The U.S. Supreme Court has agreed to decide whether a group of North Dakota ranchers can recover roughly $383,000 in legal fees they spent forcing a pipeline company to pay fair market value for their land. The case, brought by Leonard and Denae Hoffmann and their neighbors against WBI Energy Transmission, turns on a narrow but consequential question: when a private company exercises the federal power of eminent domain under the Natural Gas Act, does state law govern who pays the landowner’s attorneys, or does federal law crowd it out?
The Eighth Circuit said federal law controls. Every other circuit to consider the question over four decades has said the opposite. That split is why the justices took the case.
It is a small dispute in dollar terms and a large one in principle.
What the ranchers were fighting about
WBI Energy Transmission told Leonard Hoffmann and several neighbors in McKenzie County that it intended to run a natural gas pipeline across their property. WBI is a private company, but it holds a federal certificate of public convenience and necessity, which under the Natural Gas Act gives it the power to condemn private land for pipeline construction. According to Reason’s account of the plaintiffs’ filings, the company’s initial offer came in at roughly half of what the Institute for Justice, which now represents the landowners, describes as fair market value.
The Fifth Amendment’s Takings Clause requires “just compensation” when private property is taken for public use, and the Supreme Court has long read that phrase to mean fair market value. The ranchers sued. After a federal judge ruled they could put on evidence of what the land was actually worth, the parties settled under confidential terms.
That should have been the end of it. It was not.
The $383,000 question
Getting to fair market value cost the landowners about $383,000 in attorneys’ fees. North Dakota’s eminent domain statute contemplates that a landowner who has to litigate to secure adequate compensation can recover those costs. U.S. District Judge Daniel Hovland agreed and ordered WBI to pay, according to reporting from the North Dakota Monitor.
The Eighth Circuit reversed on appeal. In its reading, the Natural Gas Act delegates the federal government’s eminent domain power to certificated pipeline companies, and federal law, not state law, governs what those companies owe. Federal law generally does not require the condemning party to pay the landowner’s attorneys.
The plaintiffs’ petition notes that the Eighth Circuit ruling conflicts with decisions from the Third, Fifth, Sixth, and Eleventh Circuits. For more than forty years, those courts have read the Natural Gas Act to borrow the compensation rules of whichever state the condemned property sits in. The Eighth Circuit went the other way and said so plainly.
That kind of open acknowledgement of a circuit split is often an invitation to the Supreme Court. The Court accepted.
Why the split matters beyond one ranch
There are millions of miles of natural gas pipelines in the United States, with more proposed every year. Each new segment sits on land that either belongs to someone or has to be taken from someone. The question of who pays for the fight over price sits behind every one of those transactions, including the ones that never reach a courtroom because the landowner cannot afford one.
The Institute for Justice attorney leading the case framed the stakes to the North Dakota Monitor as fundamentally about federalism, noting that eminent domain was historically a state power.
WBI’s position, laid out in its court filings, is the mirror image. The Natural Gas Act is meant to make interstate pipeline construction uniform across state lines. Requiring companies to follow fifty different rules on attorneys’ fees, WBI argues, would fracture that uniformity. The company also argues, in the alternative, that even if North Dakota law did apply, it grants judges discretion to award fees rather than mandating them.
What the two sides in Washington are saying
The case has drawn attention beyond the parties. A coalition of states, led by North Dakota, filed a friend-of-the-court brief urging the justices to side with the landowners. The U.S. Department of Justice filed on the other side, backing WBI’s reading of the Natural Gas Act.
That alignment is worth noting. State attorneys general who might be expected to defend state regulatory authority are doing so here. The federal executive, whose eminent domain power is being delegated to the pipeline company, is arguing that the delegation carries federal rules with it and leaves state compensation statutes behind.
Preemption, quietly, is the whole ballgame
The technical name for the doctrine at issue is federal preemption: the principle that federal law can displace state law where Congress intended it to, or where the two conflict. Preemption cases are a recurring feature of the Court’s docket. In May, the justices ruled on preemption in the freight broker context, and preemption questions have surfaced in several other recent decisions on contractor immunity and federal removal.
The Natural Gas Act does not say, in so many words, that federal law displaces state attorney fee rules. It also does not say that state law fills the gap. The Eighth Circuit read the silence one way. The Third, Fifth, Sixth, and Eleventh Circuits have read it the other. The Supreme Court will now say which reading is right, or offer a third.
What we find useful about the framing is that the underlying constitutional guarantee is not really in dispute. Both sides accept that the Fifth Amendment requires fair market value. The disagreement is about the cost of enforcing that guarantee. A property owner who has to spend $383,000 to establish that the offered price was too low has, in a practical sense, not been made whole even after winning, unless someone reimburses those fees.
What the case does not decide
It is worth being clear about scope. The Supreme Court is not being asked to reconsider whether pipeline companies can use eminent domain. That authority, granted by the Natural Gas Act, is not on the table. The Court is not being asked to rewrite the Fifth Amendment’s just compensation standard. And the case does not directly touch state-level eminent domain disputes that do not involve federal certificated companies, of which there are many.
The Institute for Justice, which represents the landowners, is a libertarian public-interest firm with a long record of eminent domain litigation. Its involvement gives the case a national profile it might not otherwise carry.
Eminent domain cases have been reaching state supreme courts as well. In August, the New Jersey Supreme Court ruled against a Jersey Shore motel owner in a state-level takings dispute, a reminder that the doctrine keeps producing hard cases at every level of the system.
What to watch for
According to North Dakota Monitor’s reporting, oral arguments are expected this fall, with a decision likely three to six months later. That would put a ruling in the first half of 2027.
The narrower the Court’s reasoning, the smaller the ripple. A ruling that simply says the Natural Gas Act incorporates state compensation rules would restore the pre-Eighth Circuit status quo across the country. A broader ruling on preemption in eminent domain contexts could reach further, into other federal statutes that delegate condemnation authority.
In my recent piece on the IRS conservation easement settlement program, the pattern was similar: a federal rule written for uniformity ran up against the messiness of how property actually gets valued on the ground. The Hoffmann case is the same shape of problem, arriving at the Court from the opposite direction.
None of this is settled. It is a granted petition, a scheduled argument, and a pending decision. What the ranchers have won so far is a hearing, which after seven years of litigation is worth something, and which the Eighth Circuit’s ruling had, for a moment, put out of reach.