In the case of Interstate Commerce Commission v. United States ex rel. Los Angeles, 1929, the Supreme Court examined whether or not the Interstate Commerce Commission (ICC) had overstepped its authority by ordering certain railroads to stop charging higher rates for shorter distances than longer ones on freight traffic in Southern California. The city of Los Angeles and other shippers challenged these rate structures as discriminatory under federal law governing interstate commerce. The ICC agreed with them and ordered a change in rates which was then appealed by the railroads to the Supreme Court. The court ruled that while it is generally true that carriers may charge more for short hauls than long ones if justified by competitive conditions, this principle does not apply when such practices are unjustly discriminatory against smaller cities like Los Angeles compared to larger hubs like San Francisco or Chicago where competition among many carriers naturally leads to lower prices per mile for longer distances. Therefore, it upheld ICC's order finding that there was substantial evidence supporting their conclusion about discrimination and affirmed its power under existing law to correct such abuses even though they might be caused partly by natural market forces beyond direct control of individual carriers.

In the dissenting opinion for Interstate Commerce Commission v. United States ex rel. Los Angeles, Justice Stone argued that the majority's decision to allow a railroad company to abandon its line without approval from the Interstate Commerce Commission (ICC) undermined federal regulatory power over interstate commerce and threatened public interests. He contended that Congress had granted ICC authority over such matters in order to protect communities dependent on rail service from arbitrary decisions by railway companies seeking only profit maximization. By allowing unilateral abandonment of lines, he believed it would leave these communities vulnerable and disrupt national transportation policy objectives set by Congress through ICC regulation.