In the case of Kelly, Director, et al. v. Washington Ex Rel. Foss Co., 1937, the U.S Supreme Court ruled in favor of a state's right to regulate and control its own waters for safety purposes even if it interfered with interstate commerce. The dispute arose when Foss Company challenged an order by the State of Washington requiring all tugboats operating within its waters to be licensed by the state and comply with certain regulations regarding crew size and qualifications among other things. The company argued that this was unconstitutional as it interfered with interstate commerce which is under federal jurisdiction according to Article I Section 8 Clause 3 (the Commerce Clause) of the Constitution. The court disagreed stating that while Congress does have power over interstate commerce, states also have inherent police powers allowing them to enact laws for public health or safety unless they conflict directly with federal law or are discriminatory against out-of-state interests - neither being true in this instance.

In the dissenting opinion for Kelly, Director, et al. v. Washington Ex Rel. Foss Co., Justice McReynolds disagreed with the majority's decision that upheld a state law regulating tugboats operating in navigable waters within and adjacent to the state of Washington. He argued that this was an overreach of state power into an area traditionally controlled by federal maritime law under the Commerce Clause of the U.S Constitution. According to him, such regulation could lead to inconsistent rules across different states which would disrupt interstate commerce and navigation on shared waterways - something he believed should be avoided at all costs due to its potential negative impact on national unity and economic stability.