Key Takeaways
- The U.S. Supreme Court will resolve a circuit split on whether state or federal law governs compensation in private pipeline condemnation actions under the Natural Gas Act.
- The Eighth Circuit held that the Fifth Amendment — not state law — supplies the compensation standard, excluding attorney’s fees as a recoverable cost.
- A ruling affirming the Eighth Circuit would eliminate state-law fee protections for landowners in NGA condemnation cases nationwide.
- A reversal could significantly increase condemnation costs for pipeline operators, varying by state.
On June 29, 2026, the U.S. Supreme Court granted certiorari in Leonard W. Hoffmann, et al. v. WBI Energy Transmission, Inc., on a question with significant implications for landowners, pipeline operators and energy infrastructure development: whether state law or federal law governs the measure of compensation owed to property owners when a private company exercises the federal eminent domain power under the Natural Gas Act (NGA).
Background
WBI Energy Transmission holds a certificate of public convenience and necessity from the Federal Energy Regulatory Commission. WBI sought to construct a roughly 12-mile pipeline through McKenzie County, North Dakota. WBI was unable to reach voluntary agreements with several local landowners for the needed easements and rights-of-way, so it initiated a federal condemnation action under Section 717f(h) of the NGA to obtain the required property rights.
After three years of litigation, the parties reached a settlement on the value of the property interests taken but left unresolved the question of whether WBI was obligated to reimburse the landowners’ attorney’s fees and expenses. The U.S. District Court for the District of North Dakota awarded the landowners over $383,000 in attorney’s fees, reasoning that the NGA was silent on the measure of compensation, creating a gap that should be filled by North Dakota law — which treats attorney’s fees as a component of just compensation in condemnation proceedings.
The Eighth Circuit’s Decision
In a March 24, 2025, opinion, the U.S. Court of Appeals for the Eighth Circuit vacated the fee award. The court held that Section 717f(h) categorically delegates the federal eminent domain power to NGA certificate holders, placing them in the same position as the federal government itself. Drawing on the Supreme Court’s reasoning in PennEast Pipeline Co., LLC v. New Jersey, the panel concluded that a private condemnor wielding this delegated authority inherits not only the power to take property but also the same limitations that would apply if the United States were the condemnor.
The Eighth Circuit rejected the district court’s reliance on the Kimbell Foods gap-filling framework, finding that framework inapplicable in the eminent domain context. Because the NGA does not specify the measure of compensation, the court reasoned, the Fifth Amendment itself supplies the governing standard, and that standard does not encompass attorney’s fees or other indirect litigation costs. The panel acknowledged policy arguments favoring the application of state law but characterized those concerns as matters for Congress to address through legislation.
The Eighth Circuit’s holding directly conflicts with the approach taken by other federal appellate courts. The Third, Fifth, Sixth and Eleventh Circuits applied state law to determine the compensation owed in private condemnation actions under the NGA or analogous statutes, including on the specific question of attorneys’ fees.
The United States’ Position
In a brief filed at the Court’s invitation, U.S. Solicitor General D. John Sauer, on behalf of the United States, urged the Court to grant certiorari. While endorsing the Eighth Circuit’s conclusion that the Fifth Amendment — not state law — supplies the applicable compensation standard, the solicitor general emphasized the entrenched nature of the circuit conflict and the importance of the issue to federal energy infrastructure policy.
Looking Ahead
The case will be set for argument during the October Term 2026, and the Court’s decision will have broad ramifications for the energy sector. If the Court affirms the Eighth Circuit’s decision, landowners in states that provide for attorneys’ fees or other enhanced compensation in condemnation proceedings would lose those protections in NGA cases. If the Court reverses, pipeline companies could face materially higher condemnation costs depending on the state in which they operate, introducing geographic variability into the cost of critical energy infrastructure.
McGuireWoods continues to monitor developments in the area. For questions concerning this alert, contact the authors or a member of the Environmental Enforcement & Regulatory Counseling Practice Group.