In the case of St. Louis, Iron Mountain & Southern Railway Company v. United States in 1919, the U.S Supreme Court ruled that a railroad company could not charge more for a shorter distance than it does for a longer one over the same line in the same direction unless authorized by federal regulators. The railway company had been charging higher rates to ship goods from Missouri to Texas than it did from Kansas (a further distance) to Texas due to competition with other railroads on the latter route. The court held that this practice was discriminatory and violated Section 4 of the Interstate Commerce Act which prohibited such behavior without approval from what is now known as Federal Railroad Administration.

In the dissenting opinion for St. Louis, Iron Mountain & Southern Railway Company v. United States, Justice McReynolds disagreed with the majority's interpretation of the Hepburn Act of 1906. He argued that Congress did not intend to give such broad power to the Interstate Commerce Commission (ICC) over railroad companies' rates and practices without judicial review or due process protections for railroads. According to him, this would be an unconstitutional delegation of legislative authority by Congress and a violation of separation-of-powers principles in U.S Constitution. Furthermore, he believed that it was unfair and unreasonable for ICC to impose penalties on railroads based on retroactive application of new standards which were not clearly defined at time when alleged violations occurred.