The U.S. Supreme Court case Arizona Public Service Co. et al v. Snead, Director of Revenue Division, Taxation and Revenue Department of New Mexico, et al., 1978 revolved around the constitutionality of a New Mexico tax law that imposed higher taxes on electricity generated out-of-state than in-state. The plaintiffs were utility companies from outside New Mexico who claimed this law violated the Commerce Clause by discriminating against interstate commerce. The Supreme Court ruled in favor of the plaintiffs, finding that while states have authority to tax businesses operating within their borders, they cannot impose discriminatory taxes that favor local over out-of-state businesses as it interferes with free trade among states.

In the dissenting opinion for Arizona Public Service Co. et al. v. Snead, Director of Revenue Division, Taxation and Revenue Department of New Mexico, et al., Justice Brennan disagreed with the majority's ruling that New Mexico's tax on electricity generated within its borders but sold out-of-state did not violate the Commerce Clause of the U.S Constitution. He argued that this taxation was discriminatory against interstate commerce as it imposed a heavier burden on out-of-state consumers compared to in-state ones who were exempt from such taxes due to an equivalent credit provided by another state law. The justice contended that this differential treatment created a commercial advantage for local businesses over their out-of-state competitors which is contrary to principles underlying free trade among states enshrined in the Commerce Clause.