The Supreme Court case of Banks v. Ogden was a dispute between the state of New York and Aaron Ogden over the right to operate steamboats in New York waters. The court ruled that Congress had exclusive authority under the Commerce Clause to regulate interstate commerce, including navigation on navigable waterways such as rivers and lakes. This decision overturned an earlier ruling by a lower court which held that states could grant monopolies for certain types of transportation within their borders, even if it interfered with interstate commerce. The Supreme Court's ruling established federal supremacy over state laws when it comes to regulating interstate commerce, thus setting an important precedent for future cases involving similar issues.

In Banks v. Ogden, the Supreme Court was asked to decide whether a state law granting an exclusive right to operate steamboats in New York waters violated the Commerce Clause of the United States Constitution. The majority opinion held that it did not, finding that Congress had no power over navigation within a state's borders and thus could not preempt such laws. Justice Field dissented from this decision, arguing that while states may have some authority over their internal commerce, they cannot interfere with interstate or foreign commerce as regulated by Congress under its constitutional powers. He argued further that allowing states to pass laws which conflict with federal regulations would lead to chaos and confusion among businesses operating across multiple jurisdictions and ultimately impede economic growth throughout the nation.