May 19, 2014 – The Wisconsin Supreme Court recently accepted review of two cases to determine whether manure and septage used as farm fertilizers are “pollutants” for insurance purposes.
In one case, neighboring landowners sued a dairy farmer, arguing that the dairy farmer’s use of manure contaminated nearby water wells. The farmers, Robert and Jane Falk, had a farm liability insurance policy with Wilson Mutual Insurance Company.
The insurance policy contained a “pollution exclusion clause.” Specifically, Wilson Mutual said that the farm policy contained an exclusion for damage caused by “pollutants,” including “waste,” and the manure that polluted the water fell into this category. The Washington County Circuit Court agreed with Wilson Mutual.
In December 2013, however, a three-judge panel for the District II Wisconsin Court of Appeals reversed, siding with the Falks. The appeals court concluded that manure, in the case of dairy farmers fertilizing their fields, was considered a nutrient not a pollutant.
“Manure is a matter of perspective; while an average person may consider cow manure to be a ‘waste,’ a farmer sees manure as liquid gold,” Judge Paul Reilly had explained.
The Wisconsin Supreme Court is expected to determine whether fertilizer in the form of cow manure or septage containing human excrement is considered a “pollutant” for insurance purposes and thus not covered if the manure causes damage.
The court will also hear similar case to determine whether “septage” containing water, human urine and feces, and chemicals was a pollutant for insurance purposes.
In this case, the Kuettels farming family, which also owed a septic business, agreed to spread septage as farm fertilizer for Tina and Frederick Preisler, who owned a nearby farm. In 2008, some of the Preisler’s cattle began dying at an uncharacteristic rate.
The Preisler’s sued the Kuettels and another business that the Kuettels hired to spread the septage, arguing the improper spreading caused increased nitrates in the groundwater and perpetuated the livestock deaths. Numerous insurers were involved.
The policies at issue had “pollution exclusion clauses.” The Outagamie County Circuit Court trial ruled that septage was waste and the pollution exclusion clauses applied. An appeals court, affirmed the trial court’s ruling, concluding that “septage” is a pollutant.
Decisions by the Wisconsin Supreme Court are expected to resolve the apparent conflict in appeals court decisions and whether there’s a distinction between “cow manure” and “septage” containing human excrement for insurance purposes.
A “Crap” Shoot: Navigating Pollution Exclusion Clauses in Wisconsin – WisBar InsideTrack, Feb. 19, 2014