In the case of Newton, Attorney General of the State of New York, et al. v. Consolidated Gas Company of New York in 1921, the Supreme Court ruled on a dispute between a state and a private corporation over gas prices. The Consolidated Gas Company had been charging an amount for gas that was deemed excessive by the State's Public Service Commission (PSC). When ordered to reduce its rates by PSC, the company refused arguing it would not be able to earn fair returns on its investments if forced to comply with such low rates. This led to litigation which eventually reached the Supreme Court. The court sided with PSC stating that while corporations have rights under Fourteenth Amendment’s due process clause against confiscatory rate regulation - meaning they are entitled to charge enough so as not only cover their costs but also make reasonable profit - these rights do not prevent states from regulating utility prices in public interest provided those regulations allow utilities opportunity for earning just and reasonable return.

In the dissenting opinion for Newton v. Consolidated Gas Company of New York, Justice Oliver Wendell Holmes Jr. argued that the majority's decision to strike down a New York law setting gas prices was an overreach of judicial power. He contended that it was not within the Court's purview to determine whether or not a state legislature had set reasonable rates for utilities; rather, this should be left up to local authorities who were better equipped and informed about their own economic conditions and needs. Furthermore, he believed that if a company found these rates unprofitable they could simply choose not to do business in that area instead of seeking intervention from federal courts. In his view, such interference by federal courts into matters best handled at state level undermined democratic principles and threatened states' rights.