In the United States v. McGowan et al., 1937, the Supreme Court examined whether a federal law prohibiting sale of alcohol on Native American reservations was constitutional and applicable to non-Native Americans living or doing business there. The defendants were non-Native American operators of stores within reservation boundaries who had been indicted for selling liquor in violation of this law. They argued that they should not be subject to it as they were not tribal members and their businesses were located on land privately owned by them, rather than held in trust by the government for the tribe. The court ruled against them, upholding both constitutionality and applicability of the law. It reasoned that Congress has broad power over Indian affairs under Constitution's Indian Commerce Clause; thus it can regulate conduct even on private lands within reservations if necessary for tribal welfare or relations between tribes and outsiders. The prohibition served these purposes because alcohol abuse was a major problem among Native Americans which disrupted their societies and strained relations with neighboring communities.

In the dissenting opinion for United States v. McGowan et al., Justice McReynolds disagreed with the majority's decision to uphold a law that allowed Native American reservations to prohibit alcohol. He argued that this was an overreach of federal power, as it infringed upon states' rights and individual liberties. He contended that Congress did not have the authority to regulate liquor sales on privately owned lands within reservation boundaries, especially when those lands were sold by tribal members themselves. Furthermore, he believed such regulation violated equal protection principles because it treated people differently based on their race or location within a state. Thus, in his view, the law should be struck down as unconstitutional.