In the case of United States v. Appalachian Electric Power Co., 1940, the Supreme Court ruled that federal authority superseded state authority in regulating navigable waters within states' borders. The court held that Congress had broad powers under the Commerce Clause to regulate waterways and could authorize improvements or alterations for navigation purposes without obtaining consent from individual states. This decision arose when Appalachian Electric Power Co., a Virginia corporation, constructed a dam on New River without securing permission from Congress but with approval from Virginia's State Corporation Commission. The U.S government sued to restrain operation of this dam as it was not approved by Congress and violated Rivers and Harbors Act of 1899 which prohibited obstructions in navigable rivers unless authorized by Congress. In its defense, AEP argued that New River was non-navigable hence outside federal jurisdiction but after examining historical records about river's use for commerce, court rejected this argument stating even if presently non-navigable, potential future uses can bring such waters under federal control.

In the dissenting opinion for United States v. Appalachian Electric Power Co., Justice McReynolds disagreed with the majority's interpretation of Congress' power under the Commerce Clause. He argued that allowing federal regulation of intrastate activities, such as constructing dams on non-navigable rivers, would lead to an overreach of federal authority into areas traditionally controlled by states. This could potentially undermine state sovereignty and upset the balance between state and federal powers established in the Constitution. Furthermore, he contended that if every activity affecting commerce can be regulated by Congress, then there are virtually no limits to its power which is contrary to constitutional principles limiting governmental authority. Therefore, he believed that unless a river was navigable or directly affected interstate commerce, it should remain under state jurisdiction.