The U.S. Supreme Court case Alabama and Vicksburg Railway Company v. Mississippi Railroad Commission in 1906 dealt with the issue of rate regulation by state railroad commissions. The Alabama and Vicksburg Railway Company challenged an order from the Mississippi Railroad Commission that reduced freight rates on intrastate shipments, arguing it was confiscatory and violated their constitutional rights to due process under the Fourteenth Amendment. However, the Supreme Court upheld the commission's authority to regulate rates within its jurisdiction, ruling that railroads were not entitled to a specific profit margin if reasonable needs of public service were met at lower rates set by regulatory bodies like state commissions. This decision reinforced states' power over commerce within their borders while also emphasizing protection for public interests against potentially excessive corporate profits.

In the dissenting opinion for Alabama and Vicksburg Railway Company v. Mississippi Railroad Commission, it was argued that the state of Mississippi had overstepped its authority by imposing a rate on interstate commerce which is under federal jurisdiction. The dissenting justices believed that while states have power to regulate local businesses within their borders, they do not possess the right to interfere with or control rates of interstate commerce as this would violate the Commerce Clause of the U.S Constitution. They contended that such actions could lead to chaos if every state set different rules for railroads passing through them and thus, should be left in hands of Congress who has exclusive power over interstate trade regulation. Therefore, according to these justices, Alabama & Vicksburg Railway Co., an out-of-state company operating across state lines should not be subjected to Mississippi's imposed rate.