10. WORKERS' COMPENSATION AND PNEUMOCONIOSIS

The changes in the workers' compensation liability, including current and long-term liability balances, for each of the periods presented were as follows:


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2016		2015		2016		2015
	(in thousands)
Beginning balance		$	56,403	$	55,671	$	54,558	$	57,557
Accruals increase			2,480		2,959		7,904		9,126
Payments			(2,238)		(2,250)		(8,226)		(6,864)
Interest accretion			492		489		1,476		1,466
Valuation loss (gain) (1)			—		—		1,425		(4,416)
Ending balance		$	57,137	$	56,869	$	57,137	$	56,869

(1)

The ARLP Partnership's liability for the estimated present value of current workers' compensation benefits is based on its actuarial estimates. The ARLP Partnership's actuarial calculations are based on a blend of actuarial projection methods and numerous assumptions including claim development patterns, mortality, medical costs and interest rates. The ARLP Partnership conducted a mid-year review of its actuarial assumptions in the second quarter of 2016 which resulted in a valuation loss in 2016 primarily attributable to a decrease in the discount rate used to calculate the estimated present value of future obligations from 3.63% at December 31, 2015 to 2.89% at June 30, 2016, partially offset by favorable changes in claims development. The ARLP Partnership's mid-year actuarial review in the second quarter of 2015 resulted in a valuation gain primarily attributable to favorable changes in claims development and an increase in the discount rate from 3.41% at December 31, 2014 to 3.71% at June 30, 2015. Absent evidence of significant changes in underlying activity or assumptions, the actuarial study is performed at June 30 and December 31 each year. Accordingly, the discount rate used in the ARLP Partnership’s assumptions at June 30, 2016 and 2015 continue in use for the third quarter liability estimate for both years.

Certain of the ARLP Partnership's mine operating entities are liable under state statutes and the Federal Coal Mine Health and Safety Act of 1969, as amended, to pay pneumoconiosis, or black lung, benefits to eligible employees and former employees and their dependents. Components of the net periodic benefit cost for each of the periods presented are as follows:


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2016		2015		2016		2015
	(in thousands)
Service cost		$	644	$	773	$	1,936	$	2,237
Interest cost			627		524		1,880		1,571
Amortization of net actuarial gain (1)			(660)		(113)		(1,982)		(338)
Net periodic benefit cost		$	611	$	1,184	$	1,834	$	3,470

(1)

Amortization of net actuarial gain is included in the Operating expenses (excluding depreciation, depletion and amortization) line item within our condensed consolidated statements of income.