In the United States Supreme Court case of United Gas Public Service Co. v. Texas et al., 1937, the court ruled in favor of Texas and against the gas company. The issue at hand was whether or not a state could regulate natural gas rates for companies operating within its borders when that gas is transported across state lines. The United Gas Public Service Company argued that this regulation violated their rights under the Commerce Clause of the U.S Constitution, which gives Congress power to regulate interstate commerce. However, Justice Benjamin Cardozo delivered an opinion stating that while states cannot interfere with interstate commerce directly, they can indirectly influence it through reasonable regulations on local operations such as utility rates - provided these do not conflict with federal law or policy.

In the dissenting opinion for the United States Supreme Court case, UNITED GAS PUBLIC SERVICE CO. v. TEXAS et al., Justice McReynolds disagreed with the majority's decision to uphold Texas' regulation of natural gas rates within its borders when that gas was being transported interstate. He argued that this ruling violated principles of federalism by allowing a state to regulate commerce occurring outside its jurisdiction, which he believed should be under exclusive federal control as per the Commerce Clause in U.S Constitution. Furthermore, he contended that such state interference could lead to inconsistent regulations and potentially disrupt national economic stability and unity. Thus, while acknowledging states’ rights over local matters, Justice McReynolds maintained that they should not extend into areas reserved for federal governance.