In the United States v. Cumberland Public Service Co., 1949, the Supreme Court examined whether a company that produced and sold natural gas was subject to federal regulation under the Natural Gas Act of 1938. The Cumberland Public Service Company argued it was not because it only operated within one state (Kentucky), while the government contended that since some of its gas came from interstate pipelines, it should be regulated federally. The court ruled in favor of Cumberland, stating that just because a company receives goods from an interstate commerce source does not mean they are engaged in such commerce themselves. Therefore, as long as their business operations were confined within one state's boundaries and did not directly involve transporting or selling across state lines, they were exempt from federal jurisdiction under this act.

In the dissenting opinion for United States v. Cumberland Public Service Co., it was argued that the majority's decision to allow a public utility company to deduct from its gross income payments made in lieu of taxes, under an agreement with a municipality, contradicts established tax law principles. The dissenting justices contended that these payments were not deductible because they did not constitute ordinary and necessary business expenses but rather voluntary contributions or capital investments. They also disagreed with the majority's interpretation of "taxes" as including any compulsory payment imposed by government authority, arguing this broad definition could lead to potential abuses and inconsistencies in tax law application. Furthermore, they believed that allowing such deductions would unfairly advantage publicly regulated utilities over other businesses which cannot negotiate similar agreements with local governments.