April 26, 2000             No: 00-47

Contact: Tim Bundy        Phone:  907.269.4957

Department of Labor and Workforce Development

News Release

AK SUPREME COURT RULES AGAINST HALLIBURTON
FOR SAFETY VIOLATIONS

The Alaska Supreme Court on April 7 upheld the Occupational Safety and Health Review Board's decision that Halliburton Energy Services Company violated Occupational Safety and Health Administration (OSHA) standards regarding the manufacture of explosive devices at its Kenai plant. The Court ruled that Halliburton had to comply with process safety management (PSM) regulations when it assembled perforation guns that are later used to perforate oil well casings. The Court asserted that a large and sophisticated company involved in hazardous activity bears a substantial burden of inquiry concerning the understanding of OSHA standards.

"Establishing what is and what is not considered the manufacturing of explosives is an important decision and could have national ramifications," said Commissioner of Labor and Workforce Development (Labor) Ed Flanagan. "This decision effectively serves notice that oil field service companies must evaluate their compliance with PSM standards, establish detailed procedures for handling explosives, and address training for each individual employee's involvement with explosive materials."

The decision brings to a close a case that began in April 1994 when an explosion at Halliburton's Kenai plant killed a 22-year old part-time employee. Kenai resident Craig Bowen was assembling perforation guns when he accidentally triggered the fatal explosion, killing himself and seriously injuring four other workers.

OSHA regulations require that manufacturers of explosives or explosive devices comply with PSM standards. Labor's Division of Occupational Safety and Health concluded that Halliburton did not have proper safety measures in place when the explosion occurred and subsequently cited the company for failure to meet PSM standards. Halliburton contested the violations and argued to the board for dismissal asserting that when it assembled perforation guns it was not manufacturing explosive devices. Halliburton also contended that it was exempt from having to comply with PSM because it was an oil well servicing company and oil well servicing operations are exempt. The board disagreed. The case eventually reached the Supreme Court that ruled Halliburton was not performing oil well servicing operations when it manufactured the explosive device--a perforation gun.

"From a workers' safety standpoint, this decision has already had a positive impact on the industry," Flanagan said. "But it is tragic that it took the death of a young man, and the serious injuries of four others, to bring needed change."

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