The U.S. Supreme Court case Louisiana Public Service Commission et al. v. Texas & New Orleans Railroad Co. et al., 1931, revolved around a dispute over the regulation of intrastate railroad rates by the state of Louisiana and whether it conflicted with federal law under the Interstate Commerce Act (ICA). The State's Public Service Commission had ordered reduced rates for intrastate rail freight transportation, which were lower than those set federally for interstate commerce on similar routes within Louisiana by the Interstate Commerce Commission (ICC). The railroad companies argued that this violated their rights to equal protection and due process under the Fourteenth Amendment as well as conflicting with federal law governing interstate commerce. The Supreme Court ruled in favor of Texas & New Orleans Railroad Co., holding that while states have power to regulate local trade, they cannot interfere with national policy regarding interstate commerce established by Congress through ICA regulations administered by ICC. It was determined that allowing such state interference would create an untenable situation where each state could undermine nationally coordinated rate structures essential for fair and efficient operation of nationwide rail system.

In the dissenting opinion for Louisiana Public Service Commission et al. v. Texas & New Orleans Railroad Co. et al., Justice Stone argued that the majority's decision was an overreach of federal power and a violation of state sovereignty, as it interfered with states' rights to regulate their own public utilities. He contended that while Congress has authority over interstate commerce, this should not extend to control over intrastate rates set by local regulatory bodies unless there is clear evidence these rates adversely affect interstate commerce or are discriminatory against it. In his view, no such evidence existed in this case; therefore, he believed the Interstate Commerce Commission had exceeded its jurisdictional boundaries by intervening in what he saw as purely a matter of state concern.