In the case of Hodel, Acting Secretary of the Interior, et al. v. Indiana et al., 1980, the U.S Supreme Court ruled on a challenge to certain provisions in the Surface Mining Control and Reclamation Act (SMCRA) of 1977 by coal-rich states and private interests. The plaintiffs argued that these provisions were unconstitutional as they violated principles of federalism by imposing standards for surface mining operations which infringed upon state sovereignty rights over land use decisions. However, the court upheld all but one provision in a decision supporting Congress's power under Commerce Clause to regulate activities causing environmental harm across state lines even if those activities are intrastate in nature. It found that SMCRA was within Congress' authority because it aimed at controlling effects on interstate commerce from surface coal mining operations such as pollution or destruction affecting other states downstream or downwind respectively.

In the dissenting opinion for Hodel v. Indiana, Justice Powell argued that the Surface Mining Control and Reclamation Act of 1977 was unconstitutional as it violated principles of federalism by infringing upon states' rights to regulate their own land use policies. He contended that while Congress has power under the Commerce Clause to regulate activities affecting interstate commerce, this does not extend to controlling local land use decisions which are traditionally within state jurisdiction. The majority's broad interpretation of congressional authority could potentially allow federal regulation in areas such as housing or zoning laws, thus undermining state sovereignty. Furthermore, he disagreed with the majority's view on "cooperative federalism", arguing instead that forcing states to adopt federally-approved programs or face preemption is coercive rather than cooperative.