In the case of St. Louis, Iron Mountain & Southern Railway Company v. Hesterly, Administrator in 1912, the Supreme Court was tasked with determining whether a state law could regulate interstate commerce by requiring railroads to provide equal rates for intrastate and interstate travel. The plaintiff argued that an Arkansas law mandating this equality violated the Commerce Clause of the U.S Constitution which gives Congress exclusive power over interstate commerce regulation. The defendant countered that states had authority to regulate local aspects of such businesses within their borders. The Supreme Court ruled in favor of St. Louis, Iron Mountain & Southern Railway Company stating that while states do have some regulatory powers over businesses operating within their boundaries, they cannot interfere with or control matters related to interstate commerce as it is under federal jurisdiction per the Commerce Clause. This decision reinforced federal supremacy over state laws when dealing with issues concerning interstate business operations and further clarified interpretations regarding divisional powers between state and federal governments on commercial regulations.

In the dissenting opinion for St. Louis, Iron Mountain & Southern Railway Company v. Hesterly, it was argued that the court majority erred in its interpretation of Arkansas law and its application to this case. The dissent maintained that under Arkansas law, a railroad company is not liable for damages caused by sparks from one of their locomotives unless negligence can be proven on part of the company or its employees. In this case, there was no evidence presented proving such negligence; therefore, according to the dissenting justices' understanding of state law, liability should not have been imposed on St. Louis Iron Mountain & Southern Railway Company for damage caused by fire sparked by one of their trains passing through Mr.Hesterly's property.