The U.S. Supreme Court heard oral argument on November 9, 2026 in Hoffmann v. WBI Energy Transmission, Inc., a case that could affect what interstate natural gas pipelines must pay to acquire rights-of-way through condemnation. The question is whether federal or state law determines just compensation when pipelines exercise eminent domain under Section 7(h) of the Natural Gas Act (NGA). The Justices’ questions offered reason for optimism among pipeline operators, particularly those facing state requirements to pay landowners’ attorneys’ fees and litigation expenses.
Background
The dispute arose after WBI Energy Transmission condemned easements across North Dakota ranchland for a federally certificated natural gas pipeline. Although the parties settled the value of the easements, the district court awarded the landowners approximately $383,000 in attorneys’ fees and litigation expenses under North Dakota law.
The Eighth Circuit reversed, holding that federal law governs just compensation in NGA condemnations and generally does not require payment of those expenses. Its decision conflicts with the approach taken by four other federal appellate courts that have applied state compensation law in similar pipeline and electric transmission cases.
A Skeptical Court Tests the Landowners’ Arguments
Chief Justice Roberts was particularly skeptical of the landowners’ position, questioning why a pipeline exercising federal condemnation authority should face compensation obligations that would not apply if the federal government acquired the same property. At one point, he remarked, “I don’t understand why this isn’t an easy case.”
The potential financial consequences also caught the Court’s attention. Justice Kagan raised the possibility of a state requiring triple compensation for condemned property, while Justice Kavanaugh questioned whether additional acquisition costs could ultimately increase energy prices for consumers. When the landowners’ attorney argued that applying state compensation law had not frustrated pipeline development, Kavanaugh responded that consumers facing higher energy prices might disagree.
The landowners maintained that Congress left state compensation laws in place because Section 7(h) does not expressly address the issue. Justice Jackson challenged that reasoning, pointing to another federal eminent domain statute in which Congress specifically required compensation to be determined under state law. She questioned why Congress would have included that language if state law already governed whenever a federal statute was silent.
Other Justices explored arguments favoring the landowners. Justice Gorsuch examined historical support for applying state compensation law, while Justice Thomas questioned whether private companies exercising federal condemnation authority receive the same protections as the federal government.
Implications for Industry
For pipeline operators, the immediate stakes are financial. If the Supreme Court upholds the Eighth Circuit’s decision, operators would no longer be required to pay attorneys’ fees and litigation expenses under state compensation laws in NGA condemnation proceedings. In contested acquisitions, those expenses can be substantial, as WBI’s approximately $383,000 award illustrates.
The implications extend to how operators negotiate and budget for rights-of-way. The prospect of recovering litigation expenses can influence a landowner’s willingness to settle and the amount demanded for a voluntary easement. Removing that potential recovery changes the economics of negotiations, even where condemnation is ultimately avoided.
A ruling for WBI could also give operators greater certainty about right-of-way acquisition costs across state lines. If the Court holds that federal law governs compensation generally, the decision would reach beyond attorneys’ fees and litigation expenses, potentially changing the financial exposure operators face when acquiring easements in states with more generous compensation requirements.
Beatty & Wozniak’s regulatory and litigation attorneys advise interstate natural gas pipeline operators on federal regulatory requirements, condemnation proceedings, and right-of-way acquisition. For questions about this case or its implications for pipeline development and property acquisition, please contact Ahuva Battams, Tyler Weidlich, or Nicol Thompson Kramer.