In the Southern Pacific Company v. Interstate Commerce Commission case of 1905, the Supreme Court ruled on whether or not a railroad company could charge more for shorter distances than longer ones. The Southern Pacific Company had been charging higher rates for short hauls within California compared to long hauls that crossed state lines, which was challenged by the Interstate Commerce Commission (ICC). The ICC argued this practice violated federal law prohibiting railroads from charging more per mile for short trips than they do for long ones over the same line in roughly similar circumstances. However, Southern Pacific contended that it should be allowed to set its own prices based on market conditions and competition with other modes of transport such as ships. The Supreme Court sided with the ICC stating that while there may be valid reasons why a carrier might want to charge more for shorter distances, these must be clearly demonstrated and justified before being permitted under federal law. This ruling affirmed regulatory power over interstate commerce and underscored principles of fairness in pricing.

In the dissenting opinion for Southern Pacific Company v. Interstate Commerce Commission, it was argued that the Supreme Court should not have jurisdiction over this case as it involves a dispute between two states and therefore falls under the purview of Congress. The dissenting justices believed that by ruling on this matter, the court was overstepping its boundaries and infringing upon congressional authority. They also disagreed with the majority's interpretation of interstate commerce laws, arguing instead that these laws were intended to regulate business practices within individual states rather than across state lines. Furthermore, they contended that if such regulations did apply to interstate commerce then they would be unconstitutional as they would violate businesses' rights to free trade. Finally, in their view, even if these regulations were constitutional and applicable in this context - which they disputed - there had been no violation by Southern Pacific Company because rates charged for transportation services are determined by market forces rather than arbitrary decisions made by companies themselves.