In the Southern Pacific Company v. United States case of 1924, the Supreme Court ruled on a dispute involving railroad rates. The Interstate Commerce Commission (ICC) had ordered an increase in transcontinental freight rates which was challenged by Southern Pacific Company, arguing that it would cause undue preference to ports and localities not affected by the rate increase. However, the Supreme Court upheld ICC's decision stating that there was substantial evidence supporting ICC’s findings and its order did not infringe upon constitutional rights or exceed statutory authority. The court also noted that while some degree of inequality might result from such adjustments in rates, this alone does not constitute unlawful discrimination under federal law unless it is unjust or unreasonable.

In the dissenting opinion for Southern Pacific Company v. United States, it was argued that the Interstate Commerce Commission (ICC) had overstepped its authority by imposing a rate reduction on railroads without sufficient evidence to justify such an action. The dissenters believed that while the ICC has broad powers to regulate interstate commerce, these powers should not be used arbitrarily or capriciously. They contended that there must be substantial evidence of unreasonable or discriminatory practices before rates can be altered and in this case, they felt such evidence was lacking. Furthermore, they expressed concern about potential harm to railroad companies from unjustified rate reductions which could impact their ability to provide essential services and maintain infrastructure. Thus, according to them, the court majority's decision upholding ICC's actions set a dangerous precedent by allowing regulatory agencies too much discretion in setting rates without adequate proof of necessity.