In the 1934 case of Texas & New Orleans Railroad Co. et al. v. United States et al., the Supreme Court ruled on a dispute between several railroad companies and the federal government regarding rates for intrastate commerce in Louisiana and Texas. The railroads argued that they were being unfairly forced to charge lower rates for intrastate commerce than interstate, which was causing them financial harm due to an increase in competition from trucking companies operating within state lines only. The Interstate Commerce Commission (ICC) had ordered these rate adjustments under its authority granted by Congress through the Transportation Act of 1920, aiming at maintaining fair competition among different modes of transportation while ensuring reasonable charges for shippers and consumers. The Supreme Court upheld ICC's decision, ruling that it did have jurisdiction over setting both interstate and intrastate freight rates when necessary to maintain competitive balance or protect against discriminatory practices affecting interstate trade - even if this meant raising some previously lower intrastate prices set by states themselves.

In the dissenting opinion for Texas & New Orleans Railroad Co. v. United States, Justice McReynolds expressed his disagreement with the majority's decision to uphold a federal regulation that required railroads to install automatic train control devices on their locomotives. He argued that this requirement was an overreach of federal power and infringed upon states' rights, as it essentially forced private companies to make significant financial investments without any clear evidence that these devices would significantly improve safety or efficiency. Furthermore, he contended that such decisions should be left up to individual railroad companies rather than being mandated by the government. This case marked a significant expansion of federal regulatory power over interstate commerce at the expense of state sovereignty and private enterprise autonomy.