Inverse Condemnation in South Dakota Requires Government Action that Takes or Damages Private Property for a Public Use—State Mining on State-Owned Land and Mere Mineral-Rights Retention Do Not Qualify

1. Introduction

Morse v. State, 2026 S.D. 45 (S.D. July 9, 2026), arose from severe ground subsidence and sinkhole activity in the Hideaway Hills residential subdivision in Black Hawk, South Dakota. The subdivision was constructed over historic gypsum mining works (including early-1900s underground “room and pillar” mining). After a major sinkhole opened in April 2020—following years of cracking, settling, and earlier sinkholes—homeowners, led by class representative Andrew Morse, sued the State of South Dakota and related state entities.

By the time of summary judgment, plaintiffs voluntarily dismissed all claims except inverse condemnation under Article VI, § 13 of the South Dakota Constitution (the “taken or damaged” clause). Plaintiffs alleged that the State’s surface mining and reclamation (and related failures of subsurface support and disclosure) caused or contributed to the later subsidence and home damage, and they urged strict liability theories associated with withdrawal of subjacent support.

The circuit court granted summary judgment to the State, viewing the claim as essentially tort-based and thus barred by sovereign immunity. On appeal, the Supreme Court of South Dakota affirmed—but on different, threshold constitutional grounds: plaintiffs failed to state a viable inverse condemnation claim because they could not satisfy the “private property” and “public use” elements required by Article VI, § 13 on these facts.

2. Summary of the Opinion

The Court affirmed summary judgment for the State, holding that plaintiffs failed to establish a compensable taking or damaging “of private property for public use.” The Court reasoned:

  • The Cement Plant’s surface mining and reclamation occurred while the land was publicly owned by the State; therefore, those actions did not constitute the taking or damaging of private property.
  • Plaintiffs’ alternative theory—premised on the State’s retention of mineral rights after selling the surface—failed because plaintiffs did not establish that such retention (or any alleged ongoing duty to provide support) was for a public use under South Dakota’s “use by the public” test.
  • Because no inverse condemnation claim existed, the Court did not reach strict liability, causation, standing/superseding cause, or limitations under SDCL 15-3-1.

3. Analysis

A. Precedents Cited

The Court’s analysis is built around South Dakota’s inverse condemnation framework and its distinct “damaging” clause, while also emphasizing that the clause still contains core limiting elements: “private property” and “public use.”

1) Inverse condemnation and the “damaging” clause

  • Hamen v. Hamlin Cnty., 2021 S.D. 7: Cited for the definition and purpose of inverse condemnation (“initiated by the property owner”) and for the policy behind the damaging clause—preventing individuals from disproportionately bearing costs of public-benefit projects.
  • Schliem v. State ex rel. Dep't of Transp., 2016 S.D. 90: Quoted within Hamen for the inverse condemnation definition (via footnote).
  • Krier v. Dell Rapids Twp., 2006 S.D. 10: Used to reaffirm that South Dakota’s Constitution provides broader protection than the federal Takings Clause because it includes property that is “damaged,” not merely “taken.”
  • Searle v. City of Lead, 10 S.D. 312, 73 N.W. 101 (1897): Quoted (via Rupert) for the principle that inverse condemnation may exist even without a classic trespass/physical occupation, where government action causes an invasion by “water, earth, sand, or other matter” that impairs usefulness.

2) Sovereign immunity and its relationship to inverse condemnation

  • Truman v. Griese, 2009 S.D. 8 and Pub. Entity Pool for Liab. v. Score, 2003 S.D. 17: Cited for the general rule that sovereign immunity bars tort claims absent legislative waiver.
  • Rupert v. City of Rapid City, 2013 S.D. 13: Central to the Court’s explanation that sovereign immunity does not defeat a valid inverse condemnation claim because Article VI, § 13 “essentially abrogates sovereign immunity.” But Rupert also serves as a comparator: it involved undisputed damage to private property caused by a city’s public street-safety measures (deicer use).
  • The key move in Morse is to treat sovereign immunity as secondary: if the constitutional elements of inverse condemnation are not met, immunity is irrelevant because no takings claim exists to begin with.

3) “Private property” and “public use” as threshold elements

  • Long v. State, 2017 S.D. 79: Used as a second comparator where flooding damage to privately owned land arose from the State’s highway construction/maintenance (a paradigmatic public project). The Court emphasized that, unlike Long, the State here acted “within the scope of its right” as the then-owner.
  • Henderson v. City of Columbus, 827 N.W.2d 486 (Neb. 2013): Cited as instructive on sequencing: first determine whether there was a taking/damaging for public use (i.e., an eminent domain-type event), and only then analyze proximate cause and damages.
  • Illinois Central Railroad Co. v. East Sioux Falls Quarry Co., 33 S.D. 63, 144 N.W. 724 (1913) and Benson v. State, 2006 S.D. 8: Cited for South Dakota’s “use by the public test” defining “public use” as requiring a public right to use.
  • Montana-Dakota Utils. Co. v. Parkshill Farms, LLC, 2017 S.D. 88: Applied to clarify that “public use” means “use by the public” and that the “right to use” is controlling, not the number of beneficiaries.

4) Appellate posture and standards

  • Rupert v. City of Rapid City, 2013 S.D. 13; Hall v. S.D. Dep't of Transp., 2011 S.D. 70: Used for summary judgment standards.
  • Krsnak v. Brant Lake Sanitary Dist., 2018 S.D. 85 and Dep't of Transp. v. Miller, 2016 S.D. 88: Cited for the proposition that whether property was taken/damaged for public use is a question of law and reviewed de novo.
  • A-G-E Corp. v. State, 2006 S.D. 66: Supports affirmance on any legal basis, enabling the Court to affirm on “private property/public use” grounds even though the circuit court relied on immunity.

B. Legal Reasoning

1) The Court reframed the dispute as a constitutional-threshold problem

Plaintiffs presented the case as “the State’s reclamation and failure to provide support (and/or disclosure) damaged our homes; therefore compensation is owed under the damaging clause.” The Court instead insisted on the constitutional prerequisites: (i) a taking/damaging of private property (ii) for a public use. Without those elements, the claim is not inverse condemnation—regardless of how serious the harm is.

2) “Private property” failed because the alleged causative conduct occurred while the State owned the land

The Court drew a bright line between (a) government action impacting someone else’s private land (as in Rupert v. City of Rapid City and Long v. State) and (b) government use of its own property while it owns it. Here, the Cement Plant’s mining and reclamation activities occurred when the State held both surface and mineral estates. Because Article VI, § 13 is triggered when “private property” is taken or damaged, the Court held plaintiffs could not base inverse condemnation on state activities undertaken during public ownership.

3) “Public use” failed even under plaintiffs’ mineral-rights-retention theory

Plaintiffs tried to recharacterize the case: even if the mining/reclamation happened during public ownership, the State later sold the surface while constitutionally reserving mineral rights, allegedly creating a continuing, strict duty to provide subjacent support—and the possibility of future mineral extraction might be a public use.

The Court rejected this on “public use” grounds by applying the “use by the public test” from Illinois Central Railroad Co. v. East Sioux Falls Quarry Co., Benson v. State, and Montana-Dakota Utils. Co. v. Parkshill Farms, LLC. The question was not whether the State might someday mine gypsum, but whether the public has a legally cognizable right to use the retained mineral rights or resulting minerals. The Court concluded they do not; therefore the retention is not a “public use” in the constitutional sense.

The Court also emphasized the damaging clause’s purpose (as discussed in Rupert v. City of Rapid City): to prevent individuals from disproportionately bearing costs of projects intended to benefit the public. The State’s retained mineral ownership—particularly where mining was not currently feasible—showed no identified public-benefit project analogous to public streets, highway drainage, or other quintessential public works.

4) Consequence: no inverse condemnation claim, so the Court did not reach strict liability or tort-like issues

Plaintiffs’ argument that strict liability should apply (citing Restatement-based support doctrines) became irrelevant in the Court’s sequencing: strict liability might matter only after a valid inverse condemnation theory is established. Because “private property” and “public use” were not satisfied, the Court declined to address strict liability, proximate causation/superseding cause theories, standing, or the statute of limitations defense under SDCL 15-3-1.

C. Impact

1) A practical limitation on inverse condemnation in “legacy land use” settings

Morse signals that South Dakota’s generous “taken or damaged” clause is not a universal compensation mechanism for downstream harm traceable to historical government conduct. Where the alleged damaging conduct occurred during public ownership and looks like proprietary/commercial activity (state mining as owner), inverse condemnation is unlikely to lie—especially when plaintiffs cannot identify a present “public use” as South Dakota defines it.

2) Mineral reservations alone are not transformed into “public use” takings

Many state land dispositions reserve mineral rights by constitutional mandate. Morse reduces the risk that such routine reservations, standing alone, will be treated as a constitutionally compensable “public use” basis for inverse condemnation when later surface owners experience subsidence associated with prior mining.

3) Litigation channeling effect

The opinion implicitly channels similarly situated plaintiffs toward non-takings theories against other actors (e.g., developers, sellers, real estate professionals, engineers) and toward legislative solutions, because the Court held the Constitution’s takings/damaging clause does not fit these facts. Notably, the record describes extensive disclaimers in upstream transactions and a lack of disclosure in downstream homebuyer sales—yet those matters were not adjudicated here because the remaining claim was inverse condemnation against the State.

4) Doctrinal clarity: “public use” remains a real gatekeeper

In an era where “public use” can be debated expansively in some jurisdictions, Morse reinforces that South Dakota continues to treat “public use” as requiring a public right to use, not merely a conceivable public benefit or an indirect fiscal interest of the State.

4. Complex Concepts Simplified

  • Inverse condemnation: A lawsuit by a property owner claiming the government effectively took or damaged property without filing a formal eminent domain action, seeking “just compensation” as if condemnation had occurred.
  • “Taken” vs. “damaged” (South Dakota): South Dakota’s Constitution covers not only direct appropriation (“taken”) but also government-caused injury that impairs property (“damaged”). However, it still requires damage to private property for a public use.
  • Public use (“use by the public test”): In South Dakota, “public use” focuses on whether the public has a right to use the project/resource, not simply whether the State benefits or the public might benefit indirectly.
  • Sovereign immunity: A doctrine that generally shields the State from tort liability unless the Legislature waives immunity. It does not bar a valid inverse condemnation claim—but if the claim is not actually inverse condemnation, immunity issues may reappear.
  • Subjacent support / subsurface support: The principle that underground conditions (or mineral extraction) must not cause the surface to collapse. Plaintiffs argued strict duties apply to subsurface owners, but the Court never reached whether such duties existed because the takings elements were not met.
  • Reclamation: Statutorily required rehabilitation of mined land to a stable, beneficial post-mining condition (here, returned largely to pasture/rangeland conditions). Plaintiffs contended the reclamation was inadequate; the Court treated that as outside inverse condemnation absent “private property/public use.”

5. Conclusion

Morse v. State clarifies that South Dakota’s “taken or damaged” clause—though broader than the federal Takings Clause—still demands a constitutional fit: government action must take or damage private property for a public use. Mining and reclamation conducted while the State owned the land did not satisfy the “private property” requirement, and the State’s continued retention of mineral rights (without an identifiable public right of use) did not satisfy “public use.” The decision narrows the availability of inverse condemnation in cases involving alleged downstream harms from historic state-owned commercial activities and reinforces “public use” as a meaningful gatekeeping doctrine in South Dakota takings law.