In the case of Railroad Commission of the State of Mississippi v. Louisville & Nashville Railroad Company, 1911, the U.S Supreme Court was called upon to determine whether a state railroad commission had authority to set intrastate freight rates that were lower than interstate rates for a private railroad company. The Louisville & Nashville Railroad Company argued that this violated their rights under the Fourteenth Amendment and interfered with interstate commerce. The court ruled in favor of the railroad company stating that while states have power over local trade within their borders, they cannot use this power in such a way as to materially obstruct or burden interstate commerce. Therefore, it was concluded that setting intrastate rates lower than those charged for similar services on an interstate basis constituted undue discrimination against interstate commerce and thus infringed upon federal jurisdiction.

The dissenting opinion in the case of Railroad Commission of the State of Mississippi v. Louisville & Nashville Railroad Company argued that the majority's decision was an overreach and undermined state authority. The dissenters believed that it was within a state's rights to regulate commerce within its borders, including setting railroad rates, as long as those regulations did not interfere with interstate commerce or violate federal law. They contended that there wasn't sufficient evidence to prove that Mississippi's rate-setting had such effects and thus should have been upheld by the court. Furthermore, they criticized the majority for failing to give due deference to local authorities' understanding of their own economic conditions and needs. In essence, they felt this ruling represented unwarranted judicial activism at odds with principles of federalism.