









Appeal and Cross-Appeal Dismissed; Petition for Writ of Mandamus Denied;
and Opinion filed February 24, 2004








Appeal and Cross-Appeal Dismissed; Petition for Writ
of Mandamus Denied; and Opinion filed February 24, 2004.
 
 
 
 
In The
 
Fourteenth Court of Appeals
_____________
 
NO. 14-03-00242-CV
____________
 
WASTE MANAGEMENT
OF TEXAS, INC.,
Appellant/Cross-Appellee
 
V.
 
JERRY L.
BLACKWELL, ANNIE M. BLACKWELL, E.W. BRADSHAW, III, DEAN SHAW, PATRICIA R. SHAW,
KEN E. CALVERT, THERESA ANN CALVERT, E.W. BRADSHAW, DEANNA BRADSHAW, AND JERRY
E. MCCULLOUGH,
Appellees/Cross-Appellants
 

 
On Appeal from the 212th
District Court
Galveston County, Texas
Trial Court Cause No. 01-CV-0422
 

 
No. 14-03-00386-CV
 
IN RE WASTE MANAGEMENT OF TEXAS,
INC.
 

 
O P I N I O N




This case involves an accelerated
interlocutory appeal, cross-appeal and mandamus concerning the application of
the Texas Environmental, Health, and Safety Audit Privilege Act to the production
of documents and deposition testimony relating to environmental audits.  For the reasons discussed below, we dismiss
the appeal and cross-appeal, and deny the writ of mandamus.
I.        BACKGROUND
FACTS
Appellees/cross-appellants/real parties in
interest, which will be collectively referred to as ABlackwell,@ live or own
property in the vicinity of Waste Management=s Coastal Plains
Recycling and Disposal Facility (ACoastal Plains@) in Galveston
County, Texas.  They sued
appellant/cross-appellee/relator Waste Management of Texas, Inc. (AWaste Management@) for nuisance,
trespass, negligence, and gross negligence, alleging that the expansion of
Coastal Plains substantially interferes with the use and enjoyment of their
property.




In connection with the suit, Blackwell
served requests for production on Waste Management seeking numerous documents,
including documents concerning (1) the measures or actions taken to control
odors emanating from Coastal Plains, and (2) testing, monitoring, or analysis
of the air in and around Coastal Plains. 
Blackwell also sought to question Waste Management employees about
environmental audits conducted by Waste Management since 1998.  Waste Management objected to this discovery,
and in response to Blackwell=s motion to
compel, asserted that, since 1998, three categories of audits were conducted at
Coastal Plains: (1) an audit pursuant to Waste Management=s Environmental
Compliance Program; (2) an audit to complete the Environmental Compliance
Representation, and (3) audits for compliance with 30 Texas Administrative Code
section 101.4.[1]
Waste Management asserted that these audits, and information known to its
employees about them, were privileged from discovery under the Texas
Environmental, Health, and Safety Audit Privilege Act (AAudit Privilege
Act@ or AAct@).  See Tex. Rev. Civ. Stat. art. 4447cc, '' 1B13.  Waste Management
supported its assertion of the privilege with the affidavits of three of its
employees, Charles Rivette, Robert Michael Derdeyn, and John Ohlemacher. 
After a hearing, the trial court ordered
that the Environmental Compliance Program and Environmental Compliance
Representation audits were privileged under the Audit Privilege Act, but held
that the 30 Texas Administrative Code section 101.4 audits Ado not fall within
the statutory privilege provided by the Act.@  The court also ordered Waste Management to
produce Ohlemacher to testify about Aany physical
events of noncompliance that he personally observed@ at Coastal
Plains, but further ordered that he could not be compelled to testify about the
audits pursuant to the Environmental Compliance Audit Program and the audits to
complete the Environmental Compliance Representation.  This appeal, cross-appeal, and petition for
writ of mandamus followed.
II.       INTERLOCUTORY
APPEAL OR MANDAMUS?
In its mandamus action, Waste Management
contends that the trial court abused its discretion in ordering the production
of the 30 Texas Administrative Code section 101.4 auditsCwhich we will
refer to as the Adaily audits@ for ease of
referenceCand the testimony of Ohlemacher.  The interlocutory appeal raises the same
issues.  In its cross-appeal, Blackwell
argues that the trial court erred in failing to require the production of the other
two categories of audits.  




Before we can address the merits of the parties= arguments, however, we must first
determine if we have jurisdiction to hear the interlocutory appeal.  Although the parties give different reasons,
both contend we have jurisdiction over the interlocutory appeal based on
section 7(e) of the Audit Privilege Act, but for different reasons.  Waste Management also represents that it filed
the mandamus in an abundance of caution in the event we find we have no
jurisdiction over its interlocutory appeal. 
If we determine we have jurisdiction over the interlocutory appeal, then
Waste Management is not entitled to mandamus relief.  If, however, we determine that we have no
jurisdiction over the interlocutory appeal, then we will consider Waste
Management=s mandamus action.
A.        Interlocutory
Appeals are Limited under the Audit Privilege Act to Determinations that
Disclosure is Required under Section 7 of the Act.
The Texas Legislature enacted the Audit
Privilege Act to encourage voluntary compliance with environmental and
occupational health and safety laws.  See Tex. Rev.
Civ. Stat. art. 4447cc, ' 2.  The Act provides
that an audit report and, subject to certain limited exceptions, any part of an
audit report is privileged and not admissible as evidence or subject to
discovery in a civil action or an administrative proceeding.  Id. ' 5(a), (b).
Under the Audit Privilege Act, interlocutory appeals are
limited to appeals of disclosures ordered by a court only when the disclosure
is ordered for one of the reasons enumerated in section 7 of the Act: AA determination of a court  under this section is subject to
interlocutory appeal to an appropriate appellate court.@ 
See Tex. Rev. Civ. Stat.
art. 4447cc, ' 7(e) (emphasis added).  Under section 7, a court may require
disclosure of a portion of an audit report if it determines, after an in-camera
review, that (1) the privilege is asserted for an improper purpose, (2) the
portion of the audit report is not subject to the privilege under section 8 of
the Act, or (3) the portion of the audit report shows evidence of noncompliance
with an environmental or health and safety law and appropriate efforts to
achieve compliance with the law were not promptly initiated and pursued with
reasonable diligence after discovery of noncompliance.  Id. ' 7(a)(1)B(3). 
The party seeking disclosure under this section has the burden of
proving that the documents are subject to disclosure under subsections (1),
(2), or (3) apply.  Id. ' 7(b).
B.        Interlocutory
Appeal is Not Available to Either Waste Management or Blackwell because there is No Evidence the
Trial Court Ordered the Daily Audits Disclosed under Section 7.




There is no evidence or argument that sections 7(a)(1) or
7(a)(3) apply; therefore, we have jurisdiction over the interlocutory appeal
only if the trial court determined that disclosure of the audits was required
under section 7(a)(2)Cthat is, if the court determined that the audits were not
subject to the privilege under section 8 of the Act.  Section 8 provides that the privilege does
not apply to any of the following: (1) a document, communication, datum, or
report or other information required by a regulatory agency to be collected,
developed, maintained, or reported under a federal or state environmental or
health and safety law; (2) information obtained by observation, sampling, or
monitoring by a regulatory agency; or (3) information obtained from a source
not involved in the preparation of the environmental or health and safety audit
report.  See id. ' 8(a)(1)B(3).




In its order, the trial court did not state the basis for its
rulings, so we must look to the record to see if it supports the parties= claim that the trial court ruled as
it did because it concluded that disclosure was required under section 8 of the
Act.  Each party suggests a different
reason why the court found the documents produceable under sections 7 and
8.  Blackwell argues section 8(a)(1)
applies, because Waste Management is required to compile the information in the
30 Texas Administrative Code section 101.4 audits under 30 Texas Administrative
Code sections 330.114[2]
and 330.133.[3]  However, these provisions, on their face, do
not require that Waste Management compile the information at issue here.  Moreover, Blackwell did not argue below that
section 8(a)(1) applied; and while it is possible the trial court could have
determined on its own that section 8(a)(1) applied, the judge=s discussion of the issue does not
indicate that this was ever considered and no evidence supports applying
section 8(a)(1).  In light of these
factors, it does not appear that the trial court determined that section
8(a)(1) of the Act required the production of the documents.
Waste Management, on the other hand, speculates that the
trial court may have determined that the daily audits were not privileged under
section 8(a)(3), based on the court=s comment at the hearing that the
daily audits did not fall within the statute Abecause that=s just every day the same guy going
out there and seeing what=s going on there.@ 
Section 8(a)(3) provides that the privilege does not apply to Ainformation obtained from a source
not involved in the preparation of the audit report.@ 
See id. ' 8(a)(3).  There is one
problem with this position: the uncontroverted affidavit of Waste Management
employee Rivette states that each of the audits at issue are performed by Waste
Management employees, who Ado not rely on any information obtained by . . . another source not involved in
the preparation of the audits.@  And otherwise, there
is no evidence in the record to support such a finding.  Thus, we also find it highly unlikely that
the trial court could not have determined that the daily audits were not
privileged under section 8(a)(3) of the Act.
In summary, we conclude that the court did
not rule as it did on the basis of either section 8(a)(1) or 8(a)(3), and that
it also could not have ordered the documents produced under section 8(a)(2)Cinformation
obtained by . . . a regulatory agencyCbecause,
unquestionably, the daily audits were performed by a Waste Management employee.
 Indeed, Blackwell, as the party seeking
disclosure, had the burden to prove that section 7(a)(2) applied, but made no
argument and presented no evidence below to support that burden.  See id. ' 7(b).  




For all these reasons, we find that the
trial court did not determine that the daily audits were required to be
disclosed by section 7(a)(1), (2), or (3). 
As a result, we do not have jurisdiction to consider Waste Management=s interlocutory
appeal under section 7(e) of the Audit Privilege Act.  See id. ' 7(e).  Additionally, we have no jurisdiction to consider Blackwell=s cross-appeal, which seeks
interlocutory review of the trial court=s determination that Waste Management=s first two categories of audits were
privileged.  All section 7 determinations
are Adeterminations by the trial court
that the documents sought to be protected are not privileged@ under the Act.  See id. ' 7(a) (emphasis
added).  Thus, when section 7(e) states
that Aa determination of
a court under this section is subject to interlocutory appeal . . .@ it is referring
to the determination that documents must be disclosed under section 7and
section 8, not a determination that documents are not subject to disclosure and
were not ordered produced.[4]  See id. '' 7(e), 8(a).
We dismiss the interlocutory appeal and
cross-appeal.
III.      WASTE
MANAGEMENT IS NOT ENTITLED TO MANDAMUS RELIEF
We now turn to the mandamus.  Waste Management contends its affidavits
established that the daily audits it conducts to ensure compliance with 30
Texas Administrative Code section 101.4 and John Ohlemacher=s knowledge about
the environmental audits fall within the scope of the Audit Privilege Act and
are therefore not subject to discovery. 
It points out that Blackwell produced no controverting proof or any
evidence that any exception to the privilege applies to either the audits or
Ohlemacher=s testimony.  
Mandamus will lie to correct a discovery
order if (1) the discovery order constitutes a clear abuse of discretion and
(2) the aggrieved party has no adequate remedy by appeal.  Walker v. Packer, 827 S.W.2d 833, 840B44 (Tex.
1992).  An erroneous order requiring the
production of privileged information or documents leaves the party claiming
privilege without an adequate remedy by appeal and thus may be corrected by
mandamus.  Id. at 843.  We have held that interlocutory appeal is not
available to the parties under the Audit Privilege Act; therefore, if the trial
court abused its discretion in ordering the production of privileged
information and documents, then Waste Management has no adequate remedy by
appeal, and mandamus relief is appropriate.




A trial court clearly abuses its
discretion if A>it reaches a
decision so arbitrary and unreasonable as to amount to a clear and prejudicial
error of law.=@  Walker, 827 S.W.2d at 839 (quoting Johnson
v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex. 1985)).  In considering whether an abuse of discretion
occurred, we must determine if the party asserting the privilege has discharged
its burden of proof.  In re WHMC,
996 S.W.2d 409, 411 (Tex. App.CHouston [14th
Dist.] 1999, orig. proceeding).  The
party claiming privilege bears the burden of producing proof to support its
contention that the documents in question qualify for the privilege claimed as
a matter of law.  Id.; see also
Tex.
Rev. Civ. Stat. art.
4447cc, ' 5(f) (stating that a party asserting the
privilege provided in the Audit Privilege Act has the burden of establishing
the applicability of the privilege).  
A detailed affidavit that tracks the
statutory language and is descriptive enough to be persuasive, but not so
descriptive as to disclose the privileged information, is sufficient to raise
and prove privilege.  In re WHMC,
996 S.W.2d at 413.  Here, however, we
find that the affidavits submitted do not sufficiently raise and prove the
privilege available under the Audit Privilege Act.  Waste Management=s counsel agreed
that the daily audits
consist solely of field notes and records of observations.  We cannot say that, on this record, the trial
court abused its discretion in determining that the daily audits do not qualify
as audit reports subject to the privilege provided by the Act.  See Tex. Rev. Civ. Stat. art. 4447cc, ' 4 (defining and describing contents of
audit report).  We also hold the trial
court did not abuse its discretion in ordering the limited testimony of Waste
Management employee Ohlemacher.    Therefore,
we deny Waste Management=s conditional petition for writ of
mandamus.
 
 
 
/s/      Wanda McKee Fowler
Justice
 
 
Judgment
rendered and Opinion filed February 24, 2004.
Panel
consists of Justices Yates, Hudson, and Fowler.




[1]  Section 101.4
of 30 Texas Administrative Code addresses nuisances as follows:
No person shall discharge from any source whatsoever
one or more air contaminants or combinations there, in such concentrations and
of such duration as are or may tend to be injurious to or to adversely affect
human health or welfare, animal life, vegetation, or property, or as to
interfere with the normal use and enjoyment of animal life, vegetation, or
property.
30 Tex. Admin.
Code ' 101.4.


[2]  Section
330.114 of 30 Texas Administrative Code is entitled ASite Operating Plan@ and
requires that a municipal solid waste landfill facility maintain a site
operating plan (ASOP@) that provides operating procedures for the site
management and the site operating personnel in sufficient detail to enable them
to conduct the day‑to‑day operations of the facility.  See 30 Tex. Admin. Code '
330.114.  This section specifies certain
minimum requirements for the types of information to be contained in an SOP,
including Aa detailed description of the procedures that the
operating personnel shall follow concerning the operational requirements of
this subchapter,@ and Aother instructions as necessary to ensure that
operating personnel comply with any other local, state, or federal regulation
for the operational standards of the type of work involved at the facility.@  See id.
' 330.114(3), (4).


[3]  Section
330.133 of 30 Texas Administrative Code specifies the requirements for various
types of landfill cover, including daily cover, intermediate cover, and
alternative material daily cover.  See
30 Tex. Admin. Code ' 330.133(a), (b), & (c).  When alternative material daily cover (AADC@) is allowed, an ADC operating plan must be included
in the site development plan that includes, among other things, Aits effect on vectors, fires, odors, and windblown
litter and waste.@  See id.
' 130.133(c)(1)(B).


[4]  A party is not
necessarily stymied at this point, because, if the denial of discovery
qualifies for mandamus relief, the party could still seek a mandamus against
the judge.  See Walker v. Packer, 827 S.W.2d 833, 843B44 (Tex. 1992). 


