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,
	2017		2016		2017		2016
	(in thousands)
Beginning balance	$	59,981	$	56,403	$	48,131	$	54,558
Accruals increase		1,999		2,480		16,673		7,904
Payments		(2,357)		(2,238)		(7,799)		(8,226)
Interest accretion		421		492		1,261		1,476
Valuation loss (1)		—		—		1,778		1,425
Ending balance	$	60,044	$	57,137	$	60,044	$	57,137

(1)

The liability for the estimated present value of current workers′ compensation benefits is based on the ARLP Partnership's 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 which resulted in a valuation loss in 2017 primarily attributable to a decrease in the discount rate used to calculate the estimated present value of future obligations from 3.52% at December 31, 2016 to 3.38% at June 30, 2017 and unfavorable changes in claims development. The ARLP Partnership's mid-year 2016 actuarial review resulted in a valuation loss 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.

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,
	2017		2016		2017		2016
	(in thousands)
Service cost	$	580	$	644	$	1,682	$	1,936
Interest cost		649		627		1,906		1,880
Amortization of net actuarial gain (1)		(479)		(660)		(1,613)		(1,982)
Net periodic benefit cost	$	750	$	611	$	1,975	$	1,834

(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.