In the case City of Hammond v. Farina Bus Line & Transportation Company (1927), the U.S. Supreme Court ruled in favor of Farina Bus Line, a Chicago-based company that operated buses between Illinois and Indiana. The city of Hammond, Indiana had imposed an annual license fee on all vehicles for hire operating within its limits, which included those owned by out-of-state companies like Farina. However, the court found this to be unconstitutional as it violated both due process and equal protection clauses under the Fourteenth Amendment because it discriminated against interstate commerce without providing any additional benefits or services to those paying the fee compared to local businesses not subjected to such fees. Therefore, while cities have authority over their streets and can charge reasonable compensation for their use by public utilities including transportation companies; they cannot discriminate against interstate commerce through excessive charges or taxes.

In the dissenting opinion for the case City of Hammond v. Farina Bus Line & Transportation Company, it was argued that the city's ordinance requiring bus companies to obtain a permit and pay a fee before operating within its limits did not infrive upon interstate commerce regulations. The dissenting justices believed that this local regulation was an exercise of police power aimed at ensuring public safety rather than an attempt to regulate or burden interstate commerce. They contended that such ordinances were necessary for cities to maintain order and protect their citizens from potential harm caused by unregulated commercial activities. Furthermore, they asserted that if every municipal regulation affecting interstate businesses were deemed unconstitutional, it would severely limit the ability of local governments to govern effectively in other areas as well.