Leonard Hoffmann v. WBI Energy Transmission

The U.S. Constitution grants government the power to take private property, but that power comes with a caveat: the government must provide “just compensation.” Unfortunately, the government doesn’t typically start by offering property owners a fair price. To get a fair deal, owners facing eminent domain look to the courts, where they can present evidence for what they should be paid.

When Len Hoffmann and his neighboring ranch owners in North Dakota were told by a natural gas pipeline company with eminent domain power that it wanted their land, they knew the initial price offered was way too low. North Dakota’s prairie has been a hotbed of oil and natural gas development for years. And oil companies don’t have the power of eminent domain to build their pipelines. They have to find willing sellers, which means Len and his neighbors had a really good sense of what the going rate was for pipeline easements.

But the pipeline company insisted that their government power also came with that steep discount. So the ranchers fought back in court.

Hiring an attorney to represent you in an eminent domain case isn’t cheap, but it’s usually worth the money. Along the U.S. border, property owners losing their land to border wall construction could get more than 200% what the government initially offered them if they got a lawyer. Meanwhile, those who negotiated alone only talked the government up around 30%.

Hiring a lawyer proved to be the right move for the ranchers, too. After three years of fighting, a judge ruled that the ranchers were right and should be allowed to introduce evidence about the market rate for pipeline easements. The case settled shortly thereafter, but the ranchers were left with a healthy bill for all the time it took to vindicate their rights. The judge ruled that the pipeline company should have to pay that bill, too. North Dakota law says that property owners are entitled to walk away with the full value of the land that was taken, not the full value minus however much it cost to defend the condemnation, and the judge held that private companies wielding the power of eminent domain had to respect state-law protections.

Then things went sideways. The 8th U.S. Circuit Court of Appeals determined that the company did not have to pay the ranchers’ legal fees, which were hundreds of thousands of dollars. This decision puts the 8th Circuit out on a legal island. Everywhere else in the country, the courts look to state law to determine how much money property owners deserve and North Dakota law says the ranchers should get their fees paid for.

Property owners are now stuck in a Catch-22: accept a low-ball offer for their property or fight for a fair price out of their own pocket. That’s not just unfair—it’s illegal, and that’s why the Institute for Justice is asking the U.S. Supreme Court to take up their case and ensure that property owners don’t get stiffed when the government comes for their land.