In the case of Hiawassee River Power Company v. Carolina-Tennessee Power Company in 1919, the Supreme Court was asked to determine whether a North Carolina corporation had the right to construct and operate a dam on the Hiawassee River without obtaining consent from Tennessee. The river flowed through both states, but most of it was located within Tennessee's borders. The court ruled that while each state has sovereignty over its own territory, this does not extend to actions which could harm another state or interfere with its rights. Therefore, even though part of the river ran through North Carolina, they did not have unilateral authority over it due to potential impacts downstream in Tennessee. This decision established an important precedent for interstate water disputes by affirming that no single state can exercise exclusive control over shared natural resources if their use could negatively affect other states.

In the dissenting opinion for Hiawassee River Power Company v. Carolina-Tennessee Power Company, Justice Holmes disagreed with the majority's decision to dismiss the case on jurisdictional grounds. He argued that there was a substantial federal question involved in this dispute over water rights and power generation, which warranted Supreme Court review. According to him, it was not merely a local issue as suggested by his colleagues but had broader implications for interstate commerce and federal regulation of natural resources. Furthermore, he contended that dismissing such cases without hearing them could undermine public confidence in judicial fairness and consistency. Therefore, he would have allowed the appeal to proceed rather than summarily rejecting it based on procedural technicalities.