Marshall v. Cities Service Oil Co., 76-1927

• Decision Date: 05 June 1978
• Docket Number: No. 76-1927,76-1927
• Citation: 577 F.2d 126
• Parties: 6 O.S.H. Cas.(BNA) 1631, 1978 O.S.H.D. (CCH) P 22,791 Ray MARSHALL, * Secretary of Labor, Petitioner, v. CITIES SERVICE OIL CO. and Occupational Safety and Health Review Commission, Respondents.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 126

577 F.2d 126

6 O.S.H. Cas.(BNA) 1631, 1978 O.S.H.D. (CCH) P 22,791

Ray MARSHALL, ^* Secretary of Labor, Petitioner, v. CITIES SERVICE OIL CO. and Occupational Safety and Health

Review Commission, Respondents.

No. 76-1927.

United States Court of Appeals, Tenth Circuit.

Submitted March 14, 1978.

Decided June 5, 1978.

Nancy L. Southard, U. S. Dept. of Labor, Washington, D. C. (Carin A. Clauss, Sol. of Labor, Alfred G. Albert, Acting Sol. of Labor, Benjamin W. Mintz, Associate Sol., Washington, D. C., for Occupational Safety and Health, Michael H. Levin and Allen H. Feldman, Washington, D. C., Counsel for App. Litigation, on briefs), for petitioner.

Robert R. Reis, Tulsa, Okl. (Russell H. Smith, Tulsa, Okl., on brief), for respondent Cities Service Oil Co.

Before HOLLOWAY, BARRETT and McKAY, Circuit Judges.

BARRETT, Circuit Judge.

The Secretary of Labor (Secretary) petitions to review and set aside an order of the Occupational Safety and Health Review Commission (Commission). The petition for review does not involve factual issues. The challenge posed relates to the propriety of the legal conclusions reached by the Commission in arriving at its ruling that Cities Service Oil Co. (Cities) had not violated the general duty clause, 29 U.S.C.A. § 654(a)(1) ¹ of the Occupational Safety and Health Act of 1970 (OSHA), 29 U.S.C.A. § 651, et seq. A review of the pertinent and undisputed facts should facilitate our review.

Cities owns producing oil and gas leases near Holyrood, Kansas, including an area called the Stoltenberg lease, from which is produced sour crude oil (oil containing detectable amounts of hydrogen sulfide). Within the leasehold field were a number of free water knockout tanks utilized by Cities to separate water and crude oil in order to render the oil deliverable to a pipeline. The tanks contain sacrificial anodes, consisting of blocks of magnesium which neutralize impurities in the crude oil thereby preventing corrosion of the tanks. From time to time, Cities had the tanks drained and cleaned and the anodes replaced. This work was done by independent contractors.

On August 16, 1973, the day of the alleged violation, Fry's Tank Service, Inc. (Fry's), an independent contractor, sent its employee, Jim Thach (Thach), to clean one of Cities' tanks and to replace the anodes therein. Thach had been employed by Fry's since 1971. Prior to 1971, Thach had worked for some 18 to 20 years as an independent contractor in the tank cleaning business. When Cities had contracted with Fry's to clean the tank and replace the anodes, Cities agreed to supply personnel to assist Fry's. To this end four Cities' employees, Harold Holmes (Holmes), Delbert Hendricks (Hendricks), Clyde Rathbun (Rathbun) and Dale Wittich (Wittich), were at the tank jobsite to assist Thach. Holmes, Hendricks and Rathbun each had over 25 years experience in oil field work. Rathbun was a personal friend of Thach.

After the tank was cleaned a ladder was placed in it and Thach descended the ladder stopping midway to accept an anode handed to him by one of Cities' employees. After receiving the anode, Thach completed his descent. He then placed the anode on the bottom of the tank, started back up the ladder and collapsed. Holmes entered the tank. He was able to lift Thach out of the tank to the reach of the other Cities' employees after which he also collapsed inside the tank. Thereafter, while Rathbun revived Thach and called for help, Hendricks and Wittich entered the tank in order to remove Holmes therefrom. Their efforts were to no avail, inasmuch as they, too, collapsed inside the tank. Thach then reentered the tank in an attempt to rescue Holmes, Hendricks and Wittich, but he was overcome a second time. When Rathbun returned after calling for help on a radio in his truck, he found the four men lying dead inside the tank. It was later determined that they had died of hydrogen sulfide inhalation.

Prior to the accident Cities had, repeatedly, orally instructed its employees not to enter the tanks on the Stoltenberg lease. Fry's had also instructed its employees not to enter such tanks. However, it is uncontested that at the time of the accident Cities was aware that anode replacement in this particular tank did require entry.

On August 24, 1973, eight days after the tragedy, a citation for serious violation was issued to both Cities and Fry's for failure to provide a place of employment free from recognized hazards. Serious violations arise under OSHA whenever "there is a substantial probability that death or serious physical harm could result from a condition which exists unless the employer did not, and could not with the exercise of reasonable diligence, know of the presence of the violation." As a result of receiving a citation for serious violation, Cities was fined $1,000 which was reduced by 20% for good faith and 20% because Cities had no previous inspection history by the Kansas City OSHA office. Fry's was also fined $1,000 which was reduced 20% for good faith, 20% for not having a previous inspection history, and 10% for size since Fry's had fewer than twenty employees.

The citations were administratively reviewed in the course of a two-day hearing before an administrative law judge, who entered an order upholding the citations. In so ruling, the administrative law judge noted, inter alia :

. . . hydrogen sulfide is a recognized hazardous material; Cities' argument that it had no prior knowledge of hazardous concentrations of hydrogen sulfide at the Stoltenberg lease is not acceptable; Cities health coordinator had never been to the lease to check for hydrogen-sulfide content; sour crude contains detectable amounts of hydrogen sulfide; on the date of the accident there was a recognized hazard to the employees working on the tank; Cities oral instruction to its employees not to enter the tanks did not constitute reasonable diligence on its part; Cities' employees were not warned of the dangers, including hydrogen sulfide, of entering the tank and they instinctively attempted to save Thach and each other; Cities' argument that it could not foresee that its employees would enter the tank after being instructed not to do so is not acceptable; it was entirely foreseeable that the employees might attempt the rescue of a fellow employee while working on the tank; Cities and Fry's were participating directly together even though Fry's was hired as an independent contractor; the only issue is whether Cities and Fry's furnished a place of employment free from recognized hazards; Cities should have furnished their employees with testing equipment, masks and harness equipment; and that Fry's should not have allowed Thach to work on a job it was not familiar with.

The administrative law judge thereafter incorporated his observations into detailed findings and conclusions in the order upholding the citations.

On appeal, the Commission affirmed the citation and notification of proposed penalty issued to Fry's and vacated the order upholding the citation relating to Cities. The majority opinion of the Commission stated, inter alia:

. . . The tank in question had been cleaned about every two years; the tank had been cleaned 5 or 6 times since being placed in service and was cleaned each time by Thach; when Thach was self-employed he had done other work for Cities which required entry into a "stock tank" and that he always did so while wearing a safety belt with someone outside holding a safety line attached to the belt; on the day of the accident Cities personnel worked with Thach in preparing the tank; both Fry's and Cities were aware of the hazards of hydrogen sulfide; because it knew of the hazards of entering a tank Cities instructed its employees not to enter the tanks on the Stoltenberg lease; on locations where Cities employees were required to enter confined spaces they were required to test the atmosphere prior to entry, use breathing equipment and safety lines where necessary; both Fry's and Cities recognized the hazards of hydrogen sulfide and there were readily available feasible means to protect against the hazard; Fry's violation must be affirmed, since all employees, including experienced personnel like Thach, must receive supervision concerning the hazards inherent in their employment; the gravamen of the charge against Cities is that it should have had rescue equipment available at the site so a rescue could have been effectuated without endangering its employees; although Cities was charged with failing to furnish rescue equipment it was not the party who committed the violation (entering the tank) which led to the necessity of the rescue attempt; a necessary element of a general duty clause violation is that the employer must be able to foresee the hazard to its employees; the dispositive question is whether Cities could reasonably foresee that Fry's would perform the work in an unsafe manner in violation of the Act necessitating a rescue attempt; the record does not establish that Cities "should reasonably have foreseen the violation committed by Fry's"; Cities knew the tank was being cleaned by an experienced person who, in some of the work performed for Cities, had used protective equipment; that had Thach used safety equipment on the day of the accident, it would have negated the need of Cities personnel to enter the tank in a rescue attempt; and that Cities could not foresee that Thach would work in such a manner that its employees would be endangered in attempting to rescue him.

A concurring Commission opinion ² observed inter alia, that:

Thach's death was the result of his disobedience of the express orders of Fry's president; the Act requires that "each employee shall comply with . . . orders issued pursuant" to the Act (29 U.S.C.A. § 654(b)); employers are not to be held liable where a violation results from an employee's wilful misconduct in disobeying an employer's direct order, particularly when...