In the 1940 case Oklahoma ex rel. Phillips, Governor v. Guy F. Atkinson Co., et al., the U.S Supreme Court ruled in favor of federal authority over state rights concerning water resources management and hydroelectric power generation projects on navigable rivers that cross multiple states' boundaries. The State of Oklahoma sued to prevent construction of a federally funded dam on the Red River, arguing it would interfere with its sovereign rights to control and use waters within its borders for irrigation purposes without federal interference or regulation under the Commerce Clause of Constitution. However, the court held that Congress has broad powers under this clause to regulate commerce among states including navigation; thus can authorize improvements like dams even if they may affect interests within individual states such as water supply for irrigation or other uses.

In the dissenting opinion for Oklahoma ex rel. Phillips, Governor, v. Guy F. Atkinson Co., Justice McReynolds argued that the federal government had overstepped its constitutional boundaries by intruding on state rights to control and manage their own water resources. He believed that there was no clear evidence of navigational interference which would justify federal intervention in this case under the Commerce Clause of the Constitution. Furthermore, he asserted that Congress did not have unlimited power to regulate all activities affecting commerce among states; such a broad interpretation could potentially lead to an unwarranted expansion of federal authority at the expense of state sovereignty and individual liberties.