In the 1932 case Brooklyn Eastern District Terminal v. United States, the U.S Supreme Court ruled that a company operating tugboats and barges in New York Harbor was subject to federal regulation under the Interstate Commerce Act. The court found that even though all of the company's operations took place within one state (New York), it still played an integral part in interstate commerce because its services were used by railroads transporting goods across state lines. Therefore, despite not directly participating in interstate trade itself, its activities were closely related and essential to such trade thus falling under federal jurisdiction for regulatory purposes. This decision expanded the scope of what could be considered "interstate commerce" thereby broadening Federal power over business activities.

In the dissenting opinion for Brooklyn Eastern District Terminal v. United States, Justice McReynolds disagreed with the majority's decision to uphold a lower court ruling that found the Brooklyn Eastern District Terminal guilty of violating safety provisions in federal law. He argued that there was insufficient evidence to prove negligence on part of the company and emphasized that accidents can occur even under careful management. Furthermore, he contended that it is not fair or justifiable to hold employers responsible for all injuries sustained by employees during work hours without clear proof of neglect or violation of duty on their part. The justice also pointed out inconsistencies in how similar cases had been handled previously, suggesting an unfair application of laws and regulations.