In the 1931 case Southern Pacific Co. v. United States, the Supreme Court ruled on a dispute involving railroad companies and their rates for transporting commodities across state lines. The Interstate Commerce Commission (ICC) had ordered railroads to reduce their rates for certain goods, but several railroads including Southern Pacific challenged this order in court, arguing that it was unreasonable and would cause them financial harm. However, the Supreme Court upheld the ICC's decision by a vote of seven to two. The majority opinion held that courts should defer to regulatory agencies like the ICC when they make decisions within their area of expertise unless there is clear evidence that an agency's action is unjust or unwarranted.

In the dissenting opinion for Southern Pacific Co. v. United States, Justice Stone argued that the Interstate Commerce Commission (ICC) had not exceeded its authority when it ordered railroads to stop giving free transportation to federal employees traveling on official business. He believed that Congress had given the ICC broad powers to regulate railroad rates and practices in order to protect public interest, including preventing undue preferences or advantages. The majority's decision was based on a narrow interpretation of "person" under the Interstate Commerce Act which excluded government entities from receiving preferential treatment by railroads; however, Justice Stone contended this interpretation contradicted previous court decisions and congressional intent behind passing such legislation. He also pointed out that providing free transport could be seen as an indirect form of rate regulation - something within ICC's purview - since it affected overall revenue streams and competitive dynamics among different carriers.