In the case of United States v. Oklahoma Gas & Electric Co., 1942, the U.S Supreme Court ruled in favor of the government, upholding a decision by the Federal Power Commission (FPC). The dispute arose when Oklahoma Gas & Electric Company challenged an order from FPC that required them to obtain a license for their hydroelectric project on navigable waters. The company argued that since they had already been operating under state-granted rights before Congress passed legislation regulating such projects, they should be exempted from federal licensing requirements. However, the court held that even though states have authority over local matters like water power development within their borders, this does not supersede or limit federal powers granted by Congress under Commerce Clause to regulate navigation and commerce on navigable waters nationwide. Therefore, regardless of prior state permissions or ownership status of lands surrounding these waters; any construction affecting navigation requires federal approval.

In the dissenting opinion for United States v. Oklahoma Gas & Electric Co., Justice Frank Murphy argued that the majority's decision to allow states to tax federal instrumentalities, such as public utilities, was a departure from established constitutional principles. He contended that this ruling undermined the supremacy of federal law and could potentially lead to discriminatory taxation against federally owned properties by state governments. Furthermore, he expressed concern about potential conflicts between state and federal authorities over taxation rights in future cases if this precedent were allowed to stand. In his view, it was not within a state’s power or right under the Constitution to impose taxes on government-owned property used for public purposes without express congressional consent.