In the case of Federal Power Commission v. Pacific Power & Light Co., et al., 1938, the U.S Supreme Court was tasked with determining whether or not the Federal Water Power Act (FWPA) gave authority to the Federal Power Commission (FPC) over power companies operating on non-navigable tributaries that flowed into navigable waters. The FPC had issued an order for Pacific Power & Light Company and other similar companies to apply for licenses under FWPA regulations due to their operation on such tributaries. However, these companies challenged this order arguing that they were outside of FPC's jurisdiction as per FWPA since they operated solely on non-navigable waters. The Supreme Court ruled in favor of FPC stating that it did have jurisdiction over these power companies because even though they operated on non-navigable tributaries, those tributaries affected interstate commerce by flowing into navigable waters which fell within federal control.

In the dissenting opinion for Federal Power Commission v. Pacific Power & Light Co., Justice McReynolds argued that the majority's interpretation of the Federal Water Power Act was too broad and overreached federal authority. He contended that Congress did not intend to give such expansive power to regulate all aspects of hydroelectric energy production, especially those on non-navigable waters or without a direct effect on interstate commerce. The justice believed this ruling could potentially lead to an unwarranted extension of federal control over local matters, infringing upon states' rights and disrupting the balance between state and federal powers as intended by the Constitution. Furthermore, he expressed concern about potential negative impacts on private property rights due to excessive regulation.