19. 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 and a noncancelable lease with a third party 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
	Capital
Year Ending December 31,	Lease		Affiliate		Others		Total
	(in thousands)

2018	$	32,378	$	240	$	9,827	$	10,067
2019		48,953		—		5,826		5,826
2020		8,866		—		1,366		1,366
2021		966		—		—		—
2022		917		—		—		—
Thereafter		—		—		—		—
Total future minimum lease payments	$	92,080	$	240	$	17,019	$	17,259
Less: amount representing interest		(6,376)
Present value of future minimum lease payments		85,704
Less: current portion		(28,613)
Long-term capital lease obligation	$	57,091

Rental expense (including rental expense incurred under operating lease agreements) was $16.1 million, $17.0 million and $11.7 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Contractual Commitments— In connection with planned capital projects, the ARLP Partnership has contractual commitments of approximately $64.3 million at December 31, 2017. As of December 31, 2017, the ARLP Partnership had $1.3 million in commitments to purchase coal from external production sources in 2018.

In February 2017, Alliance Minerals committed to invest $30.0 million in AllDale III. As of December 31, 2017, Alliance Minerals had a remaining commitment to AllDale III of $15.6 million. For more information on Alliance Minerals and AllDale III, see Note 12 – 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 is being amortized over the lease term. On June 29, 2016, the ARLP Partnership entered into various sale-leaseback transactions for certain mining equipment and received $33.9 million in proceeds. The lease agreements have terms ranging from three to four years with initial monthly rentals totaling $0.7 million. Balloon payments equal to 20% of the equipment cost under lease are due at the end of each lease term. As a result of this transaction, the ARLP Partnership recognized a deferred loss of $7.9 million which is being amortized over the life of the equipment. The ARLP Partnership has recognized these sales-leaseback transactions as capital leases and included future payments within 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, 2017, the ARLP Partnership renewed its annual property and casualty insurance program. 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.