Rocky Prestangen and Randy Stevenson (Photo: Institute for Justice, AI-enhanced image)
A dispute over who should pay nearly $300,000 in legal expenses has brought a group of North Dakota ranchers and a natural gas pipeline company before the US Supreme Court. The ranchers had challenged the compensation offered for pipeline access across their properties and eventually reached a settlement. However, an appeals court later ruled that the company was not responsible for their legal costs. The Supreme Court is scheduled to hear the case on November 9. The case, Hoffmann v. WBI Energy Transmission, concerns Leonard Hoffmann, members of his family and neighbouring ranchers in McKenzie County, according to the official court record. Their disagreement with WBI Energy Transmission began over the amount the company was prepared to pay for easements. These agreements allow a company to use a portion of private land for purposes such as laying and maintaining pipelines without purchasing the entire property. The landowners initially succeeded in getting a court to consider evidence of payments made for similar pipeline easements. A settlement followed, but the legal proceedings had already cost them approximately $300,000. Although the trial court directed WBI to reimburse those expenses, the US Court of Appeals for the Eighth Circuit overturned that decision in March 2025. The Supreme Court will now examine whether private companies exercising federally authorised eminent domain powers must follow state compensation laws. According to the Institute for Justice, which represents the ranchers, the case could affect property owners in other states where local laws provide protections beyond the minimum compensation required under the US Constitution.
Why the $300,000 legal bill remains disputed
The ranchers' legal expenses became the central issue after their original disagreement with WBI ended in a settlement. They had spent several years challenging how the company calculated the value of the easements. Under North Dakota law, property owners whose land is acquired through eminent domain are entitled to certain protections, including reimbursement of qualifying expenses associated with the proceedings. The trial court applied those provisions and ordered WBI to cover the landowners' legal costs. However, the appeals court changed the decision, saying the company's authority to acquire the easements came from federal law. The Eighth Circuit held that WBI could rely on the compensation rules applicable to the federal government. Those rules do not necessarily require payment of the property owner's legal expenses. The Institute for Justice argues that this interpretation gives private companies protections against state-law requirements that Congress did not expressly grant them.
How disagreement over pipeline payments began
The dispute originated in McKenzie County, a part of western North Dakota where oil and natural gas development has brought extensive pipeline construction. Leonard Hoffmann and neighbouring property owners were already familiar with pipeline easements because oil companies had previously negotiated access to land in the area. However, WBI was developing an interstate natural gas pipeline. Such projects fall under the Natural Gas Act and require approval from the Federal Energy Regulatory Commission (FERC). Once a company receives the necessary federal certificate, it can also obtain authority to use eminent domain. This legal power permits the acquisition of private property rights for public use, subject to compensation. WBI proposed that compensation be based on the difference between the value of the land with a pipeline easement and the value of the land without one, the Institute for Justice said. The company argued that the difference could be minimal or even zero. The ranchers believed that this approach did not adequately reflect the value of allowing a pipeline to cross their properties. They wanted the court to consider what other companies had paid landowners for comparable easements.
What happened during court proceedings
Hoffmann joined his brother David, sister-in-law Denae Hoffmann and neighbouring ranchers Rocky Prestangen and Randy Stevenson in contesting WBI's valuation. They appointed North Dakota property lawyer Derrick Braaten to represent them. The proceedings continued for several years as both sides presented arguments about the appropriate method of determining compensation. The trial court eventually allowed the landowners to introduce evidence from comparable voluntary transactions. This meant payments negotiated between other pipeline companies and property owners could be considered when assessing the value of the easements. Following that decision, the parties reached a settlement. The amount of compensation was no longer the central dispute, but the question of reimbursement for the legal proceedings remained unresolved. WBI challenged the order requiring it to pay those expenses, leading to the March 24, 2025, appellate ruling in its favour.
What the Supreme Court will examine
The legal question before the Supreme Court concerns the extent to which federal authority allows a private company to avoid compensation requirements established by individual states. The Fifth Amendment to the US Constitution requires “just compensation” when private property is taken for public use. State laws, however, may provide additional protections, including provisions covering legal expenses. The Institute for Justice maintains that the Natural Gas Act permits qualifying pipeline companies to exercise eminent domain but does not automatically exempt them from state compensation laws. The case has attracted significant attention, with 12 states submitting a brief supporting state-law property protections, while the federal government has presented a different position.
