In the case of City of Tacoma v. Taxpayers of Tacoma et al., 1957, the U.S. Supreme Court ruled in favor of the city's right to construct and operate a hydroelectric project on Cowlitz River without state interference. The court held that under Article VI, Clause 2 (the Supremacy Clause) of the Constitution, federal law preempts conflicting state laws or regulations when it comes to federally licensed projects such as this one. This decision was based on two main points: firstly, that Congress had granted authority over navigable waters to Federal Power Commission; secondly, that Washington State’s attempt to impose additional conditions violated this grant by interfering with comprehensive national regulation scheme for power development in navigable waters.

In the dissenting opinion for CITY OF TACOMA v. TAXPAYERS OF TACOMA et al., Justice William O. Douglas argued that the case should not have been heard by the Supreme Court in the first place, as it was a local dispute over municipal bonds and did not involve any substantial federal question. He contended that even if there were a federal issue involved, it had already been settled by previous court decisions which held that municipalities could engage in business enterprises without violating constitutional provisions against impairing contracts or taking property without due process of law. Furthermore, he believed that allowing this case to be heard set an undesirable precedent for future cases involving similar issues at state and local levels.