In the MCCHORD v. LOUISVILLE AND NASHVILLE RAILROAD COMPANY case of 1901, the U.S Supreme Court ruled that a state could not regulate interstate commerce rates without infringing upon federal jurisdiction. The Kentucky Railroad Commission had ordered Louisville and Nashville Railroad Company to charge equal rates for in-state and out-of-state freight transportation, which was challenged by the railroad company as an attempt to control interstate commerce. The court held that while states have power over local matters within their borders, they cannot interfere with or impose burdens on interstate commerce - a power reserved exclusively for Congress under the Commerce Clause of the Constitution. Therefore, any regulation imposed by a state attempting to directly control operations beyond its boundaries is unconstitutional.

The dissenting opinion in the case of McChord v. Louisville and Nashville Railroad Company argued that the Kentucky state law, which allowed a railroad commission to set rates for interstate commerce, did not infringe upon federal authority. The dissenters believed that states should have the power to regulate businesses within their borders as long as they do not interfere with interstate commerce laws established by Congress. They contended that since Congress had not enacted any legislation regarding this specific issue at hand, it was within Kentucky's rights to enforce its own regulations on railroads operating within its boundaries. This view held an emphasis on states' rights and autonomy in regulating local affairs unless explicitly superseded by federal law.