“Liquid Gold” Manure Not a “Pollutant” Subject to Insurance Coverage Exclusion

December 31, 2013 | Kristine Tidgren

Note: This opinion has been reversed by the Wisconsin Supreme Court. See our new article here.

Wilson Mutual Insurance Co. v. Falk, No. 2013AP691, 2013 Wisc. App. LEXIS 1031 (Wisc. App., Dec. 11, 2013)

The Wisconsin Court of Appeals has ruled that manure spread by a farmer as fertilizer onto his fields was not a “pollutant” subject to exclusion from coverage under his farm owners’ insurance policy.

The farmer used manure from his dairy cows as fertilizer for his fields pursuant to a nutrient management plan prepared by a certified crop agronomist and approved by the Washington County Land and Water Conservation Division. Several months later, the Wisconsin Department of Natural Resources notified the farmer that the manure had polluted a local aquifer and contaminated neighboring water wells. The well owners demanded compensation, and the farmer sought coverage from his insurer under his farm owners’ policy.

The insurer sought a judicial declaration that it had no duty to defend or indemnify the farmer because, it argued, manure was a “pollutant” subject to exclusion under the policy. Specifically the policy excluded from coverage any losses resulting from the “discharge, dispersal, seepage, migration, release, or escape of ‘pollutants’ into or upon land, water, or air.” “Pollutant” was defined by the policy as “any solid, liquid, gaseous…irritant or contaminant, including…waste.”

The circuit court agreed with the insurer, finding that the pollution exclusion in the policy applied to exclude coverage for damage caused by the application of manure because “a reasonable person in the position of the [farmer] would understand cow manure to be a waste.”

In reversing the circuit court’s ruling, the court of appeals found that while an average person may consider cow manure to be “waste,” a farmer sees manure as “liquid gold.” Manure in the hands of a farmer is not a waste product, but a natural fertilizer. Thus, a reasonable farmer would not consider manure to be a “pollutant,” an “irritant,” a “contaminant,” or “waste.” Rather, the court found, it is an everyday, expected substance on a farm that is not rendered a pollutant under an insurance policy merely because it may become harmful in abnormally high concentrations or under unusual circumstances.

The court also noted that the insurer had expressly covered the farmer’s manure tank, manure pump, manure spreaders, and manure tankers. Consequently, the court found, the insurer could not seriously argue that paying claims related to the farmer’s manure spreading was a risk it did not contemplate.

Wilson Mutual is a welcome decision for farmers, much like the recent Illinois opinion that declared that hog odor is not “traditional environmental pollution” subject to the “pollution exclusion” of an umbrella liability policy. See our related article regarding County Mutual Insurance Co. v. Hilltop View, No. 4-13-0124, 2013 Ill. App. (4th) 130124, 2013 Ill. App. LEXIS 788 (Ill. Ct. App., Nov. 13, 2013).