In the 1947 case Panhandle Eastern Pipe Line Co. v. Public Service Commission of Indiana et al., the United States Supreme Court ruled in favor of Panhandle, a natural gas company operating interstate pipelines. The dispute arose when the Public Service Commission of Indiana attempted to regulate and set rates for Panhandle's intrastate business operations within Indiana, despite it being part of an integrated interstate pipeline system regulated by federal law under Natural Gas Act (NGA). The court held that states could not impose their own regulations on companies already governed by federal laws like NGA as this would interfere with comprehensive national regulation scheme intended by Congress and thus violate Supremacy Clause of U.S Constitution. This decision reinforced principle that state regulatory powers are limited where they conflict with or impede operation of federal legislation.

In the dissenting opinion for Panhandle Eastern Pipe Line Co. v. Public Service Commission of Indiana et al., Justice Frank Murphy argued that the majority's decision effectively stripped states of their power to regulate natural gas companies within their borders, which he believed was a violation of state sovereignty and federalism principles. He contended that Congress did not intend to give such sweeping powers to the Federal Power Commission when it passed the Natural Gas Act, as evidenced by its explicit preservation of state regulatory authority in certain areas. Furthermore, he warned that this ruling could lead to monopolistic practices by interstate pipeline companies at the expense of local consumers and businesses who rely on affordable access to natural gas supplies.