16. ASSET RETIREMENT OBLIGATIONS

The majority of the ARLP Partnership's operations are governed by various state statutes and the Federal Surface Mining Control and Reclamation Act of 1977, which establish reclamation and mine closing standards. These regulations require, among other things, restoration of property in accordance with specified standards and an approved reclamation plan.

The following table presents the activity affecting the asset retirement and mine closing liability:


	Year Ended December 31,
	2017		2016
	(in thousands)

Beginning balance	$	125,701	$	123,685
Accretion expense		3,793		3,769
Payments		(1,046)		(379)
Allocation of liability associated with acquisitions, mine development and change in assumptions		2,152		(1,374)
Ending balance	$	130,600	$	125,701

For the year ended December 31, 2017, the allocation of liability associated with acquisition, mine development and change in assumptions was a net increase of $2.2 million. This increase was attributable to the net impact of increased expansion and disturbances of refuse sites primarily at the Hamilton and River View mines, offset in part by overall changes in inflation and discount rates, current estimates of the costs and scope of remaining reclamation work, reclamation work completed and fluctuations in projected mine life estimates.

For the year ended December 31, 2016, the allocation of liability associated with acquisition, mine development and change in assumptions was a net decrease of $1.4 million. This decrease was primarily attributable to the net impact of overall general changes in inflation and discount rates, current estimates of the costs and scope of remaining reclamation work, reclamation work completed and fluctuations in projected mine life estimates, offset in part by increased expansion and disturbances of refuse sites primarily at the Warrior and Gibson County Coal mines.

The impact of discounting the ARLP Partnership's estimated cash flows resulted in reducing the accrual for asset retirement obligations by $114.0 million and $110.7 million at December 31, 2017 and 2016, respectively. Estimated payments of asset retirement obligations as of December 31, 2017 are as follows:


Year Ended
December 31,	(in thousands)

2018	$	3,850
2019		454
2020		433
2021		—
2022		1,256
Thereafter		238,604
Aggregate undiscounted asset retirement obligations		244,597
Effect of discounting		(113,997)
Total asset retirement obligations		130,600
Less: current portion		(3,850)
Asset retirement obligations	$	126,750

Federal and state laws require bonds to secure the obligations to reclaim lands used for mining and are typically renewable on a yearly basis. As of December 31, 2017 and 2016, the ARLP Partnership had approximately $172.9 million and $171.8 million, respectively, in surety bonds outstanding to secure the performance of its reclamation obligations.

See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for asset retirement obligations.