Apogee Coal Company v. Office of Workers ’ Compensation Programs

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 23-2521
A POGEE C OAL C OMPANY , et al.,
Petitioners,
v.
O FFICE OF WORKERS ’ C OMPENSATION PROGRAMS ,
Respondent.
____________________
Petition for Review of an Order of the
Benefits Review Board.
No. 22-0262 BLA
____________________
A RGUED M AY 13, 2024 — DECIDED A UGUST 19, 2024
____________________
Before S CUDDER , S T. EVE, and PRYOR , Circuit Judges.
S CUDDER , Circuit Judge. Harold Grimes developed black
lung disease after 34 years of working in coal mines. He died
of lung cancer in 2018. It is undisputed that Grimes’s spouse,
Susan, is eligible for survivor’s benefits under the Black Lung
Benefits Act. This appeal requires us to decide who must pay
those benefits. A Department of Labor administrative law
judge assigned financial responsibility to Apogee Coal Com-
pany—Grimes’s last employer—and the Benefits Review

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2 No. 23-2521
Board affirmed. Central to both decisions was the conclusion
that Arch Resources Inc.—Apogee’s former parent corpora-
tion—bore responsibility for paying the benefits on Apogee’s
behalf. Arch disagrees and insists that Mrs. Grimes’s benefits
must instead come from the Black Lung Disability Trust
Fund. On the record before us, we agree with Arch. Neither
the ALJ nor the Board has identified any provision (or combi-
nation of provisions) in the Act or its implementing regula-
tions that justify holding Arch liable for the benefits obliga-
tions of Apogee. So we grant Arch’s petition for review, va-
cate the Board’s decision, and remand with instructions that
Mrs. Grimes’s benefits be assigned to the Trust Fund.
I
A
The Black Lung Benefits Act provides disability benefits to
miners “totally disabled” due to black lung disease. See
Pittston Coal Grp. v. Sebben, 488 U.S. 105, 108 (1988); see also 30
U.S.C. §§ 901(a), 922(a), 932(c). It does so largely at the ex-
pense of the mining industry itself. Whenever possible, the
statute assigns financial responsibility for a miner’s benefits
to one of the coal mine operators in whose service the miner
developed black lung disease. See Old Ben Coal Co. v. Luker,
826 F.2d 688, 693 (7th Cir. 1987); see also 30 U.S.C. § 932(c); 20
C.F.R. § 725.495(a)(1). When no such entity is capable of pay-
ing, the cost of benefits falls to the Black Lung Disability Trust
Fund, see 26 U.S.C. § 9501(d)(1)(B), which is jointly adminis-
tered by the Secretary of the Treasury, the Secretary of Labor,
and the Secretary of Health and Human Services, see id.
§ 9501(a)(2), and funded by an excise tax on coal, see id.
§§ 9501(b)(1), 4121(a)(1).

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No. 23-2521 3
The Department of Labor adjudicates benefits claims un-
der the Act. See 30 U.S.C. § 932a; see also U.S. Dep’t of Labor v.
Triplett, 494 U.S. 715, 717 (1990) (describing administrative
scheme). The Department’s Division of Coal Mine Workers’
Compensation performs this work in field offices across the
nation. 30 U.S.C. § 903(a); see also DCMWC Offices and Lead-
ership, https://www.dol.gov/agencies/owcp/dcmwc/distric-
toffices, archived at [perma.cc/8EVQ-CETS].
The processing of black lung claims occurs in three stages.
The district director for the field office that received the claim
undertakes the initial review, including by examining the ap-
plicant’s employment history, see 20 C.F.R. § 725.404(a), and
notifying those coal mine operators, if any, that are potentially
responsible for paying benefits under the statute. See id.
§ 725.407(a)–(b); see also Rockwood Cas. Ins. Co. v. Director, Off.
of Workers’ Compensation Programs, 917 F.3d 1198, 1205–06
(10th Cir. 2019) (discussing notification process). Absent the
requisite notice, liability for benefits obligations cannot be im-
posed on a coal mine operator. See 20 C.F.R. § 725.360(a)(3).
In addition to fulfilling these threshold functions, district di-
rectors have substantial authority to gather evidence, see id.
§ 725.404, develop the medical record, see id. § 725.414, and
hear argument from interested parties, see id. §§ 725.408(a)(2),
725.412(a)(1), 725.416(a).
The work of the district director culminates in the issuance
of a decisional document called a preliminary decision and
order (or PDO for short) that “resolve[s] [the] claim on the ba-
sis of the evidence submitted to or obtained by the district di-
rector.” Id. § 725.418(a). In any case in which the district direc-
tor awards benefits, it must designate the coal mine operator,
if any, that the Act and its implementing regulations make

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4 No. 23-2521
liable for the miner’s benefits. See id. § 725.418(d). Absent
such a designation, the district director must assign the claim
and attendant payment obligation to the Trust Fund. See 26
U.S.C. § 9501(d)(1)(B).
The Act and its regulations establish a two-step procedure
for determining which employer, if any, is liable for awarded
benefits. A district director first identifies each of the miner’s
previous employers that qualify as a so-called potentially lia-
ble operator under five criteria enumerated in 20 C.F.R.
§ 725.494(a)–(e). Only the fifth of these criteria is contested in
this appeal—that “[t]he operator [be] capable of assuming []
liability for the payment of continuing benefits ….” Id.
§ 725.494(e). After identifying the pool of potentially liable
operators, the district director must then select a single re-
sponsible operator according to the formula prescribed by a
neighboring regulation, § 725.495. As a general rule, that reg-
ulation makes liable “the potentially liable operator … that
most recently employed the miner.” Id. § 725.495(a)(1).
Parties dissatisfied with a district director’s PDO may seek
referral to an ALJ for a formal hearing to resolve any con-
tested issue. See id. §§ 725.450, 725.451. In most respects, the
district director’s findings do not bind the ALJ. The ALJ may
not, however, revisit the district director’s decision to desig-
nate a particular employer as the financially liable operator
under the Act’s liability rules. See Rockwood Cas. Ins. Co., 917
F.3d at 1215. If the ALJ determines that the district director
designated the wrong entity, “a new responsible operator
may not be named.” Id. The benefits are instead paid out of
the Trust Fund. See Regulations Implementing the Federal
Coal Mine Health and Safety Act of 1969, as Amended, 65 Fed.
Reg. 79990 (Dec. 20, 2000) (“In the event the responsible

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No. 23-2521 5
operator designated by the district director is adjudicated not
liable for a claim, the Black Lung Disability Trust Fund will
pay any benefit award.”).
A party that disagrees with an ALJ’s decision may chal-
lenge it before the Benefits Review Board. See 33 U.S.C.
§ 921(b); 20 C.F.R. § 802.205(a). The Board’s authority is
strictly appellate—it may not “engage in a de novo proceeding
or unrestricted review of a case brought before it.” 20 C.F.R.
§ 802.301(a). Board decisions may be appealed to the court of
appeals “for the circuit in which the [claimant’s] injury oc-
curred.” 33 U.S.C. § 921(c).
B
To ensure that potentially liable operators have the finan-
cial ability to pay benefits, Congress has mandated that all op-
erators either acquire a commercial insurance policy covering
their black lung liability or receive the Department of Labor’s
approval to self-insure. See 30 U.S.C. § 933(a); 20 C.F.R.
§ 726.1; see also Lovilia Coal Co. v. Williams, 143 F.3d 317, 319–
20 (7th Cir. 1998) (explaining that operators that fail to do one
or the other “may be punished by civil penalty”).
The self-insurance option permits an operator to satisfy its
financial obligations under the Act by demonstrating to the
Department’s satisfaction that it has sufficient resources to
forgo the procurement of commercial insurance coverage.
An operator seeking to self-insure must, at a minimum,
satisfy several threshold requirements enumerated in 20
C.F.R. § 726.101(b), including that its “average current assets
over the preceding 3 years” be sufficient to cover “black lung
benefits … which such operator may expect to be required to
pay during the ensuing year,” id. § 726.101(b)(3), and that it

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6 No. 23-2521
“obtain security” in a form and amount approved by the De-
partment, id. § 726.101(b)(4). Even then, the Department of
Labor has discretion to deny an application for self-insurance.
See id. § 726.101(a).
Upon approving an application for self-insurance, the De-
partment sets the required amount of security at a level suffi-
cient “to guarantee the payment of benefits and the discharge
of all other obligations which may be required of such appli-
cant under the Act.” Id. § 726.104(a). That security can take
many forms, including (1) “an indemnity bond with sureties
satisfactory to the [Department],” (2) “a deposit of negotiable
securities with a Federal Reserve Bank,” (3) “a letter of credit
issued by a financial institution satisfactory to the [Depart-
ment],” and (4) a trust fund established “pursuant to
section 501(c)(21) of the Internal Revenue Code.” Id.
§ 726.104(b)(1)–(4).
The approval of a self-insurance application reflects no
more than a determination by the Department that an opera-
tor has sufficient assets to cover expected black lung liabilities
at the time of approval. This explains why self-insurers must
receive renewed authorization at periodic intervals, as finan-
cial health is not static. See id. § 726.110(a). All along the De-
partment wields substantial authority to examine an opera-
tor’s books and records, see id. § 726.112(b), to adjust the re-
quired level of security to reflect the evolving financial health
of the operator, see id. § 726.109, and to withdraw self-insur-
ance authorization entirely if circumstances come to warrant,
see id. § 726.115.

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No. 23-2521 7
II
With this statutory background in place, we turn to the
dispute before us.
A
Harold Grimes worked as a coal miner from 1965 to 1999
in both underground and surface mines. That work brought
Grimes into regular contact with coal and rock dust as well as
other gases and fumes. In retirement he developed emphy-
sema and in 2016 was diagnosed with lung cancer. Believing
that these conditions stemmed at least in part from his work
in the mines, Grimes filed a claim for black lung benefits with
the Department of Labor.
That filing set into motion the regulatory scheme we just
described, beginning with the assigned district director exam-
ining Mr. Grimes’s employment history to determine if any of
his former employers satisfied § 725.494’s requirements for
potential liability. It found and notified just one—Apogee
Coal Company. This was an interesting choice. Grimes, it is
true, had worked for Apogee from 1972 until his retirement
from the coal industry in 1999. But Apogee went bankrupt in
2015, alongside its parent company at the time, Patriot Coal
Corporation. What is more, Apogee did not appear to resume
operations following that bankruptcy.
In light of that history, the question before us comes into
focus: how could § 725.494’s fifth requirement be satisfied—
that Apogee be “capable of assuming … liability for the pay-
ment of continuing benefits”—if the company was defunct.
Id. § 725.494(e). This is where Apogee’s parent company at the
time of Grimes’s retirement—Arch Resources Inc.—enters the
mix.

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8 No. 23-2521
In designating Apogee as a potentially liable operator, the
district director, as it turns out, was simply following admin-
istrative protocol. Apogee was one of 50 Patriot Coal subsidi-
aries to go under in 2015. That wave of bankruptcies placed
tremendous financial pressure on the Black Lung Disability
Trust Fund. See U.S. Gov’t Accountability Off., GAO-20-438T,
Black Lung Benefits Program: Oversight Is Needed to Ad-
dress Trust Fund Solvency Strained By Bankruptcies, p. 2
(2020) (estimating that Patriot Coal’s bankruptcy resulted in
the transfer of $230 million of benefits responsibility from
mining companies to the Trust Fund). In response to this de-
velopment, the Department of Labor issued an internal bulle-
tin instructing its claims processing staff to notify bankrupt
subsidiaries of potential liability in situations where the De-
partment believed solvent third parties could be required to
pay benefits on the subsidiaries’ behalf. See Div. of Coal Mine
Workers’ Comp., Off. of Workers’ Comp. Programs, Dep’t of
Labor, BLBA Bull. No. 16-01 (2015).
This was most obviously the case for miners who worked
for one of Patriot’s bankrupt subsidiaries at a time when the
subsidiary was covered by a commercial black lung insurance
policy. That is because 20 C.F.R. § 726.203(a) requires all such
policies to include an endorsement making the insurer liable
for any black lung claim that accrues against its insured dur-
ing the policy period, regardless of when the benefits claim is
ultimately filed. See Director, Off. of Workers’ Compensation Pro-
grams v. Trace Fork Coal Co., 67 F.3d 503, 505 n.4 (4th Cir. 1995).
What this means is that commercial insurers remain contrac-
tually obligated to pay black lung benefits on their insured’s
behalf, even when the insured has ceased operating. By exten-
sion it also means that bankrupt operators remain “capable of
assuming liability for the payment” of insured claims under

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No. 23-2521 9
§ 725.494(e), so long as the insurance company itself is sol-
vent.
Here, however, Apogee was not covered by a commercial
insurance policy during Mr. Grimes’s employment. It instead
obtained self-insurance authorization through its then-parent
corporation, Arch Resources. On these factual points, every-
one agrees.
So far as we can tell, the Act’s regulations do not expressly
contemplate such a parent-subsidiary self-insurance arrange-
ment, which the parties refer to as a self-insurance umbrella.
Nevertheless, it is apparently a common practice. From what
we have been able to gather, this approach allows a subsidi-
ary like Apogee to self-insure on the strength of its parent’s
financial health. If a subsidiary covered by the parent’s finan-
cial umbrella is unable to pay a black lung claim, the Depart-
ment can call on the parent to do so. In this way, parent cor-
porations effectively guarantee their subsidiaries’ black lung
obligations.
The record before us does not reveal whether the terms of
this parent-subsidiary self-insurance arrangement are memo-
rialized in a written contract akin to black lung insurance pol-
icies. Although self-insurers are required, as a “condition
precedent” to receiving self-insurance authorization, to “exe-
cute and file with the [Department] an agreement and under-
taking” committing to pay black lung claims “as required by
the Act,” no such agreement is in the record. Id. § 726.110(a),
(a)(1). Neither party did much in their briefs to explain with
much clarity how these parent-subsidiary arrangements work
and get recorded at a nuts-and-bolts level.

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10 No. 23-2521
What we do know, though, is that Bulletin 16-01 instructs
claims processing staff to treat parent-subsidiary self-insur-
ance arrangements similarly to commercial insurance poli-
cies. At a practical level this translates into a bankrupt Patriot
Coal subsidiary (like Apogee) being named as a potentially
liable operator so long as the claimant (like Harold Grimes)
worked for the entity at a time when it was covered by a sol-
vent parent corporation’s self-insurance umbrella. In that cir-
cumstance, the Department appeared to believe that a parent
corporation (akin to a commercial insurer) could be made un-
der the Act to pay all claims that accrued against the subsidi-
ary during the period of self-insurance, regardless of when
the claim for benefits was filed. If this is correct, then in this
circumstance, too, a bankrupt subsidiary would be “capable
of assuming [] liability for the payment” of benefits through a
solvent third party. Id. § 725.494(e).
Consistent with these instructions from Bulletin 16-01, the
district director identified Apogee as a potentially liable op-
erator on Mr. Grimes’s claim and notified Arch of its potential
for liability as Apogee’s “Insurance Carrier.”
Mr. Grimes’s death came before the district director could
issue its preliminary decision and order. This resulted in the
substitution of Mrs. Grimes as a party, and the case pro-
ceeded. From the beginning, Arch objected to the district di-
rector’s decision to notify Apogee as a potentially liable oper-
ator, seeing the notice as an indirect assertion of liability
against it. Believing that no legal authority supported the De-
partment’s theory of liability, Arch insisted that the benefits
obligation must fall to the Trust Fund.
The district director was not persuaded and in April 2019
issued a preliminary decision and order finding Mrs. Grimes

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No. 23-2521 11
eligible for black lung survivor’s benefits and designating Ap-
ogee as the responsible operator under 20 C.F.R. § 725.495.
Although the district director’s decision did not explicitly ad-
dress Arch’s objections to liability, implicit in its designation
of Apogee was the conclusion that the core logic underpin-
ning Bulletin 16-01 was correct—that although Apogee had
gone bankrupt, Arch remained solvent and could be com-
pelled to pay any black lung claims that accrued against Ap-
ogee while it was covered by Arch’s self-insurance umbrella.
B
At Arch’s request, the district director referred Mrs.
Grimes’s claim to a Department of Labor ALJ for further ad-
judication. After extensive proceedings, the ALJ came to agree
with the district director’s central conclusions—both that Mrs.
Grimes was eligible for benefits (as Mr. Grimes’s surviving
spouse) and that, despite its bankruptcy, Apogee could be
designated as the responsible operator because Arch bore le-
gal responsibility for Mrs. Grimes’s benefits under the Act
and its implementing regulations.
The reasoning the ALJ gave for the latter of these two con-
clusions is difficult to parse. Where the ALJ began is easy
enough to follow—with the recognition that Apogee could be
designated as the responsible operator for Mrs. Grimes’s ben-
efits only if it satisfied the regulatory criteria enumerated by
20 C.F.R. § 725.494. In conducting that inquiry, however, the
ALJ at times seemed to treat Arch as though it too were des-
ignated by the district director as a responsible operator. For
example, the ALJ faulted Arch for failing to “prove that it is
financially unable to pay benefits” under 20 C.F.R.
§ 725.495(b), a provision that by its terms applies only to the
designated responsible operator. And in closing, the ALJ

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12 No. 23-2521
remarked that “Apogee/Arch meets the regulatory criteria of
responsible operator.”
Arch seized upon this apparent conflation of Arch and
Apogee in a motion for reconsideration. Pointing out that the
district director had made it a party to Mrs. Grimes’s black
lung claim only in its capacity as a potentially liable self-in-
surer, Arch insisted that the ALJ had erred by treating it as a
designated responsible operator under the Act’s regulations.
The ALJ disagreed. In a supplemental opinion, the ALJ
clarified that he was well aware that the district director
“named Apogee, not Arch, as a potentially liable operator”
and from there stood by his prior ruling that the district di-
rector had authority to do so under 20 C.F.R. § 725.494. Be-
cause everyone agreed that Apogee met § 725.494’s first four
requirements, the ALJ explained that “the only way for [Arch]
to escape liability was to establish that Apogee [did] not pos-
sess sufficient assets to pay benefits.” Arch failed to make that
necessary showing, with the ALJ reasoning this way: Alt-
hough Apogee was “no longer in … operation,” Arch could
be made to pay “under the regulations” because “it provided
Apogee’s self-insurance while the Miner was employed by
Apogee.” And there was no dispute that Arch had the finan-
cial ability to do so.
C
The Benefits Review Board affirmed. Rather than address
the ALJ’s reasoning, the Board rejected Arch’s challenge to li-
ability in a single paragraph that incorporated by reference its
reasoning in three prior cases: Bailey v. E. Assoc. Coal Co., BRB
No. 20-0094 (Oct. 25, 2022) (en banc), Graham v. E. Assoc. Coal

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No. 23-2521 13
Co., 25 BLR 1-298 (2022), and Howard v. Apogee Coal Co., 25 BLR
1-301 (2022).
Arch then sought our review.
III
Arch lodges several objections to the administrative pro-
ceedings below. We address just one—its contention that the
Department’s theory of continuing liability for self-insuring
parent corporations is without legal foundation.
A
But before we reach the merits, we owe a word on the
standard of review. Although black lung appeals come to us
from decisions of the Benefits Review Board, we have often
observed that our principal focus is on the reasoning of the
ALJ. See, e.g., Collins v. Old Ben Coal Co., 861 F.2d 481, 486 (7th
Cir. 1988); Zeigler Coal Co. v. Director, Off. of Workers’ Compen-
sation Programs, 326 F.3d 894, 897 (7th Cir. 2003) (collecting
cases). In most cases, this makes good sense. Because the
Board’s authority is strictly appellate, see 20 C.F.R. § 802.301,
it must affirm an ALJ’s decision that is “rational, supported
by substantial evidence, and in accordance with applicable
law.” See Consol. Coal Co. v. Director, Off. of Workers’ Compen-
sation Programs, 911 F.3d 824, 838 (7th Cir. 2018). Most often
our role is to ensure that the Board adheres to that mandate—
that it affirms decisions of the ALJ that satisfy that standard
and reverses those that do not. See Crowe ex rel. Crowe v. Zei-
gler Coal Co., 646 F.3d 435, 440–41 (7th Cir. 2011). So our focus
necessarily concentrates in the main on the ALJ’s reasoning,
not the Board’s.
This case comes to us with a slight wrinkle, however. Ra-
ther than review the ALJ’s analysis on its own terms, the

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14 No. 23-2521
Board invoked, without elaboration, three of its own prece-
dents that it believed foreclosed Arch’s position. We see no
problem in the Board’s doing so. Whatever limitations 20
C.F.R. § 802.301 might place on the authority of the Board to
affirm an ALJ ruling on alternative grounds—a question we
do not consider or decide—we have no doubt that the Board
can apply its own decisions to the cases that come before it,
even when those decisions went overlooked by the ALJ.
But when we roll up our own sleeves and look to the de-
cisions relied on by the Board, we immediately see that they
do not overlap completely with the reasoning given by the
ALJ below. We therefore find ourselves confronted with two
distinct rationales for the agency action under review. In these
circumstances, we cannot limit our focus to the ALJ’s reason-
ing alone. We instead must affirm so long as either rationale is
sound. So we proceed by examining with equal rigor the
analysis of both the ALJ and Board.
B
For all this case’s regulatory complexity, the question pre-
sented distills to a single point of law: did either the ALJ or
the Board identify a valid legal basis for holding Arch liable
for the black lung liability owed by Apogee to Harold
Grimes’s surviving spouse?
That basis could be statutory, regulatory, contractual, or
even equitable. But a basis there must be. There must be some
source of law (or perhaps combination of sources) that the De-
partment can point to that affirmatively requires Arch to sat-
isfy benefits owed to Mrs. Grimes. Without such a legal basis,
we see no alternative other than to reach the twofold conclu-
sion that the district director improperly designated Apogee

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No. 23-2521 15
the responsible operator and that the Trust Fund must bear
the cost of Mrs. Grimes’s benefits. The latter conclusion fol-
lows because, remember, Apogee, by everyone’s account, has
no other conceivable source of assets that it could call on to
cover its benefits obligation to Mrs. Grimes. To put the point
in regulatory terms, if Arch is not legally obligated to pay on
Apogee’s behalf, Apogee is not “capable of assuming [] liabil-
ity” for Mrs. Grimes’s benefits under 20 C.F.R. § 725.494(e)
and could not be designated as the responsible operator un-
der § 725.495(a)(1).
We also cannot overstate the importance of a principle that
limits our review. That principle comes from the Supreme
Court’s 1943 decision in SEC v. Chenery and instructs that
agency action must be judged on the reasoning given by the
agency at the time of its decision. See 318 U.S. 80, 87–88. In-
deed, both parties were quick at oral argument to agree with
this precise observation and, even more specifically, that the
Chenery doctrine applies with full force in black lung appeals.
See Island Creek Coal Co. v. Henline, 456 F.3d 421, 426 (4th Cir.
2006); Pate v. Director, Off. of Workers’ Compensation Programs,
834 F.2d 675, 676 (7th Cir. 1987); but see Arch of Kent., Inc. v.
Director, Off. of Workers’ Compensation Programs, 556 F.3d 472,
477 (6th Cir. 2009) (concluding that Chenery does not apply to
review of black lung benefits determinations).
In no way is our observation academic. The Chenery doc-
trine has the very practical effect of directing our focus singu-
larly on whether the rationales given by the ALJ and the
Board for holding Arch liable were legally sound.
Right off the bat, then, we can eliminate some possibilities.
As Arch correctly observes, neither the ALJ nor the Board
purported to hold Arch liable under common law principles

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16 No. 23-2521
of equity. See, e.g., Esmark, Inc. v. N.L.R.B., 887 F.2d 739, 753
(7th Cir. 1989) (applying veil-piercing principles to determine
whether parent could be held liable for labor law violations of
subsidiary). Nor did the ALJ or the Board ground Arch’s lia-
bility in an oral or written contract or in one or more than one
provision of the Black Lung Benefits Act itself. Instead, both
decisionmakers relied exclusively on the Act’s implementing
regulations.
But the ALJ and Board invoked the Act’s regulations in
only the most general and conclusory manner. We have thor-
oughly reviewed the decision of the ALJ and not one of the
regulations it discussed or cited can be fairly read (in isolation
or combination) to support the premise at the core of its lia-
bility determination: that self-insuring parent corporations—
akin to commercial insurers—are legally obligated to pay all
black lung benefits that accrue against their subsidiaries dur-
ing the period of self-insurance, regardless of when the claim
is filed.
The Board’s reliance on its own precedent fell short for
much the same reason. Of the three cases it identified and re-
lied upon—Bailey, Graham, and Howard—only Howard
squarely confronted the legal question before the ALJ here.
The Howard case also involved Arch and Apogee. There, as
here, the Department of Labor sought to use Arch’s self-insur-
ance umbrella as a means of shifting liability away from the
Trust Fund. And there, too, Arch was adamant that the regu-
lations did not support this result. It emphasized that the De-
partment had achieved a similar result in the commercial in-
surance context only through the promulgation of 20 C.F.R.
§ 726.203(a), and stressed that “no similar provision” exists
for self-insurance.

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No. 23-2521 17
The Board in Howard was unpersuaded by Arch’s insist-
ence that its liability had to find some basis in positive law. To
be sure, the Board did seem to agree with Arch that neither
the Act nor its implementing regulations explicitly made a
self-insuring parent liable for claims that accrued against a
former subsidiary like Apogee. But from there the Board saw
that legal gap as supporting the Department of Labor, not the
other way around. Arch, it reasoned, had failed to point to
any “regulatory authority to support [its] argument that self-
insurance liability is triggered by the date the claim is filed
rather than the last day of the miner’s coal mine employ-
ment.” Regulatory silence, in other words, supported liability,
not assignment of the claim to the Trust Fund.
The Director attempts to defend the essence of Howard’s
reasoning on appeal. Conceding that there is no “explicit reg-
ulation” supporting the Department’s proposed rule, the Di-
rector contends that such a regulation is unnecessary because
the liability of parent corporations like Arch is inherent in the
very fiber of self-insurance. We find this assertion unpersua-
sive, for the position anchors itself more in policy reasoning
than an identifiable source of law. Liability may not be im-
posed on a corporation simply because it strikes an agency or
a court as sensible as a matter of policy. The rule of law re-
quires that the rights, duties, and obligations of persons and
corporations alike spring, if at all, from some concrete basis in
positive law or principle of equity. Unless and until the De-
partment identifies such a basis for the theory of liability it
embraced in this case, we are unwilling to read into regula-
tory silence an intention to depart from the time-honored
principle “that a parent corporation … is not liable for the acts
of its subsidiaries.” United States v. Bestfoods, 524 U.S. 51, 61
(1998) (internal quotation marks omitted); see also Olympia

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18 No. 23-2521
Equipment Leasing Co. v. W. Union Tel. Co., 786 F.2d 794, 798
(7th Cir. 1986).
The Director presses several other contentions to save the
ALJ’s and Board’s decisions. Foremost, the Director criticizes
as “irrational” a rule that would treat the primary liability of
operators like Apogee—which endures as long as they remain
“capable of assuming [] liability for the payment of continu-
ing benefits” under 20 C.F.R. § 725.494(e)—differently from
that of a self-insuring parent corporation. He claims, moreo-
ver, to find support for the Department’s position in a D.C.
Circuit decision interpreting indemnity bonds posted as secu-
rity for self-insurance. See United States v. Ins. Co. of N. Am., 83
F.3d 1507 (D.C. Cir. 1996). Finally, he warns of the potentially
serious policy consequences that might ensue if Arch’s posi-
tion prevails. Whatever their merit, not one of these argu-
ments was mentioned (directly or even obliquely) by the ALJ
or the Board below. Chenery precludes us from considering
them for the first time on appeal.
We have read the ALJ’s and Board’s decisions many times
over, and in the end remain unable to identify a statutory or
regulatory provision—identified by the ALJ or Board—that
supports holding Arch liable for the benefits obligation owed
by Apogee to Harold Grimes’s surviving spouse. Chenery re-
quires that we approach our review this exact way, and in the
final analysis we see no way around concluding that the deci-
sions of the ALJ and Board lack legal support. We therefore
have no choice but to vacate the decision of the Benefits Re-
view Board.
In reaching this conclusion, we find ourselves at odds with
the Sixth Circuit’s recent decision in Apogee Coal Company,
LLC v. Director, Off. of Workers’ Compensation Programs, No. 23-

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No. 23-2521 19
3332, — F.4th ―, (Aug. 5, 2024), which affirmed the Board’s
bottom-line conclusion in Howard that Arch could be held lia-
ble as a self-insuring parent for black lung benefits owed by
Apogee, its former subsidiary. It did so based on two regula-
tions: 20 C.F.R. §§ 726.110(a)(1) and 726.4(b). The first man-
dates that all self-insurers “execute and file … an agreement
and undertaking” in which they agree to pay black lung ben-
efits “when due, as required by the Act.” Id. § 726.110(a)(1).
The second emphasizes “that the Secretary [of Labor] has
wide latitude for determining which operator shall be liable
for the payment of Part C benefits” and states that any “busi-
ness entity which has had or will have a substantial and rea-
sonably direct interest in the operation of a coal mine may be
determined liable for the payment of pneumoconiosis bene-
fits” under the Act.
After careful consideration, we see nothing in the Sixth
Circuit’s analysis that warrants a different outcome in this
case. Although §§ 726.110(a)(1) and 726.4(b) found passing
mention in the decisions of the ALJ and the Board below, nei-
ther decisionmaker intimated, let alone held, that Arch’s lia-
bility as a third-party self-insurer sprung from those regula-
tions. Chenery thus precludes us from affirming the Board on
the Sixth Circuit’s theory.
Even if we could overlook Chenery, it is hard to see how
either provision could support a finding of liability on the
facts before us. Section 726.110(a)(1) mandates only that self-
insurers agree to pay black lung benefits “as required by the
Act.” (emphasis added). By its very terms, § 726.110(a)(1) is
not an independent source of liability—a self-insurer’s prom-
ise to pay benefits kicks in only if a provision elsewhere in the
Act makes it liable on a claim. As for § 726.4(b), that

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20 No. 23-2521
regulation appears to do no more than give the Secretary of
Labor flexibility in determining which entities can be desig-
nated as the responsible operator. But remember that the dis-
trict director designated Apogee—not Arch—as the responsi-
ble operator for Mrs. Grimes’s benefits. That the district direc-
tor might have been able to designate Arch as the responsible
operator in this case (a question we take no position on) is be-
side the point, because that is not the decision that was actu-
ally made by the agency.
Because this opinion could be seen as creating a conflict
with the Sixth Circuit, the panel circulated it before release to
all judges in active service under Circuit Rule 40(e). No judge
voted to hear the appeal en banc.
All that remains is to determine the scope of remand.
Whatever authority we might possess to remand for a fresh
attempt by the agency to justify its liability determination, we
decline to do so in the circumstances of this case. The Director
has not requested a remand, and the Act’s implementing reg-
ulations disfavor turning the liability question into a game of
administrative ping pong. It is precisely to prevent such delay
in the adjudication of benefits that the Department decided to
require the Trust Fund to pay benefits in cases where the dis-
trict director designated the wrong responsible operator. 65
Fed. Reg. 79990 (Dec. 20, 2000) (noting that “[t]his limitation
… prevents a claimant from having to relitigate his entitle-
ment to benefits”). So although we return the case to the De-
partment, we do so for the limited and exclusive purpose of
allowing the Department to take those measures necessary to
assign Mrs. Grimes’s benefits to the Black Lung Disability
Trust Fund.

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No. 23-2521 21
IV
We close by emphasizing the limited scope of today’s
holding. That the Department of Labor has yet to articulate a
basis for liability in cases like this one does not mean that no
such basis exists. For today, all we decide is that the ALJ and
the Board have failed to justify their conclusions that Arch can
be compelled to satisfy the black lung liability of Apogee. The
Chenery doctrine, to say nothing of the party presentation
principle, affirmatively prohibits us from scouring the Act
and regulations for bases for liability that have to date gone
unidentified by the Department. In future black lung cases,
the Director can press additional arguments for the rule it ad-
vocates. And with the benefit of those proceedings, courts will
come closer to a final answer about what the regulations do
and do not authorize. In the specific case of Mrs. Grimes, how-
ever, the Trust Fund, not Arch, must pay.
The petition for review is GRANTED and the case
REMANDED to the Board with instructions that Mrs.
Grimes’s benefits be assigned to the Black Lung Disability
Trust Fund.

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