20.COMMITMENTS AND CONTINGENCIES

Commitments—The ARLP Partnership leases buildings and equipment under operating lease agreements that provide for the payment of both minimum and contingent rentals. The ARLP Partnership also has a noncancelable lease with SGP (See Note 19 – Related-Party Transactions) and a noncancelable lease for equipment under a capital lease obligation. In 2015, the ARLP Partnership acquired equipment and other assets under operating and capital lease agreements as a result of the Hamilton and Patriot acquisitions (See Note 3 – Acquisitions). Future minimum lease payments are as follows:

				Other Operating Leases
Year Ending December 31,	Capital Lease			Affiliate		Others		Total
				(in thousands)

2016	$	24,138		$	240	$	15,107	$	15,347
2017	23,572			-		11,334		11,334
2018	23,521			-		9,372		9,372
2019	39,716			-		5,371		5,371
2020	690			-		1,239		1,239
Thereafter	-			-		-		-

Total future minimum lease payments	$	111,637		$	240	$	42,423	$	42,663

Less: amount representing interest	(11,723		)

Present value of future minimum lease payments	99,914
Less: current portion	(19,764		)

Long-term capital lease obligation	$	80,150

As a result of the idling of the Onton mine, the ARLP Partnership has removed certain rental payments currently under negotiation from the table above (See Note 4 – Long-Lived Asset Impairments). Rental expense (including rental expense incurred under operating lease agreements) was $11.7 million, $4.7 million and $5.1 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Contractual Commitments—In connection with planned capital projects, the ARLP Partnership has contractual commitments of approximately $28.7 million at December 31, 2015. As of December 31, 2015, the ARLP Partnership had no material commitments to purchase coal from external production sources in 2016.

On November 10, 2014, Cavalier Minerals purchased equity interests in AllDale Minerals, an entity created to purchase oil and gas mineral interests in various geographic locations within producing basins in the continental U. S. Cavalier Minerals has an investment funding commitment to AllDale Minerals of $83.1 million at December 31, 2015, which it expects to fund over the next two years. For more information on Cavalier Minerals and AllDale Minerals, see Note 11 – Variable Interest Entities and Note 13 – Equity Investments.

On October 29, 2015, the ARLP Partnership entered into a sale-leaseback transaction whereby the ARLP Partnership sold certain mining equipment for $100.0 million and concurrently entered into a lease agreement for the sold equipment with a four-year term. Under the lease agreement, the ARLP Partnership will pay an initial monthly rent of $1.9 million. A balloon payment equal to 20% of the equipment cost is due at the end of the lease term. As a result of this transaction, the ARLP Partnership recognized a deferred gain of $5.0 million which will be amortized over the lease term. The ARLP Partnership has recognized this transaction as a capital lease and it is reflected in the future minimum lease payments presented above.

General Litigation—Various lawsuits, claims and regulatory proceedings incidental to the ARLP Partnership’s business are pending against the ARLP Partnership. The ARLP Partnership records an accrual for a potential loss related to these matters when, in management’s opinion, such loss is probable and reasonably estimable. Based on known facts and circumstances, the ARLP Partnership believes the ultimate outcome of these outstanding lawsuits, claims and regulatory proceedings will not have a material adverse effect on the ARLP Partnership’s financial condition, results of operations or liquidity. However, if the results of these matters were different from management’s current opinion and in amounts greater than the ARLP Partnership’s accruals, then they could have a material adverse effect.

Other—Effective October 1, 2015, the ARLP Partnership renewed its annual property and casualty insurance program. In an effort to reduce cost, the ARLP Partnership’s property insurance was procured from its wholly owned captive insurance company, Wildcat Insurance. Wildcat Insurance charged certain of the ARLP Partnership’s subsidiaries for the premiums on this program and in return purchased reinsurance for the program in the standard market. The maximum limit in the commercial property program is $100.0 million per occurrence, excluding a $1.5 million deductible for property damage, a 75, 90 or 120 day waiting period for underground business interruption depending on the mining complex and an additional $10.0 million overall aggregate deductible. The ARLP Partnership can make no assurances that it will not experience significant insurance claims in the future that could have a material adverse effect on its business, financial condition, results of operations and ability to purchase property insurance in the future.