In the 1913 case Houston, East and West Texas Railway Company v. United States, the U.S Supreme Court ruled in favor of the government's right to regulate interstate commerce. The railway company had argued that it was not subject to federal regulation because its operations were entirely within Texas state lines. However, since goods transported on this railway often continued their journey across state lines via other carriers, the court held that these activities constituted a part of interstate commerce and thus fell under federal jurisdiction as per Interstate Commerce Act (1887). This ruling reinforced Congress' power over all forms of interstate commercial activity regardless if parts are conducted solely within one state.

In the dissenting opinion for Houston, East and West Texas Railway Company v. United States (1913), Justice Hughes argued that the Interstate Commerce Commission's power to set maximum rates should be limited by judicial review. He contended that while Congress has broad powers to regulate commerce, it cannot delegate its legislative authority to an administrative body without providing clear standards or guidelines. In this case, he believed there were no such standards provided for determining what constitutes a reasonable rate. Therefore, in his view, the commission's decision was arbitrary and amounted to an unconstitutional delegation of legislative power. Furthermore, he disagreed with the majority's interpretation of "just and reasonable" rates as being solely within the purview of the commission; instead asserting that courts have a role in interpreting these terms based on evidence presented before them.