It started as a joyous Easter egg hunt on the Nebraska prairie. But when the winds shifted, it stunk so badly of hog manure the kids ran indoors. "Oh Grandma," one of the little girls cried to Kathleen Stephens, 68, "it's terrible!" The awful stench comes from some 20,000 pigs being raised a mile or so from the Stephens farm. Hiding from the odors, Kathleen and Earl Stephens, 72, mostly stay cooped up inside their old white farmstead. "We really are prisoners in our house," says Kathleen. "Your eyes water. It's unbearable. There's days it'll make you gag."

Sick of the stink, the Stephenses joined 10 other neighbors and took the hog producer to court, suing for a loss of quality of life. A Nebraska appeals court has sided with them, ruling late last month that the hog producer, Progressive Swine Technologies, must compensate its neighbors for living with the noxious fumes. It was left to a state court to determine the damages. The state of Iowa has also delivered a blow to the confinement livestock industry, the factory-like farms where thousands of pigs or cattle are caged in small pens. The Iowa Supreme Court recently decided that residents could sue livestock producers, striking down the state's Right-to-Farm law. The court ruled that the constitutional right to own property "includes the right to use and enjoy it." Pig and cow manure has always been part of country life. But the huge livestock operations, with manure lagoons the size of football fields, are a bit more rank than Old MacDonald's farm.

The confinement method now produces 43 percent of livestock in the nation, according to the Sierra Club. The environmentalist group, which has long battled the giant farms over air and water pollution, helped the plaintiffs in the Nebraska case. "It's so bad there are serious health concerns," says Barclay Rogers, a Sierra Club spokesman.

The pork industry says odor is just part of the cost of doing business. Hogs are a $40 billion industry that provides jobs for 566,000 workers, according to the National Pork Producers Council. The industry says it's working on technologies to control the odors. So far, the remedies are very expensive. Times are flush for pork producers these days, as the Atkins frenzy has helped drive up demand for meat. The long-suffering neighbors of hog factories say the companies should reach into their pockets--and make amends for making such a stink.