In the case of Scott v. Donald in 1896, the U.S. Supreme Court ruled on a dispute involving state liquor laws and interstate commerce regulations. The plaintiff, Scott, was an out-of-state liquor dealer who challenged South Carolina's dispensary law that prohibited importation and sale of alcohol except by state-run dispensaries. He argued this violated his rights under the Commerce Clause of the Constitution which regulates interstate trade. The court held that while states have broad powers to regulate alcohol within their borders due to its potential for harm (under what is known as "police power"), they cannot discriminate against out-of-state businesses or impede interstate commerce without justification. However, it also found that South Carolina’s system did not violate these principles because it applied equally to both in-state and out-of-state products once they had entered into local circulation. Thus, although recognizing some limitations on state authority over alcohol sales imposed by federal control over interstate commerce, the court upheld South Carolina's right to maintain its unique system of government-controlled liquor distribution.

In the dissenting opinion for Scott v. Donald, Justice Harlan argued that the South Carolina law in question was unconstitutional because it violated both the Commerce Clause and the Equal Protection Clause of the Fourteenth Amendment. He contended that by granting a monopoly to a state agency for selling liquor, while prohibiting importation from other states unless through this agency, South Carolina had effectively regulated interstate commerce - an authority reserved exclusively for Congress under Article I of Constitution. Furthermore, he believed that such regulation discriminated against out-of-state businesses and citizens who were denied equal protection under laws as guaranteed by Fourteenth Amendment. Thus, according to Justice Harlan's dissenting view, not only did this law infringe upon federal powers but also unjustly favored certain groups over others within society.