Rules and Regs: Pollutant Exclusion Clause Affects Liability Insurance in Wisconsin Court Cases

In this month’s regulations update, a Michigan sunset provision on septage disposal is removed, and Wisconsin septic service professionals end up in court.
Rules and Regs: Pollutant Exclusion Clause Affects Liability Insurance in Wisconsin Court Cases

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Septic service professionals in Wisconsin may be facing a bit of a quandary concerning their liability insurance. In two December decisions, the Wisconsin Supreme Court ruled that septage and manure may be considered pollutants. When wastes are identified as pollutants, the court determined, they are subject to the pollutant exclusion clause of a liability insurance policy – even if that policy was purchased to cover a company in the business of handling septage or manure.

One case involved a septic service business that had a permit to apply septage as a fertilizer on their neighbor’s farmland. The neighbor’s well became contaminated by runoff, killing some cattle, and they sued the septic business’ insurers. The Supreme Court agreed with lower courts that the septage qualified as a pollutant, so the pollution exclusion applied and the insurance company did not have to cover the damage.

Chief Justice Shirley Abrahamson was the only dissenter, questioning why such a company would purchase insurance in the first case. “I conclude that a reasonable person … in the business of hauling, storing, and disposing of septage, would not consider septage a pollutant under … general liability policies they purchased to cover liability for damage caused by their septic business operations.”

In the manure case, the Supreme Court overturned a lower court and ruled that the manure became a pollutant when it entered wells on property adjacent to a farm field where it was spread as a fertilizer. Abrahamson also dissented in that case for similar reasons.


Exception to Michigan septage law remains in effect

An exception to Michigan’s septage waste law will remain in effect now that a sunset provision of the regulation has been removed. Most septage haulers are required to dispose of their waste at a receiving facility in their area. That provision does not apply to those who own a septage storage facility of at least 50,000 gallons if it existed prior to a septage disposal facility in their area. Those haulers can continue to do land application, an exemption that was scheduled to end in 2025. The Legislature’s action removes that sunset provision and made the exemption permanent.

The bill also limits the ability of local governments to impose stricter septage requirements than those in state law. Under Michigan law, septage receiving facilities must have a designated service territory and some communities have made it mandatory that septage pumped in that area be taken to their receiving facility. Such mandates are now allowed only for existing receiving stations and only until their construction debt is paid off.


Maryland homeowner, contractor reroute failed septic system

The owner of a rental home who bypassed a failed septic system has been fined and a contractor who did the work is being charged. The Laurel, Delaware, woman was contacted by tenants who rented the Wicomico County, Maryland, home due to strong odors and sewage backing up into the home. The woman hired a contractor to install a pipe that discharged wastewater from the septic system into a creek in a wooded area of the backyard. 

The homeowner pleaded guilty to misdemeanors of water pollution and improper alteration of a sewage system and was put on probation for three years, fined $12,000 to be paid to the Maryland Clean Water Fund, and ordered to perform 75 hours of community service. An additional fine of $23,000 was suspended by the judge. The contractor has been charged with two counts of water pollution and 11 counts of installing or altering a sewage system without a permit.



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