December 31, 2011 for certain employees and was replaced prospectively with the CONSOL Energy Defined Contribution Restoration Plan.

In March of 2009, the CNX Gas defined benefit retirement plan was merged into the CONSOL Energy's non-contributory defined benefit retirement plan. At the time, the change did not impact the benefits for employees of CNX Gas. However, during 2010 an amendment was adopted to recognize past service at CNX Gas to current employees of CNX Gas who opted out of the plan for additional company contributions into their defined contribution plan and extend coverage to employees previously not eligible to participate in this plan.

Certain subsidiaries of CONSOL Energy provide medical and life insurance benefits to retired employees not covered by the Coal Industry Retiree Health Benefit Act of 1992. The medical plans contain certain cost sharing and containment features, such as deductibles, coinsurance, health care networks and coordination with Medicare. For salaried employees hired before January 1, 2007, the eligibility requirement is either age 55 with 20 years of service or age 62 with 15 years of service. Also, salaried employees and retirees contribute a target of 20% of the medical plan operating costs. Contributions may be higher, dependent on either years of service or a combination of age and years of service at retirement. Prospective annual cost increases of up to 6% will be shared by CONSOL Energy and the participants based on their age and years of service at retirement. Annual cost increases in excess of 6% will be the responsibility of the participants. Any salaried or non-represented hourly employees that were hired or rehired effective January 1, 2007 or later will not become eligible for retiree health benefits. In lieu of traditional retiree health coverage, if certain eligibility requirements are met, these employees will receive a retiree medical spending allowance of $2,250 per year for each year of service at retirement. Newly employed inexperienced employees represented by the United Mine Workers of America (UMWA), hired after January 1, 2007, will not be eligible to receive retiree benefits. In lieu of these benefits, these employees will receive a defined contribution benefit of $1 per each hour worked through December 31, 2013, increasing to $1.50 per hour worked effective January 1, 2014 through December 31, 2016.

For the year ended December 31, 2011 CONSOL Energy received proceeds of $7,973 under the Patient Protection and Affordable Care Act (PPACA) related to reimbursement from the Federal Government for retiree health spending. This amount is included as a reduction of benefit and other payments in the reconciliation of changes in benefit obligation. There is no guarantee that additional proceeds will be received under this program.

The OPEB liability reflects an increase of $11,800 and $12,300 as of December 31, 2011 and 2010, respectively, due to the PPACA reform legislation; in particular, the estimated impact of the potential excise tax beginning in 2018. A corresponding increase in Other Comprehensive Loss was also recognized. The estimated increase in the liability was calculated using the following assumptions: testing pre-Medicare and Medicare covered retirees on a combined basis; assuming individual participants have an average 2012 claim cost and future healthcare trend assumptions equal to those used in the year end valuation; assuming the 2018 tax threshold amount to increase for inflation in later years. These assumptions may change once additional guidance becomes available.

The reconciliation of changes in the benefit obligation, plan assets and funded status of these plans at December 31, 2011 and 2010, is as follows:



	Pension Benefits						Other Postretirement Benefits
	at December 31,						at December 31,
	2011			2010			2011			2010
Change in benefit obligation:
Benefit obligation at beginning of period	$	701,152		$	654,022		$	3,257,199		$	2,844,093
Service cost	17,457			14,491			13,677			13,147
Interest cost	37,744			37,150			179,739			162,815
Actuarial loss (gain)	159,320			54,006			(51,650		)	400,118
Plan amendments	(7,186		)	682			—			204
Dominion Acquisition	—			900			—			2,800
Participant contributions	—			—			6,088			4,802
Benefits and other payments	(51,135		)	(60,099		)	(162,853		)	(170,780		)
Benefit obligation at end of period	$	857,352		$	701,152		$	3,242,200		$	3,257,199

Change in plan assets:
Fair value of plan assets at beginning of period	$	537,721		$	462,000		$	—		$	—
Actual return on plan assets	23,791			63,444			—			—
Company contributions	72,194			72,376			156,765			165,978
Participant contributions	—			—			6,088			4,802
Benefits and other payments	(51,135		)	(60,099		)	(162,853		)	(170,780		)
Fair value of plan assets at end of period	$	582,571		$	537,721		$	—		$	—

Funded status:
Current liabilities	$	(5,713	)	$	(2,258	)	$	(182,529	)	$	(179,809	)
Noncurrent liabilities	(269,069		)	(161,173		)	(3,059,671		)	(3,077,390		)
Net obligation recognized	$	(274,782	)	$	(163,431	)	$	(3,242,200	)	$	(3,257,199	)

Amounts recognized in accumulated other comprehensive income consist of:
Net actuarial loss	$	494,622		$	358,674		$	1,328,077		$	1,485,090
Prior service credit	(8,244		)	(1,725		)	(75,546		)	(121,943		)
Net amount recognized (before tax effect)	$	486,378		$	356,949		$	1,252,531		$	1,363,147

The components of net periodic benefit costs are as follows:



	Pension Benefits									Other Postretirement Benefits
	For the Years Ended December 31,									For the Years Ended December 31,
	2011			2010			2009			2011			2010			2009
Components of net periodic benefit cost:
Service cost	$	17,457		$	14,485		$	12,332		$	13,677		$	13,147		$	12,654
Interest cost	37,744			37,150			35,483			179,739			162,815			151,451
Expected return on plan assets	(38,522		)	(36,977		)	(36,631		)	—			—			—
Amortization of prior service cost (credits)	(666		)	(735		)	(1,109		)	(46,397		)	(46,415		)	(46,415		)
Recognized net actuarial loss	38,102			31,870			22,263			105,364			70,145			50,357
Benefit cost	$	54,115		$	45,793		$	32,338		$	252,383		$	199,692		$	168,047

Amounts included in accumulated other comprehensive loss, expected to be recognized in 2012 net periodic benefit costs:



				Other
	Pension			Postretirement
	Benefits			Benefits
Prior Service cost (benefit) recognition	$	(1,630	)	$	(46,397	)
Actuarial loss recognition	$	49,049		$	81,380

The following table provides information related to pension plans with an accumulated benefit obligation in excess of plan assets:



	As of December 31,
	2011		2010
Projected benefit obligation	$	857,352	$	701,152
Accumulated benefit obligation	$	782,820	$	629,433
Fair value of plan assets	$	582,571	$	537,721

Assumptions:

The weighted-average assumptions used to determine benefit obligations are as follows:



	Pension Benefits				Other Postretirement Benefits
	For the Year Ended				For the Year Ended
	December 31,				December 31,
	2011		2010		2011		2010
Discount rate	4.50	%	5.30	%	4.51	%	5.33	%
Rate of compensation increase	3.77	%	3.68	%	—		—

The weighted-average assumptions used to determine net periodic benefit costs are as follows:



	Pension Benefits at						Other Postretirement Benefits at
	December 31,						December 31,
	2011		2010		2009		2011		2010		2009
Discount rate	5.30	%	5.79	%	6.28	%	5.33	%	5.87	%	6.20	%
Expected long-term return on plan assets	8.00	%	8.00	%	8.00	%	—		—		—
Rate of compensation increase	3.66	%	4.14	%	4.05	%	—		—		—

The long-term rate of return is the sum of the portion of total assets in each asset class held multiplied by the expected return for that class, adjusted for expected expenses to be paid from the assets. The expected return for each class is determined using the plan asset allocation at the measurement date and a distribution of compound average returns over a 20-year time horizon. The model uses asset class returns, variances and correlation assumptions to produce the expected return for each portfolio. The return assumptions used forward-looking gross returns influenced by the current Treasury yield curve. These returns recognize current bond yields, corporate bond spreads and equity risk premiums based on current market conditions.

The assumed health care cost trend rates are as follows:



	At December 31,
	2011		2010		2009
Health care cost trend rate for next year	6.85	%	8.47	%	8.74	%
Rate to which the cost trend is assumed to decline (ultimate trend rate)	4.50	%	4.50	%	4.50	%
Year that the rate reaches ultimate trend rate	2026		2023		2023

Assumed health care cost trend rates have a significant effect on the amounts reported for the medical plans. A one-percentage point change in assumed health care cost trend rates would have the following effects:



	1-Percentage		1-Percentage
	Point Increase		Point Decrease
Effect on total of service and interest cost components	$	24,909	$	(20,876	)
Effect on accumulated postretirement benefit obligation	$	410,191	$	(349,038	)

Assumed discount rates also have a significant effect on the amounts reported for both pension and other benefit costs. A one-quarter percentage point change in assumed discount rate would have the following effect on benefit costs:



	0.25 Percentage			0.25 Percentage
	Point Increase			Point Decrease
Pension benefit costs (decrease) increase	$	(1,948	)	$	1,965
Other postemployment benefits costs (decrease) increase	$	(4,666	)	$	5,543

Plan Assets:

The company's overall investment strategy is to meet current and future benefit payment needs through diversification across asset classes, fund strategies and fund managers to achieve an optimal balance between risk and return and between income and growth of assets through capital appreciation. The target allocations for plan assets are 36 percent U.S. equity securities, 24 percent non-U.S. equity securities and 40 percent fixed income. Both the equity and fixed income portfolios are comprised of both active and passive investment strategies. The Trust is primarily invested in Mercer Common Collective Trusts. Equity securities consist of investments in large and mid/small cap companies with non-U.S. equities being derived from both developed and emerging markets. Fixed income securities consist of U.S. as well as international instruments, including emerging markets. The core domestic fixed income portfolios invest in government, corporate, asset-backed securities and mortgage-backed obligations. The average quality of the fixed income portfolio must be rated at least “investment grade” by nationally recognized rating agencies. Within the fixed income asset class, investments are invested primarily across various strategies such that its overall profile strongly correlates with the interest rate sensitivity of the Trust's liabilities in order to reduce the volatility resulting from the risk of changes in interest rates and the impact of such changes on the Trust's overall financial status. Derivatives, interest rate swaps, options and futures are permitted investments for the purpose of reducing risk and to extend the duration of the overall fixed income portfolio; however they may not be used for speculative purposes. All or a portion of the assets may be invested in mutual funds or other comingled vehicles so long as the pooled investment funds have an adequate asset base relative to their asset class; are invested in a diversified manner; and have management and/or oversight by an Investment Advisor registered with the SEC. The Retirement Board, as appointed by the CONSOL Energy Board of Directors, reviews the investment program on an ongoing basis including asset performance, current trends and developments in capital markets, changes in Trust liabilities and ongoing appropriateness of the overall investment policy.

The fair values of plan assets at December 31, 2011 and 2010 by asset category are as follows:



	Fair Value Measurements at December 31, 2011								Fair Value Measurements at December 31, 2010
			Quoted								Quoted
			Prices in								Prices in
			Active								Active
			Markets for		Significant		Significant				Markets for		Significant		Significant
			Identical		Observable		Unobservable				Identical		Observable		Unobservable
			Assets		Inputs		Inputs				Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)
Asset Category
Cash/Accrued Income	$	552	$	552	$	—	$	—	$	482	$	482	$	—	$	—
US Equities (a)	11		11		—		—		2		2		—		—
MGI Collective Trusts
US Large Cap Growth Equity (b)	46,670		—		46,670		—		48,328		—		48,328		—
US Large Cap Value Equity (c)	48,115		—		48,115		—		48,802		—		48,802		—
US Small/Mid Cap Growth Equity (d)	20,897		—		20,897		—		20,580		—		20,580		—
US Small/Mid Cap Value Equity (e)	21,375		—		21,375		—		20,459		—		20,459		—
US Core Fixed Income (f)	29,881		—		29,881		—		27,660		—		27,660		—
Non-US Core Equity (g)	139,395		—		139,395		—		130,305		—		130,305		—
US Long Duration Investment Grade Fixed Income (h)	35,709		—		35,709		—		46,848		—		46,848		—
US Long Duration Fixed Income (i)	34,434		—		34,434		—		67,949		—		67,949		—
US Large Cap Passive Equity (j)	71,786		—		71,786		—		59,776		—		59,776		—
US Passive Fixed Income (k)	16,158		—		16,158		—		14,996		—		14,996		—
US Long Duration Passive Fixed Income (l)	21,422		—		21,422		—		26,796		—		26,796		—
US Ultra Long Duration Fixed Income (m)	33,466		—		33,466		—		24,738		—		24,738		—
US Active Long Corporate Investment (n)	62,700		—		62,700		—		—		—		—		—
Total	$	582,571	$	563	$	582,008	$	—	$	537,721	$	484	$	537,237	$	—

__________


(a)	This category includes investments in U.S. common stocks and corporate debt.

(b)

This category invests primarily in common stock of large cap companies in the U.S. with above average earnings growth and revenue expectations. It targets broad diversification across economic sectors and seeks to achieve lower overall portfolio volatility by investing in complementary active managers with varying risk characteristics. Fund selection and allocations within the portfolio are implemented by MGI's investment management team. The strategy is benchmarked to the Russell 1000 Growth Index.

(c)

This category invests primarily in U.S. large cap companies that appear to be undervalued relative to their intrinsic value. It targets broad diversification across economic sectors and seeks to achieve lower overall portfolio volatility by investing in complementary active managers with varying risk characteristics. Fund selection and allocations within the portfolio are implemented by MGI's investment management team. The strategy is benchmarked to the Russell 1000 Value Index.

(d)

This category invests in small to mid-sized U.S. companies with above average earnings growth and revenue expectations. It targets broad diversification across economic sectors and seeks to achieve lower overall portfolio volatility by investing in complementary active managers with varying risk characteristics. Fund selection and allocations within the portfolio are implemented by MGI's investment management team. The smaller cap orientation of the strategy requires the investment team to be cognizant of liquidity and capital constraints, which are monitored on an ongoing basis. The strategy is benchmarked to the Russell 2500 Growth Index.

(e)

This category invests in small to mid-sized U.S. companies that appear to be undervalued relative to their intrinsic value. It targets broad diversification across economic sectors and seeks to achieve lower overall portfolio volatility by investing in complementary active managers with varying risk characteristics. Fund selection and allocations within the portfolio are implemented by MGI's investment management team. The smaller cap orientation of the strategy requires the investment team to be cognizant of liquidity and capital constraints, which are monitored on an ongoing basis. The strategy is benchmarked to the Russell 2500 Value Index.

(f)

This category invests primarily in U.S. dollar-denominated investment grade and government securities. It may also invest in opportunistically in out-of-benchmark positions including U.S. high yield, non-U.S. bonds, and Treasury Inflation-Protected Securities (TIPs). The strategy seeks to achieve lower overall portfolio volatility by investing in complementary active managers with varying risk characteristics, and total portfolio duration is targeted to be within 20% of the benchmark's duration. Total exposure to high yield issues is typically less than 10%, inclusive of direct investment in high yield and exposure through other core fixed income funds. Fund selection and allocations within the portfolio are implemented by MGI's investment management team. The strategy is benchmarked to the Barclays Capital Aggregate Index.

(g)

This category invests in all cap companies operating in developed and emerging markets outside the U.S. The strategy targets broad diversification across economic sectors and seeks to achieve lower overall portfolio volatility by investing in complementary active managers with varying risk characteristics. Total exposure to emerging markets is typically 10-15%, inclusive of direct investment in emerging markets and exposure through other non-U.S. equity funds. Fund selection and allocations within the portfolio are implemented by MGI's investment management team. The strategy is benchmarked to the MSCI EAFE Index.

(h)

This category invests in a passively managed U.S. long duration corporate investment grade portfolio at a 90% weight and a passively managed U.S. Long Treasury portfolio at a 10% weight. It seeks to provide broad exposure to U.S. long duration investment grade credit while allowing for short term liquidity through a strategic allocation to US Treasuries. The strategy is benchmarked 90% to the Barclays Capital U.S. Long Credit Index and 10% to the Barclays Capital Long Treasury.

(i)

This category invests primarily in U.S. dollar denominated investment grade bonds and government securities with durations between 9 and 11 years. It may also invest opportunistically in out-of-benchmark positions including U.S. high yield, non-U.S. bonds, municipal bonds, and TIPs. The strategy seeks to achieve lower overall portfolio volatility by investing in complementary active managers with varying risk characteristics. Fund selection and allocations within the portfolio are implemented by MGI's investment management team. The strategy is benchmarked to the Barclays Capital U.S. Long Government/Credit Index.


(j)	This category invests in common stock of U.S. large cap companies. The strategy is benchmarked to the S&P 500 Index.


(k)	This category invests primarily in U.S. dollar-denominated investment grade bonds and government securities. The strategy and its underlying passive investments are benchmarked to the Barclays Capital Aggregate Index.


(l)	This category invests primarily in U.S. dollar-denominated investment grade bonds and government securities with durations between 9 and 11 years. The strategy and its underlying passive investments are benchmarked to the Barclays Capital Long Government/Credit Index.

(m)

This category seeks to reduce the volatility of the plan's funded status and extend the duration of the assets by investing in a series of ultra long duration portfolios with target durations of up to 35 years. Each underlying portfolio is managed by a sub-advisor and consists of five interest rate swaps with sequential target or maturity dates, with the longest dated portfolio maturing in 2045. The interest rate swaps are fully collateralized, resulting in no leverage. The cash collateral is invested by the sub-advisor in an actively managed cash strategy that seeks to provide a return in excess of 3 month LIBOR. The ultra long duration strategy is used in conjunction with liability driven investing solutions, which seek to align the duration of the assets to the plan's liabilities. The Strategy is benchmarked to a Custom Liability Benchmark Portfolio.

(n)

This category invests in a U.S. long duration corporate investment grade portfolio at a 90% weight and a U.S. long treasury portfolio at a 10% weight. It seeks to provide broad exposure to U.S. long duration investment grade corporate bonds with an emphasis on reducing default risk through active management while allowing for short term liquidity through a strategic allocation to U.S. Treasuries. The strategy is benchmarked 90% to the Barclays Capital U.S. Long Corporate Index and 10% to the Barclay's Capital Long Treasury.

There are no investments in CONSOL Energy stock held by these plans at December 31, 2011 or 2010.

There are no assets in the other postretirement benefit plans at December 31, 2011 or 2010.

Cash Flows:

CONSOL Energy expects to contribute to the pension trust using prudent funding methods. Currently, depending on asset values and asset returns held in the trust, we expect to contribute $110 million to our pension plan trust in 2012. Pension benefit payments are primarily funded from the trust. CONSOL Energy does not expect to contribute to the other postemployment plan in 2011. We intend to pay benefit claims as they are due.

The following benefit payments, reflecting expected future service, are expected to be paid:



			Other
	Pension		Postretirement
	Benefits		Benefits
2012	$	50,778	$	182,529
2013	$	50,902	$	187,606
2014	$	51,922	$	191,429
2015	$	53,247	$	194,995
2016	$	56,114	$	198,422
Year 2017-2021	$	293,606	$	989,306