There was a large divide how each party identified the central issue in Monday’s Supreme Court oral arguments in Hoffman v. WBI Energy Transmission, Inc., No. 25-159 (recording here, transcript here). The question sounds straightforward: when Congress authorizes a private pipeline company to exercise federal eminent domain power under the Natural Gas Act, by what standards are just compensation measured? Federal compensation rules which ordinarily do not include attorneys’ fees, or North Dakota’s compensation rules, which does?
The property owner asserted that the right to just compensation is separate from the power of eminent domain, and thus, WBI, a private delegee of the federal eminent domain power, is bound to follow North Dakota’s just compensation rules even if it is exercising federal eminent domain power. Consequently, WBI is on the hook to include attorneys’ fees as a part of just compensation even though the federal government would not be similarly bound were it taking the property itself, because the transaction costs expended to secure just compensation are not part of just compensation and Congress hasn’t otherwise waived sovereign immunity for fees and costs.
For its part, WBI joined by the Solicitor General, argued that WBI was effectively a proxy that stands wholly in the shoes of the federal government, and that’s all that matters — end of story. Thus, it is bound only to follow the same rules the feds themselves are obliged to follow, and no more.
In short sovereign immunity vs. Supremacy Clause.
[Disclosure: we filed an amicus brief in this case supporting the owner’s argument.]
Our overall view is that Court didn’t seem terribly receptive to the owner’s arguments. The Justices focused on how to figure out what Congress intended, when the NGA is silent about how compensation is measured.
The property owners argued that eminent domain is merely the power to take, and that’s all that was delegated. The obligation to pay just compensation comes from a different source. Thus, delegating federal condemnation power to a private company doesn’t necessarily turn a private actor into the United States, or import all the rules governing compensation when Uncle Sam itself is doing the taking. The Fifth Amendment supplies the floor, they argued, but states remain free to provide more unless Congress preempts state law.
That prompted Justice Kagan to pose what may be the question at the heart of the case. Before reading the briefs, she said, she would have understood “the power of eminent domain” to mean the power to take subject to the promise to provide just compensation (in other words, the power is conditioned on the obligation to pay compensation). If that’s right, perhaps separating the power to condemn from the rules governing compensation cuts things too finely. The compensation rules go hand-in-hand with the power to take.
The pipeline and the United States pressed exactly that point from another direction: WBI exercised the federal eminent domain power. When Congress wanted state compensation law to govern federal condemnations as in the General Bridge Act, it knew how to say so. The Natural Gas Act doesn’t. And PennEast characterized the NGA as a delegation of the federal government’s eminent-domain power. Game over?
The Chief Justice viewed the most important piece of this as a hypothetical based on a what appeared to be a practical concern: if the federal government could condemn property (and the just compensation it owes is calculated without reference to state law) and then transfer the newly-acquired property to the pipeline, why would Congress intend a different compensation rule merely because it authorized the pipeline to eliminate the federal middleman and condemn the property itself?
All we can say is we’re glad that our friend and colleague Bob McNamara was arguing because, were it us up there at the lectern, we’d be sorely tempted to respond thusly:
Well, Mr. Chief Justice, that ‘if‘ is carrying a lot of water…and you know what they say about “if grandma had wheels?” If Congress meant to insulate private for-profit companies from a state’s substantive law of just compensation, perhaps it could be implementing the process you suggest. But it didn’t. Instead, it handed over the most sovereign of powers to a private entity without any express requirements about whose compensation rules govern.
And there’s the property rights rub. A private pipeline isn’t the federal government, and even WBI conceded that exercising delegated federal power doesn’t give it 100% of the United States’ immunities. The owners say that distinction is everything: sovereign immunity may protect Uncle Sam from additional state-law compensation requirements, but Congress didn’t delegate sovereign immunity to a private company.
What WBI and the SG are asking the Court to do seems pretty extreme: “Your Honors, please draft language and insert it into the Natural Gas Act, even though Congress didn’t.” We’ve seen that before in NGA takings, although in a slightly different context (using Rule 65 preliminary injunctions to grant quick take power, when the NGA doesn’t delegate the federal quick take power). Note: we recently filed a cert petition challenging this thinking in yet another eminent domain context.
And although this case involves attorneys’ fees, Justice Barrett’s questioning highlighted that the issue could go wider. Many states have just compensation rules covering such things as rural property, businesses, heritage property, consequential damages, and other measures that may exceed the federal fair-market-value floor. So the Court isn’t merely deciding who pays the lawyers, it may be deciding whether those state-law compensation protections survive whenever a private condemnor exercises federally delegated eminent-domain power.
One final point caught our attention. The government argued that allowing state compensation rules could create delay, obstruction, and increased pipeline costs. But when pressed, it acknowledged it wasn’t claiming “the sky is falling” in the circuits where state compensation law already applies, or that those laws have actually thwarted construction of pipelines. A red herring, in our view. After all, property acquisition costs rarely are the biggest ticket item in infrastructure projects.
Our prediction? Unless we’re totally misreading the tea leaves, we think an affirmance is in the cards, unfortunately.
But here’s the question we’d keep in mind while waiting for the opinion: when Congress gives a private party the sovereign’s power to take your property, how much of the sovereign comes along for the ride? If Congress was silent, isn’t that silence resolved by applying a canon of construction that delegations of the most sovereign of sovereign powers (especially to private, for-profit developers) should be narrowly construed, and thus silence means that federal rules don’t apply, except to provide the bare minimum floor? We didn’t hear a lot about eminent domain being in derogation of the right to exclude (aka the right to keep) and a power that is solely in control of one side (can a landowner avoid eminent domain? No.), and thus it seems only fair that the condemnor should bear the consequences of any statutory ambiguities (with the remedy if WBI doesn’t like that is for it to go to Congress and get the statute clarified).
In the same vein, we also didn’t hear a lot of concern from the Justices was about the property owners on the target end of eminent domain (whether the power is being wielded by the government, or by a private delegee). Or how, when the owner has to bear the costs of ensuring that a condemnor meets its minimal obligation to provide just compensation by hiring the professionals necessary to accomplish what the condemnor should have, he is deprived of the “full and perfect equivalent” for the property because every dollar spent on professional help is a dollar less the owner has been compensated for his property. Net, not gross, is what should matter in eminent domain if the goal is to make innocent property owners economically whole.
The attention of the Justices, unfortunately, was on WBI and the government’s powers and how they are unlimited or modestly limited; and how much of the sovereign’s cloak of immunity covers a private entity. The big unstated scandal in eminent domain is that the system is build on systematic undercompensation of property owners. Because fully indemnifying them for something that is wholly beyond their control to avoid would just make public projects too darned expensive. And we can’t have that, can we?
It’s a shame that the Justices couldn’t take a minute to view this case from the target end, and not from the side of the guys pulling the trigger. Search the transcript and you see exactly one instance of the term “property owner,” if you had any doubts about where the Court’s focus was.
A silver lining: however this comes out, the holding will be limited. This is a question of what Congress intended, and the Court need not make any constitutional pronouncements. But be on the lookout for errant dicta about the role of just compensation, about the scope of federal power of eminent domain, and maybe a touch about property rights. We hope the Court can at least avoid screwing things up.
Transcript, Hoffman v. WBI Transmission, Inc., No. 25-159 (U.S. Nov. 9, 2026)