(FORTUNE Magazine) – BY DAY his ears ring from the roar of a giant blast furnace. By night he rocks to the blaring beat of heavy-metal music. Finally the worker's hearing fails. Is his employer responsible? In a startling alliance, the AFL-CIO and the Reagan Administration say yes. They have asked the U.S. court of appeals in Richmond to reconsider a precedent-setting decision that said no. If the decision stands, the reverberations could rock the foundations on which the Occupational Safety and Health Administration's regulations rest. The battle is over the so-called hearing conservation amendment to OSHA's noise standard. Adopted in 1971, that standard says that it's okay to expose workers to an average sound level of up to 90 decibels spread over an eight- hour day. A jackhammer's noise is about 90 decibels. Companies can comply with the standard by adjusting work schedules and installing controls to lower the average noise levels. Or if that isn't feasible, employers can provide workers with protective equipment like earplugs or earmuffs. In 1983, after years of clamoring by labor for a tougher standard, OSHA came up with a modest amendment requiring companies to administer regular hearing tests to employees exposed to noise levels over 85 decibels--roughly equivalent to the noise produced by a high-speed printing press--and to provide them with protective equipment. Most industries accepted the amendment, relieved at escaping more onerous and expensive safety requirements. But the forging and tree-cutting industries sued, and the appeals court ruled in November that OSHA's standards failed to distinguish between hazards in and outside the workplace. Cautioned the court: ''Airplanes, hunting rifles, loud music, and a myriad of other sources produce noise potentially as damaging as any at the workplace. Yet the amendment makes no distinction.'' In seeking a rehearing, the agency argues that when workers in extremely noisy jobs have lost their hearing, it is rational to presume that the loss was caused on the job. Deciding whether a hearing loss was caused by noise at work or noise elsewhere, the regulators contend, is difficult, if not impossible. Forcing OSHA to decide which noise caused the damage, they say, would severely handicap the agency's ability to protect workers at a reasonable cost to business--a primary goal of the Reagan Administration's OSHA policy. OSHA also fears that the court of appeals' reasoning might be extended to other hazards that workers might encounter off the job as well as on. That might undermine OSHA's power to regulate, say, the lead or formaldehyde industries. Lead is present in gasoline, formaldehyde in nail polish and disinfectants. Both lead and formaldehyde can be hazardous. Worries an OSHA lawyer: ''We'd really be in trouble.''