In the Pacific American Fisheries v. Alaska case of 1925, the U.S Supreme Court ruled in favor of Pacific American Fisheries (PAF). The State of Alaska had imposed a tax on PAF's fishing activities arguing that they were operating within its jurisdiction. However, PAF contended that their operations took place in navigable waters which fell under federal jurisdiction and thus should not be subject to state taxes. The court agreed with PAF stating that while states have authority over lands beneath navigable waters within their boundaries for purposes related to property law, this does not extend to matters concerning navigation or commerce which are reserved for federal control by the Constitution. Therefore, it was concluded that Alaska did not have the right to impose a tax on businesses operating in these areas.

The dissenting opinion in the case of Pacific American Fisheries v. Alaska argued that the majority's decision to uphold Alaska's tax on fish traps was inconsistent with previous rulings and violated principles of federalism. The dissent contended that, under the Constitution, states do not have authority over navigable waters; this power is reserved for Congress. Therefore, it was inappropriate for Alaska to impose a tax on fishing operations taking place in these waters as it interfered with interstate commerce and infringed upon federal jurisdiction. Furthermore, they asserted that such taxes could potentially lead to discriminatory practices against out-of-state businesses or those from other nations engaged in similar activities within U.S. territorial waters.