Supreme Court to Review Natural Gas Act Eminent Domain Authority

The U.S. Supreme Court will decide whether interstate natural gas pipeline companies exercising federal eminent domain authority must pay landowners' attorney's fees under state law, a ruling that could affect pipeline costs, permitting and project development nationwide.

(P&GJ) — The U.S. Supreme Court has agreed to hear a case that could reshape how interstate natural gas pipeline companies compensate landowners by deciding whether Section 7 of the Natural Gas Act requires certificate holders exercising federal eminent domain authority to pay attorney's fees when state law permits such recoveries.

The Court granted certiorari on June 29 in Leonard Hoffmann v. WBI Energy Transmission Inc., marking the second time in five years it has agreed to interpret Section 7 of the Natural Gas Act (NGA). The case stems from a dispute over whether pipeline companies holding Federal Energy Regulatory Commission (FERC) certificates are subject solely to the federal standard for compensation or must also comply with state laws that allow landowners to recover attorney's fees.

The case arises from a North Dakota condemnation action in which a group of ranchers sought to recover approximately $383,300 in attorney's fees incurred while negotiating compensation for property acquired by WBI Energy Transmission. The U.S. Court of Appeals for the Eighth Circuit ruled the landowners were not entitled to those fees, creating a split with four other federal appellate courts.

At issue is whether pipeline companies exercising federal eminent domain authority under Section 7 of the NGA must compensate landowners under the Fifth Amendment's "just compensation" standard, which generally excludes attorney's fees, or under state laws that, in some jurisdictions, permit recovery of those costs.

Interstate natural gas pipeline developers must obtain a certificate of public convenience and necessity from FERC before constructing or operating interstate pipeline facilities. Once issued, the certificate grants developers federal eminent domain authority to acquire property needed for approved projects.

The landowners, joined by 12 states as amici, argue that because the NGA does not expressly define "just compensation," courts should look to state law where appropriate. They rely in part on the U.S. Supreme Court's 1979 decision in United States v. Kimbell Foods Inc., which held that courts may apply state law when federal law does not provide a governing rule.

WBI Energy, supported by the United States, argues that the Supreme Court's 2021 decision in PennEast Pipeline Co. LLC v. New Jersey controls the dispute. In that case, the Court held that pipeline companies exercising eminent domain authority under the NGA effectively "step into the federal government's shoes," meaning federal eminent domain principles—not state law—should govern compensation.

The Court is expected to hear the case during its October 2026 term.

The ruling could have significant implications for future interstate pipeline development. If the Court determines state attorney-fee statutes apply, pipeline developers could face higher land acquisition costs in states with fee-shifting laws, potentially encouraging additional condemnation litigation and increasing project costs and development timelines. A ruling affirming the Eighth Circuit would preserve the current federal compensation framework for NGA certificate holders.