In the 1939 case of Buckstaff Bath House Co. v. McKinley, the U.S Supreme Court ruled in favor of Buckstaff Bath House Company, a private entity operating within Hot Springs National Park in Arkansas. The company had been ordered by state officials to comply with an Arkansas law that required businesses to provide separate facilities for black and white customers. However, since it was located on federal property, the bath house argued that it should only be subject to federal laws - which did not mandate racial segregation at the time - rather than state laws. The court agreed with this argument and held that states could not enforce their own laws on federally-owned land if those laws conflicted with federal policy or legislation.

In the dissenting opinion for Buckstaff Bath House Co. v. McKinley, Justice Black argued that the majority's decision to uphold an Arkansas law requiring bathhouses to employ licensed masseurs was a violation of due process rights under the Fourteenth Amendment. He contended that this regulation did not serve any legitimate public interest and instead interfered with private business operations without just cause or reasonable relation to health and safety concerns. Furthermore, he criticized the court's deference to state legislative judgment in matters of economic regulation as inconsistent with its duty to protect individual liberties from arbitrary government action.