I agree that he shouldn't have said that, but there's no reason to 'make a federal case out of' it. [='make a big deal about it']
Do you have to 'make a federal case out of' it every time I come home late?
Local police sought help from the 'federals'. [=(less formally) 'feds']
(..) Now, what's missing in that sentence? The uncle. Not Cole's uncle... but probably the Sheriff's uncle... is in federal prison. Let me ask you something, Stanley. Did you notice anything about the dress? The dress was altered to fit her. (..)1992 Twin Peaks: Fire Walk with Me
(..) Congratulations. I heard about that! Chet, your surprise! Her name is Lil! She's my mother's sister's girl. Federal. Good luck, Chet! Sam, you stick with Chet! He's got his own m.o.! Modus operandi! You fellas can reach me (..)1992 Twin Peaks: Fire Walk with Me