In the 1895 case of Cincinnati, New Orleans and Texas Pacific Railway Company v. Interstate Commerce Commission, the U.S Supreme Court ruled that railroads could not charge more for short hauls than long ones if the shorter route was part of a longer continuous journey. The railway company had been charging higher rates for shorter distances within states while offering lower rates for longer interstate journeys to compete with other companies. This practice was challenged by shippers who argued it violated Section 4 of the Interstate Commerce Act which prohibited unjust discrimination between places served by such carrier in transportation charges or services provided. The court upheld this interpretation, ruling that carriers cannot discriminate against short-haul routes simply because they are included within a through route unless there is some substantial difference affecting cost or value.

In the dissenting opinion for Cincinnati, New Orleans and Texas Pacific Railway Company v. Interstate Commerce Commission, it was argued that the court majority had overstepped its bounds by interpreting an act of Congress in a way that expanded federal regulatory power beyond what was intended. The dissenters contended that the law at issue - which required railroads to charge "reasonable" rates - did not give the Interstate Commerce Commission (ICC) authority to set specific maximum rates. They believed this power rested solely with Congress itself or state legislatures under their police powers. Furthermore, they expressed concern about potential harm to railroad companies from arbitrary rate-setting by a government agency without sufficient checks on its discretion or understanding of market conditions and business realities faced by these companies.