In the 1906 case of Atlantic Coast Line Railroad Company v. Florida Ex Rel. Ellis, Attorney General, the U.S Supreme Court was tasked with determining whether a state law could regulate railroad freight rates within its borders without violating the Commerce Clause of the Constitution which gives Congress power to regulate interstate commerce. The State of Florida had passed legislation setting maximum intrastate rail freight charges and penalties for non-compliance. The Atlantic Coast Line Railroad Company challenged this law arguing it interfered with interstate commerce regulations set by Congress and thus violated federal supremacy over such matters as outlined in the Constitution's Commerce Clause. The Supreme Court ruled in favor of Florida, upholding states' rights to control internal affairs including intrastate trade so long as they do not interfere with or contradict national regulation on interstate commerce. This decision reinforced that while federal authority is supreme in areas specifically designated by constitution like regulating interstate commerce, states retain sovereignty over local issues unless explicitly pre-empted by federal law.

In the dissenting opinion for Atlantic Coast Line Railroad Company v. Florida Ex Rel. Ellis, Attorney General, Justice Harlan disagreed with the majority's decision to uphold a state law that regulated railroad rates within its borders. He argued that this ruling violated principles of federalism by allowing states to interfere in interstate commerce and potentially disrupt national economic stability. Harlan contended that only Congress should have the power to regulate such matters due to their inherently national scope and potential impact on interstate relations. Furthermore, he expressed concern about potential conflicts between different state laws regulating similar issues which could lead to legal inconsistencies and confusion for businesses operating across multiple states.