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Environmental liability may be on the horizon for SD ranchers and farmers

This is not my grandfather’s farming operation for sure.  Today’s farmer and rancher ‘enjoys’ certain legal protections in their operations. Laws are on the books that protect an operator from liability based on the act of farming.  South Dakota and other states have some version of a “right to farm” statute. But what is a right to farm law and what does it mean to the average farmer?

In principle these statutes give farmers the basic “right to farm” without the worry of a lawsuit brought by a neighbor who may be bothered by the activity. Let us take an example:

A new neighbor moves in next to a farmer’s hog operation that he has operated for a number of years. The neighbor complains about the smell that wafts over from the farm to the neighbor’s property. The neighbor sues the farmer claiming that the hog farm is a nuisance. What happens?

Under the right to farm act the neighbor’s case would be dismissed. Right to farm statutes provide liability protection for agricultural operations from nuisance lawsuits. Plainly, a person, as a farmer or rancher, has the “right to farm.”

South Dakota’s “Right to Farm” statute is typical of the approach other states have taken. The statute (SDCL 21-10-25.2) provides that an agricultural operation cannot be deemed a nuisance so long as the facility has been in operation for more than a year and it was not a nuisance at the time the operation began. Additionally, agricultural operations have the right to reasonably expand (either by way of acres or animals) without losing the protection against general nuisance type suits.

The protections South Dakota farmers receive under the “Right to Farm” statute are not absolute. The agricultural operation must not engage in negligent or improper action that lead to the nuisance, or the operation would lose its protections. Additionally, if the agricultural operation is within a municipality, it does not receive protection under the statute. Nevertheless actions that result in water pollution or land overflow do not receive the any protection.

Proper legal management planning for any farm or ranch operation is one way to add a shield to environmental liability issues. In addition where the protection of right to farm statutes ends, insurance policies may pick up the slack. However, there could be trouble in the water for farmers who rely upon a general farm insurance policy. A Wisconsin Supreme Court case has the potential to significantly alter the liability landscape for farmers all around the country. According to the holding in Wilson Mutual v. Falk, bacteria from manure can now be considered a pollutant with regard to how it is classified in insurance policies. Therefore, damage caused by bacteria that comes from manure is excluded from coverage in many ‘standard form’ farm insurance policies. As problematic as this is to farmers’ liability, it is not a dramatic departure from existing case law. Indeed, many states have already classified bacteria as a pollutant. In Wilson Mutual v. Falk, the court took the next logical step and claimed that bacteria that was contained within manure was in fact classified as a pollutant.

Potentially, it could mean that the protection that farmers have come to expect from South Dakota’s Right to Farm statute and the insurance they purchase do not adequately protect them. Let us take another example:

A farmer in South Dakota has standard farm insurance. He liberally and often spreads manure over his field to fertilize his crops. A series of heavy rains early in the season cause the ground to be heavily saturated. Due to the sheer amount of water, the bacteria in the manure leaches into a ground well, thus contaminating it.

If the Wisconsin approach is adopted, this means that the farmer is liable for the damages that result from the contamination. First, the South Dakota right to farm statute specifically excludes pollution from coverage. Second, if bacteria coming from manure is classified as a pollutant, then the damage cause by it is excluded form typical farm insurance policies.

The question becomes: how can a South Dakota farmer and rancher make sure he or she is protected?  Again, I hear the grumbling but good business planning, that includes good business legal planning is an ounce of protection which is cheaper than a pound of cure. Another possibility is to purchase an insurance policy that protects against this potential liability. In Wisconsin, policies have already begun to spring up. The market is responding to this shift in liability.

South Dakota farmers should be aware of the potential liability they face. The South Dakota Right to Farm statute certainly protects farmers from nuisance claims, but that is as far as the protection affords. Insurance policies have sought to fill in the gap. To be safe, farmers should seek out advice from an attorney to make sure they are completely protected against whatever unanticipated issues await. This is not my grandfather’s operation. But as Thoreau said, never look back unless you plan on going that way.

David Ganje of Ganje Law Offices practices natural resources, environmental, and commercial law in North Dakota and South Dakota.