In the 1933 case of Illinois Commerce Commission et al. v. United States et al., the U.S Supreme Court ruled on a dispute involving state and federal regulatory authority over railroads. The Illinois Commerce Commission had ordered reductions in intrastate railroad freight rates, which were challenged by railway companies as being too low to allow them to maintain their operations effectively. The Interstate Commerce Commission (ICC) intervened, arguing that these reduced rates would negatively impact interstate commerce by forcing railways to increase their interstate rates to compensate for lost revenue from intrastate traffic. In its decision, the Supreme Court sided with the ICC and upheld its power to regulate intrastate commerce when it affects interstate commerce under certain circumstances - thus affirming an expansive view of federal power at the expense of states' rights.

In the dissenting opinion for Illinois Commerce Commission et al. v. United States et al., Justice McReynolds disagreed with the majority's ruling that upheld federal authority over intrastate railroad rates when they affected interstate commerce. He argued that this decision encroached upon states' rights and violated principles of federalism by allowing a centralized government to control local matters, which he believed should be left to state authorities. The justice contended that such an interpretation of the Interstate Commerce Act could lead to unchecked expansion of federal power at the expense of state autonomy, undermining a fundamental balance in American governance structure as envisioned by its founders.