Zimmer, Duncan & Cole

Location, Location, Location

When South Dakota closed the interstate exit closest to Ellsworth Air Force Base, a neighboring truck stop lost almost all of its customers. The truck stop then asked the State to pay for its lost business in a  case called Fuel-Food Mart, Inc. v. South Dakota Dep’t of Transportation (2011 S.D. 70).

*   *   *

The Eisenhower Interstate System came to South Dakota in the early 1960’s.  My father was in his twenties and serving as a Boy Scout troop leader. In order to advance to Eagle Scout, one of his troop members still needed the “Ten-Mile Hike” merit badge.  The student was confined to a wheelchair and had limited physical strength. My father found a solution in the new interstate being built through town.  Its smooth, empty lanes were still closed to traffic, but perfect for a ten-mile roll.  My father laced up his jogging shoes, loaded up the student, and drove the nearest on-ramp.  A few hours later, the student had earned his badge.

Around that same time, and on the other side of the state, I-90 was being paved past Ellsworth.  The influx of traffic to Exit 66 fostered a very busy and profitable Flying J truck stop. By the mid-1990’s, there was a growing consensus that it was time to move Exit 66.  Ellsworth was on the chopping block, and one of the criteria used to evaluate base closures was the presence of incompatible uses.  The Flying J (and Exit 66) presented a safety issue because it was too close to the main runway. In 2003, Exit 66 was replaced by Exit 67, one mile east.  Without the interstate access, the Flying J closed for business.  Problem solved, and air base saved.

But for Flying J, this solution was financed entirely of its own pocket.    It believed that the State was required to compensate the truck stop for this loss of its business.  With this understanding, the landowners filed a lawsuit to recover damages for something called “inverse condemnation.”

*   *   *

The state uses its right of eminent domain to forcibly buy private land and then put it to public use.  In exchange for this right, the constitution requires the state to compensate the owners. This is what happened back in 1961 to create the interstate and its exits.  The State needed the land for a public purpose and forced all of the affected landowners to sell. 

 “Inverse condemnation” is the name used when the state doesn’t actually condemn or take any property, but does something that indirectly impairs its value.  Most often, this type of claim is made about a new law or regulation.  For example, if a city decided to ban the sale of hot coffee, then all of the coffee shops in town would be entitled to bring suit against the city to recover compensation for the taking of their business, even though the city didn’t actually condemn any of the shops.

Here, Flying J argued that the closing of Exit 66 was an inverse condemnation: its truck stop depended on I-90 travelers who now had no access, as a direct result of the state’s action. Our Supreme Court concluded that this was, indeed, an inverse condemnation, and that Flying J was entitled to be paid for it. Significant to the Court’s decision was the history of the original condemnation, back in 1961. 

Whenever land is taken for public use, the owner is entitled to compensation at the market rate.  However, the state is allowed to discount that amount if the new, public use will add value to the surrounding land. In 1961, the State had done just that:  it discounted its purchase price of the land around Exit 66 for the very reason that the remaining land would soon be a lot more valuable. The Court decided it was fair, then, for the landowner to seek the rest of that compensation now that the exit was being removed. 

The Court concluded by explaining that the constitution prevents individuals from being unfairly burdened with the cost of public projects.  Instead, those should be paid for by all of us.

Here, the closing of the Flying J may have helped save Ellsworth, and the public has a responsibility to share that cost.