In the case of California v. Federal Power Commission et al., 1961, the Supreme Court ruled on whether or not the Federal Power Commission (FPC) had jurisdiction over sales for resale of natural gas produced in federal offshore areas. The State of California argued that it should have regulatory control over these transactions instead. However, the court upheld a lower court's decision that such sales fell under FPC jurisdiction according to Section 1(b) of Natural Gas Act which gives FPC authority over transportation and sale for resale of natural gas in interstate commerce. This ruling was significant as it clarified federal versus state powers concerning energy regulation and affirmed broad federal power in regulating interstate commerce.

In the dissenting opinion for California v. Federal Power Commission, Justice Frankfurter disagreed with the majority's interpretation of Section 20 of the Natural Gas Act. He argued that this section does not give authority to the Federal Power Commission (FPC) to regulate sales made directly by producers to industrial consumers in interstate commerce. According to him, such an interpretation would lead to a significant expansion of federal power at the expense of state regulatory authority over local distribution and direct industrial consumption which was never intended by Congress when it enacted this law. Furthermore, he pointed out that there is no evidence showing any serious problems arising from unregulated direct sales which could justify such a drastic change in policy or legal interpretation.