In the case of Federal Power Commission v. Memphis Light, Gas & Water Division et al., 1972, the Supreme Court ruled that under Section 4(e) of the Natural Gas Act (NGA), a state utility commission does not have jurisdiction over rates charged by interstate natural gas companies for wholesale sales to local distribution companies. The court held that such authority lies solely with the Federal Power Commission (FPC). This decision came after Memphis Light, Gas and Water Division challenged an increase in wholesale natural gas prices by United Gas Pipe Line Company. The Tennessee Public Service Commission had initially approved this rate hike but was later overturned by FPC which argued it alone has jurisdiction over these matters as per NGA provisions. The Supreme Court upheld FPC's position affirming its exclusive right to regulate interstate wholesales of natural gas.

In the dissenting opinion for Federal Power Commission v. Memphis Light, Gas & Water Division et al., Justice Douglas argued that the majority's decision to uphold the Federal Power Commission's (FPC) jurisdiction over wholesale natural gas sales by pipelines directly to local distribution companies was a misinterpretation of both legislative intent and previous court rulings. He contended that Congress intended for state regulatory agencies, not federal ones like FPC, to oversee such transactions when it passed the Natural Gas Act in 1938. Furthermore, he pointed out that this ruling contradicted earlier decisions where similar cases were ruled under state jurisdiction. In his view, this case represented an unwarranted expansion of federal power into areas traditionally regulated by states and could potentially undermine their ability to effectively manage local energy markets.