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Bankruptcy court allows Alpha Natural Resources to strip union agreement

A federalbankruptcy court sided with AlphaNatural Resources Inc. in a decision that will allow the company toend collective bargaining agreements with its labor union.

The decisioncomes a month and a half after Alpha, which filed for bankruptcy protection in Augustof last year, filed a motionin the U.S. Bankruptcy Court for the Eastern District of Virginia to allow the companyto reject agreements with the union to help it survive the "historic collapseof the domestic coal industry."

In themotion, Alpha argued that the "relentless and rapid decline" of coal marketshad strained the company's cash reserves, requiring further cost-cutting measures.The motion was intended to allow those cuts.

The motionto reject the agreements was accepted at a hearing May 9.

The decisiondrew criticism from the United Mine Workers of America, but the union's leader wasnot surprised.

"Yesterday'sruling by Judge Kevin R. Huennekens stripping away our collective bargaining agreementwith Alpha Natural Resources and wiping away the company's obligation for retireebenefits came as no surprise," said UMWA President Cecil Roberts. "Weare trying to reach an agreement with the company to resolve this issue, but ifwe are unable to do that we will have to examine our options. Alpha can attemptto impose whatever terms and conditions at its operations it may desire. That doesn'tmean our members will agree to work under them."

Whilethe union promised to challenge the effort earlier this year, the UMWA offered nofurther details about how they might challenge the motion.

The UMWAhas faced similar challengeswith other producers that have filed bankruptcy, including Patriot Coal Corp. and Walter Energy Inc.

Alphasaid it has about 610 active union employees, representing about 11% of its workforce,and 2,600 retired union employees.

"Theapproval from the U.S. bankruptcy court grants Alpha the authority to reject currentunion contracts and modify union retiree benefits," the company said in a statement.

"Thetiming and implementation of such actions, however, are still subject to companydiscretion, based upon further planning and analysis. In the interim, we continueto engage in good faith with the UMWA in an effort to finalize a negotiated, mutually-acceptableagreement," it said.