In the case of Missouri, ex rel. Wabash Railway Company v. Public Service Commission in 1926, the U.S Supreme Court ruled that states could not regulate rail freight rates on interstate shipments even if part of the journey occurred within their borders. The Wabash Railway Company had challenged a decision by Missouri's Public Service Commission to set maximum rates for intrastate rail transportation, arguing it was an interference with interstate commerce and therefore unconstitutional under federal law which reserves this power exclusively for Congress. The court agreed with Wabash and overturned the state regulation as an infringement upon federal authority over interstate commerce according to Article I Section 8 Clause 3 (the Commerce Clause) of the Constitution.

In the dissenting opinion for Missouri, ex rel. Wabash Railway Company v. Public Service Commission, Justice Stone argued that the majority's decision to strike down a state regulation of intrastate railroad rates was an overreach of federal power and undermined states' rights. He contended that while Congress has authority over interstate commerce, it does not have exclusive jurisdiction in this area; states should retain their traditional police powers to regulate local matters unless there is direct conflict with federal law or policy. In this case, he saw no such conflict as Congress had not legislified on these specific intrastate rates nor expressed any intent to preempt state regulation in this regard. Therefore, he believed the Court erred by invalidating a valid exercise of state regulatory power based solely on potential future conflicts with national interests.