Cow manure odors barred by Pollution Exclusion in Wisconsin, but Illinois hog manure odors covered.

An Illinois Appellate Court found that the relevant policy’s pollution exclusion did not preclude coverage for nuisance and negligence claims asserting the release of “foul and obnoxious odors” caused by the operation of a hog farm and the land application of manure from the hog farm on adjacent crop fields. The insurer had refused to defend based on a standard form pollution exclusion in an umbrella liability policy. Relying on the Illinois Supreme Court’s ruling in  American States Insurance Co. v. Koloms, 177 Ill. 2d 473, 687 N.E.2d 72 (Ill. 1997), which held that the pollution exclusion only applied to “traditional environmental pollution,” the court found that hog odor does not fit that classification. The court reasoned that the case did not involve “non-naturally occurring chemicals” and farms are generally considered a source of food and not a source of pollution; although the court stated that the result might have been different if the allegations were that a farmer had dumped manure into a creek. The court ordered the insurer to defend the policyholder under a reservation of rights or to continue its declaratory action and pursue other theories. Country Mutual Insurance Company v. Hilltop View, et al., No. 4-13-0124,2013 (Ill. App. Ct. November 13, 2013).

A Wisconsin Appellate Court found that the relevant policies’ pollution exclusions barred a claim involving “septage,” which is a fertilizer mixture of water, urine and feces. A dairy farm alleged that the policyholder committed nuisance and trespass by its over-application of septage that resulted in contaminated well water and death to livestock that drank the well water. The court found that septage was “unambiguously a pollutant,” which was defined in the policies as any solid, liquid, gaseous or thermal irritant or contaminant, including chemicals and waste. In support of its finding, the court said these materials are widely considered undesirable because they cause impurity and uncleanliness, despite some beneficial use, and noted that storage and disposal of septage was closely regulated by the state. The court rejected the policyholder’s argument that the exclusion should not apply because the plaintiffs agreed to have the septage applied to its property, reasoning that the policies do not speak of intent and even if they did, the plaintiff did not consent to the quantity of the septage applied. The court also considered a “reasonable expectations” test, but rejected the application in this case, finding that although the individual substances comprising septage are common, the combination is not an ordinary substance, and in fact, it is commonly understood to be harmful. Preisler v. Kuettel’s Septic Serv. LLC and Preisler v. Chartis Specialty Ins. Co., No. 2012AP2521 (Wis. Ct. App. Jan. 14, 2014).

This case seems to have interpreted the meaning of “pollutant” fairly broadly. The policyholder’s argument that the claimants permitted the use of the product on their land  thus indicating it was not a “pollutant” – an argument the court explicitly rejected – appeared to have some merit, especially when ambiguities are resolved in the favor of the policyholder.  Anything that is over-used can cause harm – such as drinking too much water – yet no one would argue that water is a “pollutant.”  Thus, this case seems to be a broad reading of the exclusion in favor of the insurer.