The Southern Railway Co. v. North Carolina case in 1963 revolved around the issue of whether a state could impose taxes on an interstate railway company for its operations within the state's boundaries, without violating the Commerce Clause of the U.S. Constitution which prohibits states from interfering with interstate commerce. The Supreme Court ruled in favor of Southern Railway Co., stating that North Carolina's tax was unconstitutional because it placed an undue burden on interstate commerce and violated federal law governing railroads' taxation rights under Interstate Commerce Commission regulations. This decision reinforced that while states have some authority to levy taxes on businesses operating within their borders, they cannot do so in a way that interferes with or discriminates against interstate commerce.

In the dissenting opinion for Southern Railway Co. v. North Carolina et al., Justice Harlan argued that the majority's decision to strike down a state law requiring railroads to maintain passenger service on certain routes was an overreach of federal power and a violation of states' rights. He contended that Congress had not explicitly preempted state regulation in this area, so it should be assumed that states retained their traditional authority to regulate local transportation services for public welfare purposes. Furthermore, he disagreed with the majority's interpretation of relevant federal statutes and regulations as prohibiting such state action, asserting instead they were intended only to prevent discriminatory treatment among carriers or between regions rather than barring all forms of local regulation aimed at ensuring adequate passenger service levels.