In the United States Supreme Court case of United Gas Pipe Line Co. v. McCombs et al., 1978, the court was tasked with determining whether a natural gas company could deduct from its federal income tax payments made to landowners for the right to store gas beneath their property. The Internal Revenue Service (IRS) had previously denied these deductions, arguing that they were capital expenditures and not ordinary business expenses as claimed by United Gas Pipe Line Company. However, in a unanimous decision delivered by Justice Harry Blackmun, the Supreme Court ruled in favor of United Gas Pipe Line Company stating that such payments should be considered as deductible business expenses rather than capital investments because they did not contribute to any significant future benefit for the company beyond one year.

In the dissenting opinion for United Gas Pipe Line Co. v. McCombs et al., Justice Rehnquist disagreed with the majority's interpretation of federal law and its preemption over state laws regarding natural gas pricing disputes. He argued that Congress had not intended to completely preempt state jurisdiction in this area, but rather sought a balance between federal and state authority. The justice believed that allowing states some regulatory power would better serve consumers' interests by providing an additional layer of protection against unfair practices by gas companies. Furthermore, he contended that the majority's decision could potentially create confusion and inconsistency in future cases due to its broad interpretation of federal preemption.