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Client Alert

FinCEN Proposes AML Compliance Obligations for Non-Financed Real Estate Transactions

March 15, 2024

Following consideration of comments received from an Advanced Notice of Proposed Rulemaking,[1] on February 16, 2024, FinCEN issued a proposed rule (the “Proposed Rule”)[2] that for the first time would require non-financed residential real estate transfers involving transfers to entities, including trusts, to be reported to FinCEN in a format similar to initial reports required to be filed pursuant to the Corporate Transparency Act and implementing FinCEN regulations (the “BOI Regulations”).[3] Unlike the reporting requirements of the BOI Regulations—which generally apply to financial institutions that are familiar with compliance obligations under applicable anti-money laundering (“AML”) reporting requirements, when adopted, the Proposed Rule would include within the scope of coverage reporting persons and entities that heretofore were exempt from AML compliance and reporting obligations (i.e., and accordingly very unfamiliar with AML compliance obligations), including persons and entities that provide residential real estate settlement services for specified residential transfers that do not involve a financing component. This Alert summarizes significant provisions of the Proposed Rule. Based upon historical experience, it is likely that few modifications will be adopted by FinCEN when the Proposed Rule is finalized. Accordingly, settlement service providers in the residential real estate market might consider familiarizing themselves with the compliance requirements of the Proposed Rule which, as described below, includes the ability to contractually delegate to another reporting person or entity required reporting and record keeping obligations. Overview of the Proposed Rule Despite significant evidence that non-financed real estate transfers provided a significant means to engage in money laundering, except for limited “geographic targeting orders” (“GTOs”),[4] for many years, FinCEN has exempted that category of transactions from comprehensive regulation under the Bank Secrecy Act and applicable FinCEN Regulations.[5] The Proposed Rule would require that certain persons involved in residential real estate closings and settlements file a so-called streamlined version of a Suspicious Activity Report (“SAR”), referred to in the Proposed Rule as a “Real Estate Report” and to maintain compliance records for a five-year period. The persons subject to these reporting and recordkeeping requirements are defined in the Proposed Rule as “reporting persons,” and the obligation to file a report would be determined through a “cascading” or descending order of priority approach based on the function performed by the person in the subject real estate closing and settlement process. Although FinCEN has stated that a Real Estate Report is a streamlined version of a SAR, as discussed below, the proposed information that must be included in a Real Estate Report is anything except streamlined, and includes detailed information about: (a) the transaction; (b) the transferor; (c) the transferee; (d) the reporting person or entity; (e) the consideration paid; and (f) beneficial ownership information of the parties to the transaction. Importantly, because only one filing relating to a covered transaction would be required for a Real Estate Report, as compared to the filing of a traditional SAR, which is an ongoing obligation when a money laundering or other illegal activity is identified, covered persons subject to the reporting requirement under the Proposed Rule would not need to maintain the more detailed AML compliance programs otherwise required of financial institutions under the BSA.[6] What follows is a summary of significant provisions of the Proposed Rule, including: (a) real estate transactions covered by the Proposed Rule; (b) transferees holding ownership interests covered by the Proposed Rule; (c) reporting persons; (d) exemptions; (e) information required to be included in a Real Estate Report; (f) record keeping requirements; and (g) the effective date of the Proposed Rule. Each will be addressed separately below. Covered Real Estate Transactions The Proposed Rule would impose reporting and recordkeeping requirements related to certain transfers of residential real property made to a transferee entity or a transferee trust (defined in the Proposed Rule as “reportable transfers”). Unlike the targeted approach employed for FinCEN’s GTOs, the Proposed Rule is intentionally meant to broadly capture residential real property throughout the United States, including any State, the District of Columbia, the Indian lands (as that term is defined in the Indian Gaming Regulatory Act), and any territory or possession of the United States.[7] The term “residential real estate” includes single family houses, townhouses, condominiums, and cooperatives, as well as apartment buildings designed for one to four families.[8] As explained in the analysis accompanying the Proposed Rule, the test to determine whether real property constitutes reportable residential real property can be met in one of three ways: (a) the real property includes a structure designed principally for occupancy by one to four families; (b) the real property is vacant or unimproved, and is zoned, or for which a permit has been issued, for occupancy by one to four families; or (c) the real property ownership is evidenced by a share in a cooperative housing corporation. Transferees and Ownership Interests Covered by the Proposed Rule The keys to understand the Proposed Rule is to understand the definitions of transferee entities and transferee trusts, as well as when an entity and trust holds an “ownership interest” in residential real property being transferred. A “transferee entity” is any person other than a transferee trust or an individual. For example, a transferee entity may be a corporation, partnership, estate, association, or limited liability company. By reference to the BOI Regulations, a transferee entity is as broad as any “Foreign Reporting Company” (as defined in the BOI Regulations)[9] except for natural persons and trust entities. A “transferee trust” is defined as any legal arrangement created when a person (i.e., a settlor or grantor) places assets under the control of a trustee for the benefit of one or more persons or entities (i.e., a beneficiary) or for a specified purpose, as well as any legal arrangement similar in structure or function.[10] Unlike the BOI Regulations in which only statutory trusts are covered for reporting purposes, a transferee trust is any trust entity formed under statutory or common law, and includes trust structures organized within the domestic United States or in a foreign jurisdiction.[11] Finally, a Real Property Report must be filed if an “ownership interest” is acquired in residential real property by a transferee entity or a transferee trust. An ownership interest in covered residential real property constitutes rights to the real property that is evidenced through a deed or, for an interest in a cooperative housing corporation, through stock, shares, membership, a certificate, or other contractual agreement evidencing ownership. Covered Reporting Persons Because most bank and non-bank lenders may not be involved in a covered non-financed real property transfer,[12] the Proposed Rule creates a descending priority of settlement service participants that would be responsible for filing a Real Property Report. In descending order of priority, those persons and entities are: Real estate professionals providing certain settlement services in the settlement process—and specifically the person listed as the closing or settlement agent for a settlement; If no person or entity prepares a closing or settlement statement, the person that files the deed or other instrument that transfers ownership of the residential real property; The person that underwrites an owner’s title insurance policy for the transferee—most typically this will be a title insurance company or a person or entity that issues a similar form of title insurance or guaranty; The person that disburses the greatest amount of funds in connection with the reportable transfer, which in many cases would be an escrow company or an attorney holding funds in a client trust account; The person that prepares an evaluation of the title status; and The person who prepares the deed, which in many jurisdictions would be prepared either by an attorney or a title company. It should be noted that the cascade of persons and entities constitutes a somewhat mishmash of functionality that may differ significantly from state to state. For example, in many state jurisdictions attorneys play a significant role in real estate closings, whereas in other states attorneys are rarely involved. Importantly, the Proposed Rule allows reporting persons to contract among settlement providers the obligation to file a Real Estate Report. This would permit, for example, a title insurance company to prepare and file a Real Estate Report even though the title insurance company would have a lower priority in the cascade than another person or entity. Exemptions In a manner similar to the exemptions provided for in the BOI Regulations, the Proposed Rule provides numerous exemptions for entities whose ownership and control information is widely available. The exemptions include: Securities reporting issuers; Governmental authorities; Banks; Credit unions; Depository institution holding companies; Money service businesses; Securities brokers or dealers; Securities exchanges or clearing agencies; Other Exchange Act registered entities; Insurance companies; State-licensed insurance producers; Commodity Exchange Act registered entities; Public utilities; Financial market utilities; SEC-registered investment companies; and Subsidiaries of an exempted entity whose ownership interests are controlled or wholly owned, directly or indirectly, by an exempted entity. It is important to note that, while the list of exempted entities substantially mirrors the exempted entities set forth in the BOI Regulations,[13] a notable omission is that “large operating companies”[14] that are exempt under the BOI Regulations are not exempted from coverage under the Proposed Rule. This is based upon FinCEN’s view that large companies (which are not, for example, SEC- registered companies) may be the source of potential money laundering by transferring covered real property under their control. Information to be Included in a Real Estate Report Although the majority of the analysis accompanying the Proposed Rule focuses on gathering and reporting information regarding a transferee entity or transferee trust, the information required to be included in a Real Estate Report for a reportable transfer is much broader and significantly more detailed, and includes, among other things, information regarding: (a) the real property, including any compensation paid by the parties; (b) the reporting person; (c) the transferor; (d) the transferee entity or transferee trust; (e) the individual signing a transfer document; and (f) the beneficial ownership of the transferee. For purposes of brevity, the following is a summary of several information items that must be included in a Real Estate Report; depending upon the status and category of the individual or entity: The full legal name of the individual or entity; The status of the person or entity (e.g., reporting person, transferor, transferee, etc.); Information regarding the transfer and transaction, including property location, and certain economic terms of the transaction; The street address of the reporting person’s residence or principal place of business in the United States; Beneficial ownership information generally determined pursuant to the BOI Regulations;[15] A unique identification number, such as a TIN or acceptable domestic or foreign substitute; In the case of a trust, information regarding trust organization and status; and In the case of a party signing a transfer document, the capacity of the individual or entity executing the transfer. As contemplated by the Proposed Rule, in order to prepare a Real Estate Report, a reporting person will be required to address each of the reporting information categories identified above (e.g., the transferor and the transferee) and obtain required data from each of the persons or entities. For example, a non-exempt company may be a transferor, with the transferee being another corporation. The transferee corporation, in turn, would be required to identify its beneficial owners for inclusion in the Real Estate Report. Similarly, in the case of a transferee trust, the trust document must be analyzed to identify who, besides the trustee, is a beneficial owner of the trust. In short, depending upon the facts underlying the reportable transfer, the data gathering may be complicated. Further, unlike the BOI Regulations that require beneficial owners of a reporting company to cooperate with the reporting company and to provide required information, the Proposed Rule is silent on this issue, which might permit a beneficial owner the flexibility to refuse to cooperate with a reporting person under the Proposed Rule. For reporting persons not accustomed to gathering sensitive and potentially complicated information, the Proposed Rule provides some useful guidance. Specifically, the Proposed Rule will allow a reporting person to collect information from a transferee or a person representing the transferee, provided the transferee or their representative certifies in writing, to the best of their knowledge, the accuracy of the information. In addition, as noted above, persons falling within the cascade list of reportable persons will be able to contract with other persons or entities falling within the cascade in order to transfer to another person or entity that regulatory obligation. Recordkeeping A reporting person will be required to maintain a copy of a filed Real Estate Report, a certification obtained from a transferee, and a designation (i.e. delegation) agreement for five years. Effective Date When finalized, the Proposed Rule would become effective one year following publication in the Federal Register. Initial Observations We offer the following initial observations. First, as described above, the disclosure scheme contemplated by the Proposed Rule is potentially complicated and detailed in the information that it will require. Many of the settlement service providers that are in the cascade of reporting persons have historically fallen outside of AML compliance requirements, and the preparation of a Real Restate Report, including training of personnel, will likely fall to that of outside vendors. Second, the description of the real estate settlement process contained in the Proposed Rule is perhaps more reflective of a summary of the real estate settlement industry created by a layperson than reflective of the actual process of real estate closings on a state-by-state basis. Reporting persons will be required to extrapolate terminology used in the Proposed Rule to actual local nomenclature and practice. For example, in many states the central role played by attorneys in a real estate settlement may result in lawyers holding the highest priority in the cascade of reporting persons under the Proposed Rule. [1] 86 Fed. Reg. 69589 (Dec. 8, 2021). [2] 2024-02565.pdf (govinfo.gov). [3] 31 C.F.R. § 1010.380 et seq. [4] GTO Order Phase 17 (fincen.gov). [5] 67 Fed Reg. 21111 (Apr. 29, 2002). [6] The BSA requires each covered financial institution to establish an AML/CFT program, which must include, at a minimum: (a) the development of internal policies, procedures, and controls; (b) the designation of a compliance officer; (c) an ongoing employee training program; and (d) an independent audit function to test programs. In addition, for covered financial institutions required to have an AML/CFT program, that category of financial institution is required to file SARs when suspicious activity is identified. See, 31 U.S.C 5312(a)(2); 31 C.F.R. § 1010.200 et seq. [7] 31 CFR §1010.100(hhh). [8] Real property would be covered in the case of a mixed-use development, such as a building with ground floor commercial space, and apartments or condominium units on higher floors.  [9] 31 C.F.R. § 380(c)(1)(ii).  [10] The impact of this broad definition is that typical family estate planning through the use of a family trust would require the filing of a Real Estate Report. [11] According to the Proposed Rule, the titling of a transfer is not material, meaning that a transfer to a trust is covered whether the subject real property is titled in the name of a trust itself or in the name of the trustee in the capacity as the trustee of the trust. [12] While bank and non-bank lenders would not be providing financing, those entities might be reporting persons if settlement services were provided (other than financing), such as escrow services provided directly or through an affiliated company. [13] 31 C.F.R. § 380(c)(2). [14] 31 C.F.R. § 380(c)(2)(xxi). [15] 31 C.F.R. § 380(d). 

Client Alert

UK IR35 – Important Changes From 6 April

March 29, 2021

Following a pandemic-related delay, significant changes to the IR35 regime come into force on 6 April 2021. From then, affected businesses which engage contractors who provide services through their own limited company intermediary (often, a personal service company) will be responsible for determining if the individual contractor is employed or self-employed for tax purposes and, if the contractor is employed, will be obliged to account for income tax and National Insurance contributions (NICs) through PAYE. Who is impacted? The new rules apply to “medium” and “large” entities which have a UK connection, and are applied on a group basis (which includes both UK and non-UK group companies). An entity is “small”, and is not subject to the new IR35 rules, if two or more of the following apply: annual turnover of no more than £10.2m balance sheet total of no more than £5.1m not more than 50 employees What is changing? From 6 April, the end-user has responsibility for determining whether a contractor is employed or self-employed for tax purposes, rather than (as currently) the intermediary. If the contractor falls within the new IR35 rules, the end-user client is responsible for accounting for income tax and NICs on the fees it pays. What is the impact? Where an end-user is subject to the new regime, there are some significant results including: they must make a “status determination” to ascertain the contractor’s status they must provide a “status determination statement” and deal with appeals where the contractor is deemed to be an employee for tax purposes, the end-user must account for income tax and NICs HMRC can impose penalties for non-compliance Act quickly Whilst HMRC has indicated that it will be lenient in enforcement in the first year, it is important to ensure that contractor arrangements are compliant, if this has not already been done.  

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The Supreme Court Update - October 8, 2026

On September 29, 2026, the Supreme Court granted certiorari in one case: Department of Homeland Security v. D.V.D., No. 26-426: This case concerns the Trump Administration’s “third-country removal” procedures, where immigrants are deported to countries not listed in the removal orders. In granting certiorari, the Court granted the Government’s application to stay a lower court decision halting the practice, which will allow third-country removals to continue pending resolution of the case. The issues presented are: (1) Whether the district court had jurisdiction over respondents’ claims; (2) whether the district court had authority to enter class-wide declaratory relief and APA vacatur under 8 U.S.C. § 1252(f)(1); (3) whether the Government’s guidance on third-country removals is unlawful under 8 U.S.C. § 1231(b), the due process clause, or FARRA/CAT and its implementing regulations; and (4) such other questions that the Government determines are appropriate for the proper disposition of the case. On October 1, 2026, the Court granted certiorari in three additional cases: Rhoney v. Barbosa da Cunha, No. 26-104: Immigration officials detained Ricardo Aparecido Barbosa da Cunha—a Brazilian citizen who had lived in the United States for approximately twenty years after entering without inspection—and denied him a bond hearing under 8 U.S.C. § 1225(b)(2)(A). The Second Circuit held that his detention was instead governed by § 1226(a), which permits release on bond, because § 1225(b)(2)(A)’s mandatory-detention requirement applies only to noncitizens apprehended while entering the country or shortly thereafter. The question presented is: Whether 8 U.S.C. § 1225(b)(2)(A) mandates the detention pending removal proceedings of aliens who, like Barbosa da Cunha, are present in the United States without having been admitted. Missionaries of St. John the Baptist, Inc. v. Frederic, No. 25-113: A Catholic religious organization sought to build a shrine to the Virgin Mary on land the organization owned adjacent to its church in Park Hills, Kentucky. Local zoning restrictions prohibited the proposed construction. The question presented is: Whether a land-use regulation that prohibits a religious institution from building a religious structure on its own property constitutes a “substantial burden” on religious exercise under the Substantial Burden Provision of the Religious Land Use and Institutionalized Persons Act, 42 U.S.C. § 2000cc(a). Marschner v. Marschner, No. 25-1349: Under the Uniformed Services Former Spouses’ Protection Act (“USFSPA”), a veteran’s longevity-based retirement pay can be divided in a divorce, but retirement pay based on disability and retirement pay that was waived to receive disability pay are indivisible. The question presented is: Does the USFSPA require state courts to refuse enforcement of indemnification provisions in a divorce settlement agreement?

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EPA Limits Title V Re-Litigation of NSR Permits

Overview On September 25, 2026, the U.S. Environmental Protection Agency (“EPA”) published a final rule that significantly limits the ability of third parties to use the Clean Air Act (“CAA”) Title V permitting process to revisit New Source Review (“NSR”) permitting decisions years after those decisions were made. The rule establishes that NSR permitting determinations generally must be challenged during the original permitting proceeding, thereby providing regulated sources with greater permitting certainty and finality for major capital projects. Published in the Federal Register titled Clarifying the Scope of “Applicable Requirements” Under State Operating Permit Programs and the Federal Operating Permit Program (Docket ID No. EPA-HQ-OAR-2023-0401), the rule amends 40 C.F.R. Parts 70 and 71 to codify EPA’s interpretation regarding when requirements established under other CAA programs may be reviewed, modified, or implemented through the Title V operating permit program. The rule becomes effective 30 days after publication. The rule addresses two principal issues: (1) the relationship between NSR preconstruction permitting and Title V operating permits, and (2) the treatment of the General Duty Clause under CAA section 112(r)(1). Most significantly, the rule provides greater certainty for sources navigating the NSR permitting process. EPA’s amendments are intended to ensure that NSR permitting decisions made through an approved public process are generally not revisited later through Title V permit proceedings. The rule responds to a circuit split between the U.S. Courts of Appeals for the Fifth and Tenth Circuits. In Environmental Integrity Project v. EPA, 969 F.3d 529 (5th Cir. 2020), the Fifth Circuit upheld EPA’s interpretation, concluding that it was consistent with the text, structure, and purpose of Title V. In contrast, the Tenth Circuit reached the opposite conclusion in Sierra Club v. EPA, 964 F.3d 882 (10th Cir. 2020), finding that the then-existing regulatory definition of “applicable requirement” did not support EPA’s position. By amending the regulatory language on which the Tenth Circuit relied and codifying the interpretation approved by the Fifth Circuit, EPA has established a nationwide framework governing the interaction between NSR and Title V. NSR and Title V: EPA Establishes a Uniform Nationwide Framework At the core of the rule is EPA’s effort to define the respective roles of NSR and Title V. The rule codifies the approach EPA has applied since 2017: once a source obtains an NSR permit under an EPA-approved permitting program, and that permit was issued following public notice with an opportunity for comment and judicial review, the permit establishes the NSR-related “applicable requirements” of the State Implementation Plan (“SIP”) or Federal Implementation Plan (“FIP”) for Title V purposes. Under this framework, Title V is not a vehicle for re-examining underlying NSR permitting decisions. EPA does not intend to use the Title V process to revisit applicability determinations, emissions calculations, control technology determinations, permit conditions, or other issues resolved through the NSR permitting process. This principle applies regardless of the stage of the Title V proceeding; whether the NSR permit was issued pursuant to a SIP or FIP; the type of NSR issue involved; or whether the NSR permit is incorporated into Title V sequentially or concurrently. Limited Exceptions EPA recognizes several circumstances in which NSR issues may still be reviewed through the Title V program: No NSR permit was issued at all; The permit was issued without public notice and an opportunity for comment and judicial review; or The issue involves substantive overlap between Title V and NSR requirements, such as the adequacy of monitoring provisions. As a result, the rule does not insulate unpermitted projects or foreclose review of matters that independently arise under Title V. Key Regulatory Amendments The rule revises the definition of “applicable requirement” in 40 C.F.R. §§ 70.2 and 71.2. Paragraph (1): Where an NSR permit is issued with public notice and an opportunity for comment and judicial review, the permit establishes and defines the applicable SIP or FIP requirements for Title V purposes. Paragraph (2): All NSR permit terms, including terms contained in minor NSR permits, constitute applicable requirements that must be incorporated into Title V permits. Paragraph (4): CAA section 112(r)(1) (the General Duty Clause) is expressly excluded from the definition of “applicable requirement,” while section 112(r)(7) Risk Management Program requirements remain included. EPA also amended 40 C.F.R. §§ 70.8 and 70.12 to clarify that alleged defects in requirements established outside the Title V process generally do not provide a basis for EPA objection to a Title V permit or for a Title V citizen petition. General Duty Clause Exclusion The rule also codifies EPA’s longstanding position that the General Duty Clause in CAA section 112(r)(1) is not an “applicable requirement” for Title V purposes. EPA points to several considerations supporting that conclusion, including the distinction between the General Duty Clause and Title V permit terms, the provision’s origins in the Occupational Safety and Health Act’s general duty clause, and the different enforcement structures applicable to the General Duty Clause and Title V permit requirements. Importantly, excluding section 112(r)(1) from the definition of “applicable requirement” does not eliminate EPA’s authority to enforce the General Duty Clause independently of the Title V program. The final rule instead clarifies that the General Duty Clause need not—and should not—be incorporated into Title V permits as an applicable requirement. Practical Implications for Regulated Sources Greater Finality for NSR Permits  For projects requiring PSD, nonattainment NSR, or minor NSR permits, the permitting process becomes the primary forum for resolving disputes regarding applicability determinations, emissions calculations, control technology requirements, offsets, and permit conditions. Once an NSR permit is issued through a qualifying public process, regulated sources should face substantially reduced risk that those same issues will be challenged years later through Title V permit proceedings. Reduced Risk of Collateral Permit Challenges Stakeholders have sometimes sought to use Title V permit issuance, renewal, revision, or citizen-petition proceedings to challenge underlying NSR determinations. The final rule makes clear that Title V is not the appropriate vehicle for challenging whether an applicable requirement was correctly established in the first instance. This should reduce the risk of permit delays and uncertainty associated with collateral challenges to previously issued NSR permits. The rule does not, however, eliminate all Title V challenges relating to an NSR permit. Challenges concerning the Title V permit itself—including whether it appropriately incorporates applicable requirements or contains adequate compliance provisions—remain possible. Increased Importance of the Initial NSR Proceeding Because Title V generally will not provide a second opportunity to challenge the substantive validity of an NSR determination, the administrative record developed during the NSR process becomes increasingly important. Permit applicants should ensure that applicability analyses, emissions calculations, control technology evaluations, modeling demonstrations, and supporting technical documentation are thoroughly developed during the original permitting proceeding. For significant projects, applicants may therefore have an additional incentive to identify and resolve potential permitting issues before the NSR permit is issued rather than assuming that unresolved issues can be addressed during a subsequent Title V proceeding. Potential Incentive for Broader Public Participation EPA also notes that permitting authorities may choose to provide public notice and an opportunity for comment for a broader range of NSR permits because permits issued through a qualifying public process receive the benefit of the finality framework established by the rule. Some permitting authorities may conclude that greater public participation at the NSR stage is preferable to uncertainty during subsequent Title V proceedings. Conclusion The final rule is principally a permitting-certainty measure. For sources that obtain NSR permits through a public process, EPA has substantially limited the ability of third parties to revisit underlying NSR determinations through the Title V program. As a result, regulated entities should benefit from greater finality regarding key permitting decisions, reduced risk of collateral permit challenges, and increased certainty when planning and implementing capital projects.

News

Dorsey & Whitney Advises Beijing Xunzhong on Two Consecutive H Share Placings Raising HK$418.5 Million

International law firm Dorsey & Whitney LLP acted as Hong Kong legal advisors to Beijing Xunzhong Communication Technology Co., Ltd. (“Xunzhong”) as to Hong Kong law in connection with two consecutive placings of new H shares under general mandate (the “First Placing” and the “Second Placing”, respectively, and together, the “Placings”). Xunzhong’s H shares are listed on the Main Board of the Hong Kong Stock Exchange (Stock Code: 2597). Winbull Securities International (Hong Kong) Limited acted as sole overall coordinator and placing agent on both Placings. The First Placing of 11,190,000 new H shares at HK$28.20 each was completed on September 17, 2026, followed by the Second Placing of 3,550,000 new H shares at HK$29.00 each on October 30, 2026. The Placings raised approximately HK$315.56 million and HK$102.95 million in gross proceeds, respectively, or approximately HK$418.51 million in aggregate (approximately HK$415.96 million in aggregate net proceeds). Both Placings were conducted under the same general mandate granted by shareholders at Xunzhong’s 2025 annual general meeting, and each was completed within one week of the signing of its placing agreement. Completing placings in consecutive months is relatively uncommon in the Hong Kong market, and doing so called on the technical depth of Dorsey’s Hong Kong Capital Markets team. Working closely with Xunzhong to understand its business needs and prepare the transaction documents, the team addressed in quick succession the remaining capacity under the general mandate, disclosure of the use of proceeds and the maintenance of Xunzhong’s public float, enabling both Placings to be completed seamlessly. “We are pleased to have advised Xunzhong on both Placings,” said Rachel Han, Partner and Co-Head of Dorsey’s Asia Capital Markets practice. “We appreciate the trust placed in our team and the close collaboration among all parties involved. We look forward to supporting Xunzhong as it continues to execute its growth strategy and pursue future capital markets opportunities.” Xunzhong is principally engaged in cloud-based communications services and enterprise digitalization services in the PRC. As disclosed in its announcements, the net proceeds of the First Placing are allocated to developing Xunzhong’s new computing power operation services business, while those of the Second Placing will be used to integrate model-as-a-service (MaaS) and AI agent capabilities into its existing cloud communications platform-as-a-service (PaaS) platform and software-as-a-service (SaaS) products. Approximately 55% of the net proceeds of the Second Placing will be used for computing power equipment upgrades for the MaaS system, approximately 35% for MaaS, PaaS and SaaS platform upgrades, and approximately 10% for working capital and general corporate purposes. With a single MaaS platform and shared computing power supporting its PaaS and SaaS offerings, Xunzhong intends for its MaaS, PaaS and SaaS capabilities to complement and reinforce one another, and to address customer needs from multiple angles, from embedding AI in customer communications and business workflows to maintaining stable performance at scale and keeping customer data within controlled environments. Partner and Co-Head of Dorsey’s Asia Capital Markets practice Rachel Han and Of Counsel in the Capital Markets and Corporate Compliance group Carlton Ng, along with Associate Kristy Ting, led the Dorsey Hong Kong Capital Markets & Corporate Compliance group in advising Xunzhong on both Placings.

Insights

Construing Congressional Silence: With the Natural Gas Act’s Not Addressing Compensation in Pipeline Condemnations, Can Courts Use State Law to Award Attorney Fees?

On November 9, 2026, the Supreme Court will hear oral arguments in Leonard W. Hoffmann v. WBI Energy Transmission, Inc. to determine: “In private condemnations under the Natural Gas Act, should just compensation be determined by reference to state law?” North Dakota ranchers litigated the price of a natural gas pipeline easement during three years of condemnation proceedings, settled on the easement price, and were awarded attorney fees based on state law, but the fees were denied by Eighth Circuit, which held that because the Natural Gas Act (“NGA”) provision authorizing pipelines to use of eminent domain does not address compensation, the Fifth Amendment standard must necessarily apply, that is, “just compensation” for property, but not attorney fees.1 Four other circuits disagree. The Court will resolve the circuit split, likely making some pipeline condemnations less expensive and quicker or, alternatively, more expensive and take longer. Whatever the result, Congressional action could follow. Background Section 7(c) of the NGA requires the Federal Energy Regulatory Commission (“FERC”) to issue a certificate of public convenience and necessity, before new interstate natural gas pipeline facilities can be constructed and operated.2 Significantly, only a private party – not the federal government, not a state, nor a municipality – can obtain certificate authorization.3 The NGA did not initially address property acquisition, leaving certificate holders to rely on state condemnation law to secure necessary property rights to develop their projects, rendering some with “only an illusory right to build.”4 Congress resolved that by enacting NGA Section 7(h), which vests certificate holders with the ability to exercise eminent domain in a federal or state court where the property is located.5 Yet Section 7(h) does not address compensation: it does not indicate whether attorney fees can be recovered; “it does not even expressly require that just compensation be provided.”6 Litigation over the meaning of the Congressional compensation silence ensued. After Years of Litigation, Parties Agreed on Easement Price, but Not Attorney Fees In February 2018, WBI Energy Transmission, Inc. (“WBI”) received certificate authorization to construct and operate approximately 12 miles of 24-inch diameter pipeline through ranch land in western North Dakota, in the heart of the oil and gas producing Bakken formation of the Williston Basin.7 WBI and the ranchers could not agree on an easement price: the ranchers had recently negotiated easement prices with oil pipelines (which do not have eminent domain rights and must pay “market” prices to obtain easements) and sought a similar deal,8 but WBI was unwilling, instead offering only what it paid for a parallel natural gas line easement years earlier.9 So WBI filed in federal district court a complaint to take by eminent domain a permanent easement and temporary rights-of-way to construct the pipeline. Shortly thereafter, with the agreement of the ranchers, the court ordered that WBI could have immediate use and possession of the easements necessary for construction, leaving for trial the amount of compensation.10 The Fifth Amendment guarantees that private property shall not be taken for public use without just compensation.11 WBI and the ranchers disagreed on what constitutes “just compensation.” WBI maintained that compensation should be determined solely by the “before and after rule” – i.e., the difference between the market value of the land free of the easement and the market value burdened with the easement.12 The ranchers argued that other factors should also be considered, such as market rate paid by oil pipelines for easements on the properties.13 WBI filed a motion in limine to exclude evidence and testimony of such payment information, which the trial judge denied,14 leading to a confidential settlement on the value of the easement, with the ranchers’ reserving their right to seek attorney fees and expenses and WBI’s reserving its right to contest. After three years of litigation, the ranchers sought to recover $383,375.76 – that is, $332,274.96 in legal fees and $50,650.86 in costs and expenses.15 WBI claimed that the amount was unreasonable and should be limited to $220,625.52.16 The trial court, recognizing that the NGA was silent on compensation issues, relied on United States v. Kimbell Foods, Inc.17 to analyze whether to “fill in the gap” with North Dakota condemnation law and ultimately concluded it could award attorney fees and costs.18 WBI appealed. Four Circuits Rely on Kimbell Foods and State Law to Award Attorney Fees Courts have recognized the difference between condemnations by the federal government and a private party: “the sovereign need only pay for what it actually takes rather than for all that the owner has lost.”19 “[W]here the federal government is the condemnor there exists a significant concern about the spending of federal dollars, one that does not exist when a private entity is the condemnor . . . pursuing the condemnation ‘for purposes of profit.’”20 As such, four circuit courts have applied federal common law to allow recovery of attorney fees and costs in condemnations under the NGA.21 “In crafting such federal common law, courts need not inevitably … resort to federal rules,”22 but rather, after weighing various considerations set forth in the Supreme Court’s 1979 opinion in Kimbell Foods, can apply state law.23 In particular, the four circuits answered “no” to each of the following three questions posed in Kimbell Foods: “(1) whether the federal program, by its very nature, required uniformity; (2) whether application of state law would frustrate specific objectives of the federal program; and (3) whether application of uniform federal law would disrupt existing commercial relationships predicated on state law.”24 The Eighth Circuit took a different tack. Eighth Circuit Reversed and Barred Attorney Fees, Breaking with Sister Circuits The Eighth Circuit framed the issue this way: “Under North Dakota law, as the district court points out, attorney fees are available in condemnation proceedings. WBI’s view is that federal law applies because it was exercising the eminent-domain power of the United States, which would owe no attorney fees if it did the condemning.”25 The court then held: “Just compensation” under the Fifth Amendment has a well-established legal meaning that usually equates to “market value,” the “full monetary equivalent of the property taken.” * * * But the focus is always on the value of the property itself, not what the owner spends trying to keep it. * * * Under the Fifth Amendment, property owners cannot recover for “indirect costs” like attorney fees and expenses. Only a statute can require more. * * * [T]he Natural Gas Act says nothing about the measure of compensation due to a property owner.  It does not even use the words “just compensation,” let alone say that attorney fees are available or that an agency or state law can provide them. Without such an exercise of “legislative grace,” the default rules applies: “just compensation” under the Fifth Amendment.26 The Eighth Circuit recognized “that different concerns are at stake when the United States is exercising its own power under the Fifth Amendment…. But these are policy arguments better addressed to Congress.”27 Petition For Writ of Certiorari Granted to Resolve Circuit Split The ranchers filed with the Supreme Court a petition for a writ of certiorari to resolve the split between the Eighth Circuit and four other circuits.28 WBI initially opposed the petition,29 but relented after the Solicitor General urged the court to grant petition and uphold the Eighth Circuit opinion.30 The attorneys general of ten states31 and a national network of eminent domain and property lawyers filed amici curiae (friends of the court) briefs in support of the ranchers’ petition.32 Shortly after WBI and ranchers filed supplemental briefs,33 the Supreme Court granted the petition for certiorari on June 26, 2026.34 Ranchers Focused on Statutory Interpretation, Six Amici on Economic Fairness Rather than rely primarily on Kimbell Foods, the ranchers’ merits brief used statutory interpretation to argue that private condemnation lawsuits under the NGA should use state law compensation rules.35 They contend that, in contrast to various ways that the federal government can take land,36 NGA Section 7(h) grants a limited “delegation of power to take property through a condemnation lawsuit – to file what is sometimes called “a straight condemnation,”37 where authorization to take property is not sought, but instead for the court to adjudicate the value of the property: “If the condemnor wants to buy the property at the court’s price, it tenders payment; if not, it can abandon the condemnation.”38 Thus, the ranchers submit that their rights to compensation under the NGA flow not from the Fifth Amendment, but rather from the NGA’s authorizing “the filing of a lawsuit whose purpose is to adjudicate how much they must be paid for their land.”39 If the condemnor were the federal government, compensation would not be greater than the Fifth Amendment minimum, absent statutory authorization;40 but that does not require the same to result in a private condemnation. The ranchers suggest that several additional reasons support using state law to resolve property compensation issues. First, given that real property law “lies at the core of traditional state authority”,41 compensation should consider “North Dakota’s rule that property owners cannot be made to bear the cost of their condemnation….”42 Second, based on the “Court’s longstanding practice of borrowing state substantive law,” the issue is not whether NGA Section 7(h) incorporates state land valuation rules, but “whether the statute preempts them.”43 Third, unless an easement’s value is above a statutory minimum,44 the condemnor can only file in state court: “If Congress expected those state courts to look to a source of law other than the one they would ordinarily look to in a property case, one could expect it to have left some hint to that effect in the text. But there isn’t one.”45 Fourth, awarding attorney fees under state law is consistent with the purpose of NGA Section 7(h): Respondent suggests that Congress, out of a desire to fix a problem in Missouri (where interstate natural-gas companies lacked an eminent-domain cause of action), also decided to take some money away from farmers and ranchers in places like Iowa (where the companies already had a cause of action). Surely not.46 Six groups filed amicus briefs supporting the ranchers.47 Among them, Florida property owners, who were involved in a different condemnation proceeding,48 contend that (1) compensation rules for federal government acting in its own name should not apply to private, for-profit companies acting under a limited delegation of eminent domain,49 and (2) “property owners who are without economic wherewithal proceed in an unrepresented fashion and are typically forced to accept a compromise close to the amount of the private licensee company’s low offers because they are not otherwise with the means to prepare their own valuation estimates and defend their respective constitutional entitlement to compensation.”50 This was reinforced by a group of property lawyers: In 2016, under the auspices of the Natural Gas Act (“NGA”), the Sabal Trail natural gas pipeline project in Florida took land from Ryan B. Thomas and offered him $6,800 in exchange. A Florida jury later determined that the measure of compensation for Sabal Trail’s taking was $463,439. Sabal Trail had thus initially offered Mr. Thomas 1.4% of his land’s value. Between the initial offer and the jury’s determination of compensation lay months of litigation work by Mr. Thomas and his attorney.51 The property lawyers also argued that affirming the Eighth Circuit’s decision would strip property owners of state law protections in 21 states.52 WBI Argued NGA Silence on Attorney Fees Intentional, Supported by Three Amici WBI’s merits brief contends that condemnation by a private party is nothing new and does not require a different set of rules from the Federal government’s condemning land: “For as long as the eminent domain power has been exercised by the United States, it has also been delegated to private parties.”53 These private delegatees “knitted together the expanding nation by building railroads, bridges, roads, and telegraph and telephone lines”54 and, absent a Congressional directive, paid the fair market value of the property taken, as required by the Fifth Amendment.55 WBI points to a 1943 case, United States ex rel. Tennessee Valley Auth. v. Powelson,56 which summarized then existing law: “[i]n the absence of a statutory mandate, the sovereign must pay only for what it takes, not for the opportunities which the owner may lose”.57 Indeed, Congress knew how to depart from the Fifth Amendment’s fair-market-value measure of condemnation compensation: “One year before enacting Section 717f(h), in the General Bridge Act of 1946, Congress authorized private parties to condemn land for bridges and expressly required that compensation ‘be ascertained and paid according to the laws of [the] State’ where the property sits.”58 Additionally, WBI argues that the ranchers essentially urge the court to adopt a patchwork of individual state compensation laws, which would undermine what Congress did in enacting NGA Section 7(h) --“eliminate state-by-state variation in NGA condemnations so that certificate-holders could efficiently construct interstate pipelines.”59 Three amicus briefs were filed in support of WBI, including one from the Attorney General, who reiterated: “Just compensation under the Fifth Amendment ‘is for the property, and not the owner. Accordingly, ‘indirect costs to the property owner caused by the taking of his land,’ such as ‘attorneys fees’ are ‘generally not part of the just compensation to which his is constitutionally entitled.’”60 Another amicus brief filed by trade associations claimed that interstate natural gas pipelines are responsible stewards of eminent domain, exercising it only as a last resort, as evinced by a survey indicating that, over a recent nine-year period FERC-certificated pipeline projects more than ten miles in length (25,268 tracts) resulted in only 10% of the tracts requiring condemnation and less than one percent (1%) required litigation.61 Finally, the US Chamber of Commerce emphasized the importance of natural gas to businesses,62 and urged the Court not to create obstacles that would “chill investment in essential infrastructure….”63 Crystal Ball Judicial Tension between “Strict Construction” and Support for Property Rights? Hoffmann could set up a clash between a favored method of the Supreme Court for resolving conflicts and a centuries’ long commitment to protecting a fundamental right. Questions during oral arguments could foreshadow which way the Court will lean. On one hand, the Court could rely on NGA Section 7(h)’s “’plain meaning’ derived from an ordinary understanding of the words and structure of the statutory text.”64 Consider the Supreme Court’s rationale in Dobbs v. Jackson Women’s Health Organization,65 which overruled the landmark Roe v. Wade:66 “The Constitution makes no reference to abortion, and no such right is implicitly protected by any constitutional provisions including . . . the Due Process Clause of the Fourteenth Amendment.”67 This type of “strict construction”68 aligns most closely with WBI’s argument that Section 7(h) does not specifically provide for attorney fees, and the silence was intentional, given that Congress expressly permitted recovery of attorney fees in eminent domain actions under the General Bridge Act of 1946, the year before enactment of NGA Section 7(h).69 On the other hand, the ranchers’ arguments resonate with a long line of cases protecting property rights. More than 130 years ago, the Court in Monongahela Nav. Co. v. U.S.70 explained that in condemnation cases the courts should adhere to “the rule that constitutional provisions for the security of person and property should be liberally construed.  A close and literal construction deprives them of half their efficacy, and leads to gradual depreciation of the right….”71 Half a century ago, the Supreme Court, in Lynch v. Household Fin. Corp,72 emphasized: “Property does not have rights. People have rights.”73 Three years ago, all nine justices, in Tyler v. Hennepin County, Minnesota,74 ruled for a property owner, holding that a local government cannot keep the surplus profit after selling a seized home for unpaid taxes.75 The policies in these (and other cases cited by the ranchers) would appear to support landowners’ recovering the costs incurred to defend their property in condemnation proceedings. Whether a strict construction of NGA Section 7(h) permits those policies to be realized in Hoffmann remains to be seen. Implications and Possible Congressional Action The amount of compensation offered by pipelines and the length of condemnation proceedings may change, depending on how the Supreme Court rules. If the Court upholds the Eighth Circuit opinion – and concludes that attorney fees and costs cannot be recovered –a landowner may be presented with an unsavory decision: accept the pipeline’s offer or, alternatively, refuse the offer, go to court, and watch legal fees erode any compensation ultimately received. Worse yet, with litigation unlikely, pipelines may submit “low ball” offers, believing that the landowner will not likely want to risk costly litigation. Conversely, if the Supreme Court reverses the Eighth Circuit and holds that attorney fees and costs can be recovered, the number of condemnation cases could increase, as landowners’ eyeing large payouts reject pipeline offers and take their chances in court. This in turn could increase pipeline costs (that are passed on to ratepayers). In short, depending on the Supreme Court rules, pipeline condemnations could become less expensive and quicker or, alternatively, more expensive and take longer. No matter how the Supreme Court rules, Congressional action could (and arguably should) follow. If the Eighth Circuit opinion is affirmed, Congress may be pressured to protect landowner property rights by amending NGA Section 7(h) to provide for the recovery of attorney and fees and costs. Under similar circumstances in 1954, Congress responded to an unpopular Supreme Court opinion on federal regulatory jurisdiction by amending the NGA.76 But even if the Eighth Circuit opinion is reversed, the result would be a geographical crazy quilt of federal common law stitched together from applicable state condemnation statutes, tying recovery of attorney fees in NGA condemnations to the state law in which the property is located, possibly leading to disparate cost recovery by landowners for the same pipeline project, prompting calls for a clear, uniform rule. 1 Click on the hyperlink in the body to access all motions and briefs submitted in the Supreme Court proceeding. 2 NGA § 7(c), 15 U.S.C. § 717(c)(1)(A) (“No natural-gas company … shall … undertake construction of extension of facilities … unless there is in force with respect to such natural gas-company a certificate of public convenience and necessity….). 3 Id. § 2, 15 U.S.C. § 717a (“’Natural-gas company’ means a person engaged in the transportation of natural gas in interstate commerce….; ‘Person’ includes an individual or a corporation.”). 4 PennEast Pipeline Co. v. New Jersey, 594 U.S. 482, 489 (2021). 5 NGA § 7(h), 15 U.S.C. § 717f(h), Pub. Law No. 80-245, 61 Stat. 459 (1947). Section 7(h), in pertinent part, provides: When any holder of a certificate of public convenience and necessity cannot acquire by contract, or is unable to agree with the owner of property to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain a pipe line or pipe lines for the transportation of natural gas, and the necessary land or other property . . . , it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such property may be located, or in the State courts. Id. 6 Tennessee Gas Pipeline Company, LLC v. Permanent Easement for 7.053 Acres, 931 F.3d 237, 243 (3d Cir. 2019). 7 Under FERC’s regulations, once issued a “blanket certificate,” an interstate natural gas pipeline may file a “prior notice” for certificate authorization to construct and operate facilities of limited cost, which, if not protested within 60 days after publication in the Federal Register, is authorized by operation of law. 18 C.F.R. § 157.205. On November 30, 2017, WBI filed a prior notice request to construct and operate certain facilities in McKenzie County, North Dakota; because no protests were filed, certificate authorization for the pipeline project was granted by operation of law. WBI estimated the project cost to be $27.2 million (WBI’s Prior Notice Request, Docket No. CP18-21-000 (Nov. 30, 2017) at 8), including $1,115,153 in pipeline right-of-way costs. WBI’s Supplemental Prior Notice Filing, Docket No. CP18-21-000, Exhibit K (Dec. 7, 2017) (Estimated Cost of Facilities). 8 “Leonard Hoffman was offered roughly half the market rate for gas pipeline access across his pastureland….” Chris Bennett, “Lowballed by Eminent Domain, ND Farmers Appeal Landmark Case to Supreme Court,” AG Web (Sept. 16, 2025) https://www.agweb.com/news/business/farmland/lowballed-eminent-domain-nd-farmers-appeal-landmark-case-supreme-court. 9 The pipeline at issue would run parallel to an existing pipeline on the ranchers’ land, which WBI uses to transport gas from the Wild Basin and Garden Creek processing plants to an interconnection with the pipeline system of Northern Border Pipeline Company. Brief of Respondent, Leonard W. Hoffman v. WBI Energy Transmission, Inc., No. 25-159 (filed Sept. 14, 2026) (“Respondent’s Brief”) at 7; id. (“Despite having earlier reached voluntary agreements for WBI’s immediately parallel pipeline at substantially lower rates, petitioners rejected WBI’s compensation offers.”) (citation omitted). 10 WBI Energy Transmission Inc. v. Easement and Right-of-Way Across, 189.9 rods, more or less, Case No. 1:18-cv-078, slip op. (D.N.D. May 7, 2018) (order adopting stipulation). 11 U.S. Const. amend. V (takings clause). 12 See United States v. 1129.75 Acres of Land, 473 F.2d 996, 998 (8th Cir. 1973) (“When land is taken by eminent domain, and the title acquired is not a fee, but merely an easement, the proper measure of damages is the difference between the market value of the land free of the easement and the market value burdened with the easement.”). 13 WBI Energy Transmission, Inc., v. Easement and Rights-of-Way Across 189.9 rods, more less, Case No. 1:18-cv-078, slip op. at 3 (D. ND, April 1, 2021) (Order Denying Plaintiff’s Motion in Limine to Exclude Evidence of Other Transactions). 14 Id. at 17 (“In this case, it may be appropriate for the fact finder to consider comparable pipeline easement transactions, particularly based on the unique natura of pipeline development in the Bakken oil field development occurring in McKenzie County, North Dakota.”). 15 The legal fees were “based upon a total of 1,295.4 hours, billed at hourly rates ranging from $115 to $350.” WBI Energy Transmission, Inc. v. Easement and Right-of-Way Across 189.9 rods, more or less . . . ., 2024 WL 1477719 (D. ND March 5, 2024). “The expenses include payments for court fees, travel expenses, legal research, and expert witness fees.” Id. 16 Each party and various amici curiae have expended considerable time and money to resolve the slightly more than $150,000 difference between the attorney fees and costs actually incurred ranchers and what WBI considered reasonable, underscoring that from the start this appeal has been about whether attorney fees should be awarded, not whether the ranchers’ attorney fees were reasonable. 17 440 U.S. 715 (1979). 18 WBI Energy Transmission, Inc., 2024 WL 1477719. 19 Tennessee Gas Pipeline, 931 F.3d at 244 (citations omitted); cf. Georgia Power, 617 F.2d at 1118 (“Thus by definition a licensed project does not implicate the interests of the United States to the degree that is thought desirable that the project be undertaken by the United States itself.”). 20 Tennessee Gas Pipeline, 931 F. 3d at 249 (citation omitted). 21 See Tennessee Gas Pipeline Company, LLC v. Permanent Easement for 7,053 Acres, 931 F.3d 237, 245 (3d Cir. 2019). The court explained: “Federal common law refers to the development of legally binding federal rules articulated by a federal court which cannot be easily found on the face of a constitutional or statutory provision.” The need for common lawmaking “stems from the inability of legislators to anticipate every possible contingency and the impracticality of judges[‘] returning all unanswered questions to the legislature.” Id. (citations omitted). The Third Circuit explained that “when Congress has not spoken in an area comprising issues substantially related to an established program of government operation, … the Supreme Court has direct[ed] federal courts to fill the interstices of federal legislation according to their own standards.” Id. (internal quotations and citations omitted). 22 Id. (citation omitted). 23 Id. The Supreme Court in Kimbell Foods was tasked with either crafting a uniform, national rule or, alternatively, utilizing state law, to determine whether contractual liens under federal loan programs take precedence over private liens. After establishing and applying a three-part test, the Court ultimately decided that nondiscriminatory state laws should be utilized. 440 U.S. at 740. The 3rd Circuit in Tennessee Gas Pipeline ruled that Kimbell Foods “and its progeny reflect a presumption in favor of state law, one not rebutted here.” 931 F.3d at 255. 24 The 5th Circuit applied Kimbell Foods first in a condemnation involving the Federal Power Act (Georgia Power Co. v. 138.30 Acres of Land, 617 F.2d 1112 (5th Cir. 1980)) and later in an NGA condemnation. Mississippi River Transmission Corp. v. Goerge S. Tabor, 757 F.2d 662 (5th Cir. 1985). The 6th Circuit (Columbia Gas Transmission Corp. v. Exclusive Natural Gas Storage Easement, 962 F. 2d 1192 (6th Cri. 1992), 3rd Circuit (Tennessee Gas Pipeline Co., 931 F. 3d at 245-46), and 11th Circuit also followed suit. Sabal Trail Transmission, LLC v. 18.27 Acres of Land in Levy County, 59 F.4th 1158 (11th Cir. 2023). The geographic footprint of each of these four circuits include significant oil and gas formations and, therefore, associated pipeline transportation systems: Third Circuit (Marcellus Formation), Fifth Circuit (Eagle Ford, Haynesville, and Permian Formations), Sixth (Devonian, Marcellus, and Utica Formations), and Eleventh Circuit (transmission from Marcellus and Utica Formations). These formations account for approximately 75% of the natural gas produced in the U.S. Ryan Bellafontaine, “Mapped: Where is U.S. Natural Gas Produced?” (Aug. 17, 2026) (Sources: EIA 2026) https://www.visualcapitalist.com/sp/sc02-mapped-where-is-u-s-natural-gas-produced/. 25 WBI Energy Transmission, Inc. v. 189.9 Rods, More or Less, 1332 F.4th 1058, 1060 (8th Cir. 2025). 26 Id. at 1060-61. 27 Id. at 1062. 28 Leonard W. Hoffmann v. WBI Energy Transmission, Inc., petition for cert. filed, No. 25-159 (U.S. Aug. 7, 2025) at 8-11. The petition was a long shot. Each year, the Court reportedly receives more than 7,000 petitions for a writ of certiorari, but only hears oral argument for 100 or less. Nora Collins, “The serious decline in petitions before the Supreme Court,” SCOTUS Blog (May 11, 2026) https://www.scotusblog.com/2026/05/the-serious-decline-in-petitions-before-the-supreme-court/. 29 WBI argued that “this case is a poor vehicle for review of the question presented” because North Dakota does not require, but merely allows the award of attorney fees (Brief in Opposition of WBI Energy Transmission, Inc. No. 25-159 (Oct. 2025) at 2) and urged the Court to wait and see if other courts agree with the 8th Circuit. Id. 30 Brief for the United States as Amici Curiae, No. 25-159 (May 22. 2026) at 2. 31 The ten states on brief included North Dakota, Alabama, Arkansas, Florida, Idaho, Indiana, Louisiana, Nebraska, South Carolina, South Dakota, Tennessee, and Texas. Brief of North Dakota, as Amici Curiae in Support of Petitioners, No. 25-159 (Sept. 8, 2025) at 4 (“just compensation” should be determined under state law because, among other things, the NGA “was not intended to displace traditional state authority for assessing real property value.”). 32 Owners’ Counsel of America as Amici Curiae in Support of Petitioners, No. 25-159 (Sept. 10, 2025) at 8 (presenting a survey showing that property owners in nearly half the states “would be stripped of their guaranteed rights if the Eighth Circuit’s choice-of-law analysis were adopted nationwide.”). 33 Respondent’s Supplemental Brief, No. 25-159 (June 8, 2026) at 1 (agreeing that cert should be granted, but “reserv[ing] the right to argue on remand, should it become relevant, that North Dakota law does not in fact include attorneys’ fees in the state’s measure of just compensation.”); Petitioners’ Supplemental Brief, No. 25-159 (June 5, 2026) at 2 (contrary to the Attorney General’s argument, requiring condemnors to pay for attorney fees would not incentivize landowners to draw out disputes to increase a potential fee award, any more than the status quo encourages condemnors to make unreasonable compensation offers). 34 https://www.supremecourt.gov/qp/25-00159qp.pdf; Sup. Ct. R. 16. (if a petition for certiorari is granted, “[t]he case then will be scheduled for briefing and oral argument.”). 35 The ranchers’ merits brief argues that the Kimbell Foods analysis leads to the same result as the statutory interpretation analysis. Brief of Petitioner, Leonard W. Hoffman v. WBI Energy Transmission, Inc., No. 25-159 (filed August 13, 2026) (“Petitioners’ Brief”) at 37-42. 36 Id. at 13-14 (unlike private parties, the federal government can take property by (1) seizing private property directly, leaving the owners to sue for compensation or (2) invoking the Declaration of Taking Act, where a condemnor takes immediate title to property, leaving compensation litigation for another day). 37 Id. at 14, citing Kirby Forest Indus., Inc. v. U.S., 467 U.S. 1, 3 (1984). 38 Petitioners’ Brief at 14. 39 Id. at 15. 40 Petitioners’ Brief at 15-16, citing Library of Congress v. Shaw, 478 U.S. 310, 317 & n.5 (1986). 41 Petitioner’s Brief at 17, quoting Sackett v. EPA, 598 U.S. 651, 679 (2023). 42 Petitioners’ Brief at 18; see also id. at 24 (arguing that, for nearly two centuries, Congress has known that the Supreme Court routinely interpreted federal claims by applying substantive state law), citing McCluny v. Silliman, 3 Pet. 270, 276, 278 (1830 (applying state limitations period to plaintiff’s rights under federal law). 43 Petitioners’ Brief at 26; see Agency Holding Corp. V. Malley-Duff & Associates, Inc., 483 U.S. 143, 158 (1987) (Scalia concurring). Thus, for example, “congressional silence on the [statute of] limitations issue is ordinarily insufficient to pre-empt state statutes….” Agency Holding Corp., 483 U.S. at 162. 44 See NGA § 7(h), 15 U.S.C. § 717f(h) (“the United States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000.”). 45 Petitioners’ Brief at 29. 46 Id. at 32. 47 Six amicus briefs supporting the ranchers were filed on August 13, 2026 in Leonard W. Hoffman v. WBI Energy Transmission, Inc., No. 25-159: Brief of Florida Property Owners Ryan Thomas, Lee Thomas Trust, and Sunderman Groves, Inc. (“Florida Property Owners Brief”); Brief of Gary R. Erb and Lynda Like (“Pennsylvania Property Owners’ Brief”); Brief of Owners Counsel of America (“Owners Counsel Brief”); Brief of Landowner Groups, (“Landowner Groups’ Brief”); Brief of Pacific Legal Foundation (“PLF Brief”); Brief of National Association of Realtors, American Farm Bureau Federation, and Realtors Land Institute (“Realtors Brief”). 48 The Florida property owners report that ten years ago Sabal Trail Transmission, LLC (“Sabal Trail”) filed 263 condemnation cases in federal courts for a 247-mile corridor to construct a 36-inch pipeline to transport 1 Bcf/day. Florida Property Owners Brief at 13-14. In August 2026, the Florida property owners received notice that Sabal Trail is evaluating expansion pipeline project running near or along the current route for 482 miles, (id. at 14) increasing the stakes at issue in Hoffmann. 49 Id. at 8-9 (“Federal actors are ultimately accountable to federal officials, sworn to uphold the Constitution, charged with promoting the public good, and held accountable by the voters on Election Day. * * * And, in direct federal condemnations, the federal government retains a continued ownership interest in the property taken . . . .”); see Pennsylvania Property Owners’ Brief” at 2 (while NGA § 7(h) delegates the power to condemn, “it does not transfer every rule or governmental protection that accompanies condemnation by the United States.”); id. at 7, citing U.S. v. Carmack, 329 U.S. 230, 243, n.13 (1946) (distinguishing federal officers acting for the sovereign from private entities authorized to condemn “on behalf of themselves”, whose grants “are, in their very natural grants and of limited powers” that “do not include sovereign powers greater than those expressed or necessarily implied.”). 50 Florida Property Owners’ Brief at 4; id. at 5 (for private licensee companies exercising eminent domain rights under the NGA, “the Fifth Amendment’s measure of compensation should serve as a floor and not a ceiling” -- to do otherwise, “state created rights to attorneys’ fees will be stricken in six of the seven states of the Eighth Circuit, and will be at serious risk in at least 15 other states if the Eighth Circuit’s new-fashioned split widens.”). 51 Owners Counsel Brief at 2 (internal citations omitted). “In the Sabal Trail pipeline litigation, condemnors spent a combined $8.3 million on appraisal work alone across the project.” Id. at 6 (citation omitted); see also Landowner Groups’ Brief at 5 (“The Eighth Circuit’s decision threatens to alter that bargaining framework well before any condemnation proceedings begin. If a company exercising eminent domain … may disregard state compensation protections and pay only the federal constitutional minimum, its fallback position becomes less costly, changing the baseline against which voluntary easement negotiations occur.”). 52 Owners Counsel Brief at 10-17 (list of 21 state statutes providing condemnation protection); see PLF Brief at 4 (distinguishing cases relied on by the 8th Circuit); see also Realtors Brief at 5 (cautioning that the 8th Circuit’s reasoning could incentivize “advocates for more public control of private interests….”) (citation omitted). 53 Respondent’s Brief” at 2, quoting PennEast, 594 U.S. at 495; see Respondent’s Brief at 2, quoting Luxton v. North River Bridge Co., 153 U.S. 525, 530 (1894) (Congress “may at its discretion, use its sovereign powers, directly or through a corporation * * * for the accommodation of interstate commerce.”). 54 Respondent’s Brief at 4. 55 Id. at 2, United States v. Miller, 317 U.S. 369, 374 (1943) (“[T]he courts early adopted, and have retained the concept of fair market value” as the appropriate compensation); United States v. New River Collieries Co., 262 U.S. 341 344 (1923) (“More would be unjust to the United States, and less would deny the owner what he is entitled to.”). 56 United States ex rel. Tennessee Valley Auth. v. Powelson, 391 U.S. 266 (1943). 57 319 U.S. at 281-82. 58 Respondent’s Brief at 2, quoting 33 U.S.C. § 532. 59 Respondent’s Brief at 28 (citation omitted). 60 Brief for the United States, Leonard W. Hoffman v. WBI Energy Transmission, Inc., No. 25-159 (filed Sept. 21, 2026) at 12 (citations omitted). The Attorney General also noted that the Supreme Court had recently ruled that eminent domain power delegated to a certificate holder is “categorical,” that is, absolute and unconditional. Id. at 10, citing PennEast Pipeline Co., 594 U.S. at 498. 61 Brief of the Interstate Natural Gas Association of America and American Petroleum Institute, Leonard W. Hoffman v. WBI Energy Transmission, Inc., No. 25-159 (filed Sept. 21, 2026) at 11. “INGAA” is the natural gas pipeline trade association, while “API” represents all aspects of the oil and gas industry. Id. at 1. 62 Brief of the Chamber of Commerce of the US, Leonard W. Hoffman v. WBI Energy Transmission, Inc., No. 25-159 (filed Sept. 21, 2026) at 4-6. 63 Id. at 9. 64 Bradley C. Karkkainen, “Plain Meaning”: Justice Scalia’s Jurisprudence of Strict Statutory Construction,” 17 Harv. J.L. & Pub. Pol’y 401 (1994). 65 597 U.S. 215 (2022). 66 410 U.S. 113 (1973). 67 Id. at 231. 68 See id. at n.9 (strict construction “refers to a construction that narrows the scope of coverage or application of a statute….”). 69 See West Virginia v. EPA, 597 U.S. 697, 723 (2022) (“We presume that ‘Congress intends to make major policy decisions itself, ….”) (citation omitted). In applying the “major question doctrine,” the Court explained: “The question there [American Elec. Power. Co. v. Connecticut, 564 U.S. 131 (2011)] however, was whether Congress wanted district court judges to decide, under unwritten federal nuisance law, ‘whether and how to regulate carbon dioxide emissions from powerplants. We answered no….”’ 597 U.S. at 731. Another reason supports the efficacy of WBI’s argument: the Roberts Court has been labeled “business friendly,” with business winning on average 71% of the cases before the Supreme Court from 2010-20. Lee Epstein and Mitu Gulati, “A Century of Business in the Supreme Court, 1920-2020,” 107 Minn. L. Rev. 49, 59 & n.36-37 (2022). 70 148 U.S. 312 (1893). 71 Id. at 325. The Court concluded that if the government condemns a series of locks and dams built by a company to make a river navigable, whose passage is compensated with tolls, it must compensate a company not just for the value of the tangible property, but also for the franchise to take tolls. Id. at 344-45. 72 405 U.S. 538 (1972). 73 Id. at 552. After lower courts allowed a credit union to seize a woman’s savings account (without notice) for failure to repay a loan, the Court remanded and explained: “The right to enjoy property without unlawful deprivation, no less than the right to speak or the right to travel, is in truth a ‘personal’ right ….” Id. (emphasis added). 74 598 U.S. 631 (2023) (J. Gorsuch and J. Jackson concurring). 75 After Hennepin County sold her condominium $40,000 to satisfy a $15,000 tax bill and kept the surplus, a 94-year-old woman filed claims (under the takings clause of the Fifth Amendment and Excessive Fines Clause of the 8th Amendment) against the county, which the trial court dismissed for failure to state a claim, and the 8th Circuit affirmed. 598 U.S. at 635-36. In a companion case, Sackett v. EPA, 598 U.S. 651 (2023), landowners wanting to build a house used sand and gravel to fill in a lot next to a ditch, but the Environmental Protection Agency (“EPA”) considered their land protected wetlands under the Clean Water Act, told the landowners that they could not build, directed them to remove the sand and gravel or face $40,000/day fines. Id. at 662. The Supreme Court reversed the underlying opinion siding with the EPA and limited the scope of the “waters of the United States,” allowing the landowners to build their house. Id. at 684. 76 NGA § 1(c), P.L. 83-323, 68 Stat. 36 (1954) (exempting from federal regulation natural gas companies operating entirely within a single state, effectively overturning FPC v. East Ohio Gas Co., 338 U.S. 464 (1950) that had ruled an otherwise local, in-state gas company was subject to federal regulation because it crossed state lines to receive gas).