In the 1925 case of Arkansas ex rel. Utley, Attorney General, for the Use of Craighead County v. St. Louis-San Francisco Railway Company et al., the Supreme Court ruled in favor of St. Louis-San Francisco Railway Company and other railroads against a claim by Craighead County, Arkansas that they owed back taxes on land grants given to them by Congress in 1853 to build railways across state lines. The court held that these lands were not taxable until they had been sold or used for purposes other than building railways because at the time when these lands were granted, there was no law allowing states to tax federal land grants made for public improvements such as railway construction.

The dissenting opinion in the case of Arkansas ex rel. Utley, Attorney General, for the Use of Craighead County v. St. Louis-San Francisco Railway Company et al., argued that the majority's decision was inconsistent with previous rulings and principles established by the court regarding interstate commerce regulation. The dissenters believed that states should have authority to regulate intrastate aspects of interstate railroads without interference from federal law or courts unless there is a direct conflict between state and federal regulations. They contended that allowing such broad preemption of state laws would undermine states' rights and upset the balance between state and federal powers enshrined in our constitutional system.