In the case of Gulf States Utilities Co. v. Federal Power Commission, 1972, the U.S Supreme Court was tasked with determining whether or not the Federal Power Commission (FPC) had overstepped its authority by ordering a utility company to interconnect its facilities with another company's facilities and sell surplus power to it at wholesale rates set by FPC. The court ruled in favor of FPC, stating that under Section 202(b) of the Federal Power Act, they were within their rights to order such an action if it is found necessary or appropriate for public convenience and necessity. This decision upheld that federal regulatory agencies have broad powers when acting in accordance with statutory mandates.

In the dissenting opinion for Gulf States Utilities Co. v. Federal Power Commission, Justice Rehnquist disagreed with the majority's interpretation of Section 201(b) of the Federal Power Act. He argued that this section does not grant jurisdiction to the Federal Power Commission (FPC) over sales by a utility company to an industrial consumer for its own use, even if it is connected to an interstate power grid. According to him, such transactions are intrastate in nature and should be regulated by state authorities rather than federal ones. Furthermore, he contended that Congress did not intend for FPC jurisdiction to extend so broadly when they enacted Section 201(b). This expansive interpretation could potentially lead to unnecessary federal regulation and intrusion into areas traditionally governed by states' rights.