U.S. Supreme Court to Hear McKenzie County Pipeline Eminent Domain Case
Travis Bateman
Farmer Staff Writer
A legal battle that began on ranchland outside Watford City is now headed to the nation’s highest court, with potentially far-reaching implications for landowners, pipeline companies, and future energy infrastructure projects across North Dakota and the United States.
The U.S. Supreme Court has agreed to hear a case involving several McKenzie County ranchers who challenged whether a pipeline company must follow North Dakota law when exercising eminent domain authority to acquire private land for a federally regulated natural gas pipeline. The decision could determine not only how landowners are compensated for condemned property, but also whether they can recover the legal costs required to obtain that compensation.
A Dispute Rooted
in McKenzie County
The case centers on ranchers Leonard Hoffmann, Rocky Prestangen and neighboring landowners in the Watford City area whose properties were needed for a WBI Energy Transmission natural gas pipeline expansion.
According to court filings and the Institute for Justice, WBI offered compensation that the ranchers believed was significantly below the market value commonly paid for voluntary pipeline easements in western North Dakota. Unlike many oil pipeline companies that negotiate voluntary easements, WBI possessed federal eminent domain authority under the Natural Gas Act, allowing it to condemn property if negotiations failed.
The ranchers did not oppose construction of the pipeline itself.
Instead, they argued that if their land was going to be taken, they were entitled to receive the same fair market compensation that other landowners commonly receive when negotiating with companies lacking eminent domain authority.
The ranchers prevailed, but still lost money.
After years of litigation in federal court, the landowners successfully convinced a federal judge that comparable pipeline easement sales could be used to establish the property’s value.
The court also initially ruled that WBI should reimburse the ranchers for their litigation expenses under North Dakota condemnation law.
That provision is significant because North Dakota statutes are designed to ensure that property owners receive the full value of property taken through eminent domain rather than having attorney fees substantially reduce their compensation.
However, the legal victory did not last.
The Eighth Circuit Court of Appeals later ruled that while the ranchers were entitled to higher compensation for their property, federal law - not North Dakota law - controlled whether attorney fees and litigation costs could be recovered.
As a result, the landowners reportedly incurred hundreds of thousands of dollars in legal expenses simply to obtain what the courts determined was fair compensation.
The legal question before the Supreme Court
The Supreme Court is not being asked to determine the value of the land.
Instead, the central question is whether state laws governing compensation - including attorney fees and litigation costs - apply when private pipeline companies exercise federally granted eminent domain authority.
Supporters of the ranchers argue that if property owners must spend substantial sums simply to prove the government’s initial offer was inadequate, they have not truly received “just compensation.”
Others contend that because the condemnation authority originates from federal law, federal standards - not individual state statutes - should determine recoverable costs.
According to the Institute for Justice, most federal appellate courts have concluded that state compensation laws should apply in these circumstances, while the Eighth Circuit adopted a different interpretation, creating the conflict that prompted Supreme Court review.
Why the Case Matters
in McKenzie County
Few places illustrate the importance of this issue more clearly than McKenzie County.
Over the past two decades, western North Dakota has experienced unprecedented energy development associated with the Bakken Formation. Thousands of miles of infrastructure - including crude oil pipelines, natural gas gathering systems, transmission lines, electrical corridors, roads and water systems - have crossed privately owned ranches and farmland.
While many easements are negotiated voluntarily, some projects have involved eminent domain authority granted under federal or state law.
The Supreme Court’s decision could influence future negotiations involving:
• Natural gas transmission pipelines.
• Carbon dioxide pipeline projects.
• Electrical transmission corridors.
• Other infrastructure requiring condemnation authority.
For McKenzie County landowners, the ruling may ultimately affect not only compensation offered during negotiations but also whether property owners can realistically afford to challenge offers they believe undervalue their land.
Balancing energy development and private property rights
North Dakota has long sought to balance private property rights with the infrastructure necessary to support agriculture, energy production and economic development.
Pipeline systems transport natural gas from producing wells to processing plants and interstate markets, helping reduce flaring while supporting regional energy production.
At the same time, many ranchers view their property as generational assets that deserve full constitutional protection when government-authorized takings occur.
The Fifth Amendment to the U.S. Constitution provides that private property shall not “be taken for public use, without just compensation.” The Supreme Court’s forthcoming decision will help define what that phrase means when a private company, rather than a government agency, exercises eminent domain authority under federal law.
A Case with National
Implications
Although the dispute originated on ranches near Watford City, its outcome could establish precedent affecting eminent domain cases across the country.
Should the Supreme Court rule in favor of the McKenzie County ranchers, pipeline companies exercising federal condemnation authority may be required to comply with state laws providing additional compensation protections for landowners.
If the Court affirms the Eighth Circuit, property owners in states with similar laws may continue bearing their own litigation expenses - even after successfully proving that initial compensation offers were inadequate.
For landowners throughout western North Dakota, where pipeline construction remains an important component of energy development, the decision will be closely watched as one of the most significant property-rights cases to emerge from the region in recent years.