The debate over the applicability of the absolute pollution exclusion is as divisive as the designated hitter. If you are reading this then you are probably familiar with the two sides. But let me lay them out here nonetheless, for those who are not and because it is a necessary set up to get to the purpose of this article.

Although adoption of the absolute pollution exclusion in 1986 was supposed to end the split in the states that had surrounded the “sudden and accidental” pollution exclusion, this proved not to be the case. The basic divide is one of whether the pollution exclusion clause is interpreted in a highly textual, broad, literal manner to apply to liability arising out of or related to the discharge of any hazardous substance (the pro-insurer position) or whether the exclusion is construed in a more functional manner focusing on the intent, purpose, reasonable expectations and goal of the exclusion (the pro-policyholder position in most cases). The divide between the courts, regarding application of the pollution exclusion, is also frequently described as one whether the exclusion applies only to what is historically regarded as a pollution claim, such as hazardous waste or industrial pollution, often referred to as “traditional environmental pollution.” Or, on the other hand, whether the exclusion, based on a broad linguistic reading, makes it applicable to claims involving any hazardous substance.

If a court determines to apply the pollution exclusion as written, it will frequently conclude that it bars coverage, given the broad definition of the term “pollutant,” often any “solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” But if a court concludes, fundamentally, that the absolute pollution exclusion should be interpreted narrowly, and limited solely to traditional environmental pollution, it may be inclined to conclude that the exclusion does not bar coverage. After all, if it were so clear that the substance at issue is traditional environmental pollution, then it is unlikely to have been litigated.

It is not unusual for a court to expend significant effort to resolve the fundamental ideological debate at the center of the absolute pollution exclusion. And when it’s finished, while not everyone will agree with the result, the opinion probably cannot be criticized for lack of reasoning. But while courts usually do a thorough job of interpreting the absolute pollution exclusion, many that determine to limit its applicability to traditional environmental pollution skimp on the definition of that term. A popular mantra is that, because the pollution exclusion was adopted by the insurance industry in response to the passage of environmental laws, traditional environmental pollution is “industrial pollution” or the conditions that motivated these laws, especially CERCLA.

A significant reason why litigation surrounding the absolute pollution exclusion often continues unabated, even after a state’s highest court has issued a comprehensive opinion addressing the boundaries of the exclusion, is that many courts that determine to limit the exclusion to traditional environmental pollution pay only lip service to what that term means. By providing nothing more than sound bites as to what qualifies as traditional environmental pollution – such as, industrial pollution or the conditions that led to the enactment of CERCLA -- litigants in future cases are left to guess if the pollution exclusion applies to their particular substance and circumstances. Even the California Supreme Court, despite issuing a unanimous decision in Mackinnon v. Truck Insurance Exchange (2003), that the absolute pollution exclusion is limited to traditional environmental pollution, recognized this precise problem when it stated: “To be sure, terms such as ‘commonly thought of as pollution,’ or ‘environmental pollution,’ are not paragons of precision, and further clarification may be required.”

With this background, turn to the recent decision from the Appellate Court of Illinois in Country Mutual Insurance Company v. Hilltop View, LLC, No. 4-13-0124 (Nov. 13, 2013). At issue was the applicability of the (total) pollution exclusion to a claim by an insured, a hog farm, for coverage for a suit brought by its neighbors, for nuisance and negligence, predicated on odors associated with the farm and the land application of manure.

An insurer for the hog farm argued that, among other reasons, a pollution exclusion precluded coverage. The Hilltop View court explained, at length, the Illinois Supreme Court’s 1997 decision in American States Insurance Co. v. Koloms, which, following an in-depth look at the two competing pollution exclusion arguments, held that the pollution exclusion only applies to those injuries caused by “traditional environmental pollution.” Thus, the task for the Hilltop View court was to determine whether the neighbors’ odor claims concerned ‘traditional environmental pollution.’” Stating the task was the easy part.

This was not the first time that an Illinois appellate court was called on to determine whether substances qualified as “traditional environmental pollution.” Indeed, such court has previously recognized the difficulty of the task. In Connecticut Specialty v. Loop Paper Recycling, Inc. (2005), the Illinois appeals court addressed the pollution exclusion in the context of the release of smoke and hazardous substances caused by a cardboard fire at the insured’s recycling facility.

The Loop Paper court recognized that the starting point for its analysis had to be the Illinois Supreme Court’s decision in Koloms, where the court held that the pollution exclusion did not bar coverage for injury caused by the accidental release of carbon monoxide inside a building because it was not traditional environmental pollution.

The Loop Paper court also noted that, in Kim v. State Farm Fire and Casualty Co. (Ill. 2000), the Illinois Supreme Court held that the absolute pollution exclusion barred coverage to an insured cleaning company because, unlike in Koloms, the hazardous material had escaped beyond the walls of the insured’s building and into the soil below. Therefore, the Kim court found that traditional environmental pollution had occurred. Loop Paper held that, because the toxic smoke containing chemicals emitted from the burning cardboard was not confined to the insured’s facility, but, instead, spread to the surrounding neighborhoods, traditional environmental pollution occurred and the absolute pollution exclusion barred coverage.

The Loop Paper court seemed to sense that its test for determining traditional environmental pollution (indoor versus outdoors) would be met with some criticism. The court stated that “we draw this distinction because we are not satisfied, nor is it helpful, to have a ‘We-know-it-when-we-see-it’ standard for what constitutes traditional environmental pollution.”

Now back to Hilltop View, where the court looked at Kim, Loop Paper and a third Illinois appeals court decision – Village of Crestwood v. Ironshore Specialty (2013). In Crestwood, the court found that the pollution exclusion applied when a long-standing mayor had routinely and knowingly mixed polluted water into the municipal tap water supply to save money for the municipality.

With all of these cases to serve as guidance, the Hilltop View court set out to determine if the odor claims concerned “traditional environmental pollution.” The court held that hogs, their manure and the smells associated with them, did not constitute traditional environmental pollution. The court’s decision was based on the following.

First, the court was impressed by an argument made by the neighbors’ attorney: “I’d like to make it clear about what the plaintiffs in the underlying case are claiming. We have made no claim that anybody’s been hurt. We’ve made no claim that they’re facing the risk of injury. There’s no claim to health, and there’s no claim to injury. It is a very pure claim. And that claim is interference with the enjoyment of property.”

The court concluded: “Hog farms have been around for a long time, and neighbors of hog farms have dealt with the smells created by hog farms ever since. These farms have been traditionally thought of as a source of food, not pollution. This is not to say a hog farm, especially a confinement hog farm, could never pollute. For example, if a hog farmer dumped hog manure into a creek instead of spreading it on his fields, it might be difficult not to categorize the contamination of the creek as a form of traditional environmental pollution. However, we are not faced with that sort of situation in this case.”

The court also rejected the insurer’s arguments that the neighbors’ odor claims are “traditional environmental pollution” based on the Illinois Environmental Protection Act’s treatment of odors as “air pollution.” Further, the court observed, “Even if the odors at issue in this case constituted air pollution for purposes of the Act, this does not mean the odors constitute ‘traditional environmental pollution.’ The statute in question reflects the policy of the General Assembly as to what now constitutes pollution. The fact an odor may now constitute pollution pursuant to statute does not mean it also constitutes ‘traditional environmental pollution.’ Generally speaking, the scope of the things seen as hazardous to the environment, as reflected in environmental protection laws today, is far greater than what we conclude our supreme court had in mind when it spoke of ‘traditional environmental pollution.’”

The moral of Hilltop View is this. The question whether a substance qualifies as “traditional environmental pollution” is as elusive as the number of licks it takes to get to the center of a Tootsie Roll Tootsie Pop. Despite all the effort of the Hilltop View court, when all is said and done, the decision for courts, whether a substance qualifies as “traditional environmental pollution,” still comes with a heavy dose of “We-know-it-when-we-see-it.”