In the 1913 case of Texas & Pacific Railway Company v. Railroad Commission of Louisiana, the U.S. Supreme Court was asked to determine whether a state could regulate interstate commerce by setting rates for railroad companies operating within its borders. The Texas & Pacific Railway Company argued that this power belonged exclusively to Congress under the Commerce Clause of the Constitution and thus, any state regulation was unconstitutional. The court ruled in favor of the Railroad Commission, upholding states' rights to regulate certain aspects of interstate commerce when such regulations do not conflict with federal law or impede on Congress's ability to regulate commerce among states. This decision affirmed that while Congress has ultimate authority over interstate trade, it does not necessarily exclude all forms of state control unless there is a direct conflict between federal and state laws or if such control interferes with national uniformity in matters requiring nationwide standardization.

In the dissenting opinion for Texas & Pacific Railway Company v. Railroad Commission of Louisiana, Justice Holmes argued that the state had a right to regulate commerce within its borders and protect its citizens from unfair pricing practices by railway companies. He disagreed with the majority's interpretation of the Commerce Clause, which they used to strike down a Louisiana law regulating intrastate railroad rates. Holmes believed that states should have more authority over their internal affairs and economic activities unless there was clear evidence of interference with interstate commerce or violation of federal laws. He also criticized his colleagues for ignoring previous precedents supporting state regulatory powers in similar cases.