660 F.2d 439 (10th Cir. 1981), 79-1775, Baroid Div. of NL Industries, Inc. v. Occupational Safety and Health Review Com'n

Docket Nº:79-1775.
Citation:660 F.2d 439
Party Name:P 25,671 BAROID DIVISION OF NL INDUSTRIES, INC., Petitioner, v. OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION and Ray Marshall, Secretary of Labor, Respondent.
Case Date:September 21, 1981
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 439

660 F.2d 439 (10th Cir. 1981)

P 25,671




Marshall, Secretary of Labor, Respondent.

No. 79-1775.

United States Court of Appeals, Tenth Circuit

September 21, 1981

Argued March 19, 1981.

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Stephen F. Fink, Dallas, Tex. (Stephen S. Livingston with him on the briefs) of Thompson & Knight, Dallas, Tex., for petitioner.

John R. Bradley, Atty., Washington, D. C. (Carin A. Clauss, Sol. of Labor; Benjamin W. Mintz, Associate Sol. for Occupational Safety and Health; Allen H. Feldman, Counsel for Appellate Litigation; and John A. Bryson, U.S. Dept. of Labor, Washington, D. C., Acting Asst. Counsel for Appellate Litigation; James E. White, Regional Sol., Dallas, Tex., of counsel, with him on the brief), for respondent.

Before McWILLIAMS and McKAY, Circuit Judges, and WEST, [*] District Judge.

McKAY, Circuit Judge.

This is an appeal from a decision of the Occupational Safety and Review Commission which vacated the decision of an administrative law judge and affirmed the Secretary of Labor's citation of petitioner based on petitioner's violation of the general duty clause of the Occupational Safety and Health Act of 1970 (OSHA), 29 U.S.C. § 654(a)(1). 1 The Secretary characterized

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the violation as serious 2 and sought to impose a penalty of $500. The Commission affirmed this assessment.

Petitioner is a materialman who leases and sells products and equipment used to drill for oil and natural gas. One of these products is drilling mud, a fluid that is poured into a drilling column to facilitate the removal of drill cuttings from the bore hole as the hole is being drilled, and to prevent natural gas from surfacing prematurely by acting as a cap on the drilling column. The viscosity of the drilling mud must be monitored and varied as the pressure of the gas in the column varies due to variations in the earth's strata. As gas becomes trapped in the drilling mud, the mud must either be discarded or circulated through a filtration system.

In addition to supplying its customers with drilling mud, petitioner furnishes them with the consultation services of "sales engineers," often referred to in the industry as "mud men." The cost of these services is included in the cost of the drilling mud. The mud man's task is to monitor a drilling operator's use of drilling mud, to advise the operator of the procedures necessary to maintain the effectiveness of the mud, and to act as an on-site sales representative for the materialman. Although the drilling operator directs the work of the mud man at the operator's rig, the materialman maintains ultimate supervisory authority over its sales mud man. Thus, the materialman has enough authority to order its mud man to leave an operator's rig where, for example, the rig has become an unsafe area. The operator, obversely, does not have authority to require a mud man to remain at the site of drilling operations. The record suggests, nonetheless, that a mud man has a strong incentive at least in the absence of mandatory evacuation rules imposed by his employer, the materialman not to leave the drilling site even when it becomes dangerous. His employer expects him to sell drilling mud to the operator by selling himself as an able and a cooperative mud man.

Following a sale of drilling mud in the fall of 1975, petitioner sent Larry Boden, an experienced mud man, to service the purchaser's drilling site. After reaching the site, Mr. Boden telephoned and informed petitioner that the drilling operations had encountered a pocket of pressurized natural gas, a formation referred to in the industry as a "kick." Mr. Boden also indicated to petitioner that no "gas separator" was in place to remove from the rig area accumulations of gas resulting from the kick, but that a "gas buster" was being constructed. Although the record suggests that a clear distinction between these two mechanisms is not always made in the industry, technically a gas separator is a commercially manufactured, sealed ventilation unit with long vent lines which vent gas from the drilling mud into the atmosphere generally fifty or more feet away from the drilling rig. In contrast, a gas buster, such as the one constructed on-site and later used in this case, is an unsealed ventilation unit that vents gas from the drilling mud into the atmosphere immediately above the drilling rig. The gas separator, by being sealed, allows the pressure of the gas to increase sufficiently to force the gas through the long vent lines and thus vent it at a distance. Being unsealed, the gas buster is incapable of venting the gas at a distance. In this case, the gas buster apparently worked well enough for several days during which steady winds at the rig dispersed the gas released through the gas buster. One day, however, there were no winds, and a large quantity of gas accumulated in the area of the rig. A spark ignited the gas, and the resulting explosion caused Mr. Boden to sustain serious bodily injuries.

A few days after the explosion, a compliance officer from the Occupational Safety and Health Administration inspected the

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drilling site at which the explosion had occurred. On the basis of this inspection, the Secretary issued to petitioner the following citation:

The employer failed to provide his employees working on a rotary drilling rig a place of employment which was free from recognized hazards that could cause death or serious physical harm to an employee in that a natural gas separator and vent line were not in operation to remove natural gas a safe distance from the rig area thus creating a fire and explosion hazard.

Petitioner contested this citation on the grounds that, for purposes of OSHA, Mr. Boden was not an employee of petitioner but of the drilling operator or its subcontractor, and that petitioner had no knowledge of or responsibility for any hazardous condition that may have existed at the drilling site.

After a hearing on the matter, an administrative law judge vacated the citation. The judge first found that Mr. Boden was indeed an employee of petitioner for purposes of OSHA, because although he was under the drilling operator's supervisory control, he maintained oral and written contact with petitioner, continued to receive his wages from petitioner, and most important was subject to petitioner's authority to remove employees from a worksite that it did not otherwise control. The judge then ruled that petitioner had no actual knowledge of the conditions constituting the recognized hazards at the drilling site and could not have discovered them with the exercise of reasonable diligence, and therefore could not be responsible for them under the general duty clause. The judge found that to require an employer constantly to scrutinize equipment and work processes that are under another employer's complete control and that are away from the employer's premises "would be totally impracticable and an unreasonable burden." Secretary of Labor v. Baroid Division of NL Industries, Inc., OSHRC No. 16096, September 20, 1976, at 14.

Upon the Secretary's appeal to the Commission, the Commission concluded that the burden the citation imposed on petitioner was not excessive but fully in accordance with OSHA. Petitioner argued that the citation against it was invalid because (1) the evidence in the record did not establish that the failure to use a gas separator is a recognized hazard, and (2) petitioner lacked authority to install a gas separator at the drilling site. The Commission rejected the first contention by concluding that, liberally and properly construed, "the citation does not allege that the failure to use a gas separator is a recognized hazard" but alleges that petitioner failed to make its employees safe from the recognized hazards of fire and explosion caused by an accumulation of gas near a drilling rig. Secretary of Labor v. Baroid Division of NL Industries, Inc., OSHRC No. 16096, June 22, 1979, at 7-8. The Commission explained, "Use of a gas separator was merely one method of avoiding or minimizing the allegedly hazardous conditions." Id. at 7. Thus, the Commission ruled, in effect, (1) that the Secretary's citation could be sustained even if the Secretary had not established that the failure to use a gas separator is a recognized hazard, and (2) that the Secretary had shown the existence at the drilling rig of the recognized hazards of fire and explosion and accumulation of gas.

The Commission dismissed petitioner's second contention by finding that petitioner could have avoided the citation by insuring (apparently by persuasion) the installation of...

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