In the United States v. Erie Railroad Company case of 1914, the Supreme Court ruled in favor of the federal government's right to regulate interstate commerce. The dispute arose when a New York state law required trains to be equipped with certain safety devices that were not mandated by federal law. The Erie Railroad Company argued this was an infringement on their rights and challenged it in court. However, Justice Oliver Wendell Holmes Jr., writing for the majority, upheld that states could impose stricter regulations than those set by Congress as long as they did not interfere with interstate commerce or contradict any existing federal laws. This decision affirmed both states' ability to enforce additional safety measures beyond national standards and reinforced Congress's authority over interstate trade regulation.

In the dissenting opinion for United States v. Erie Railroad Company, Justice Holmes argued that the Interstate Commerce Commission (ICC) should have authority to regulate railroad rates as it sees fit, without interference from courts unless there is clear evidence of unconstitutionality or illegality. He believed that Congress intended to give such power to the ICC when it created this regulatory body and thus disagreed with his colleagues' decision which limited its powers. According to him, if a rate set by a railroad company was found unreasonable by ICC then they had full right under law given by Congress to change those rates after due investigation and hearing from all parties involved. The majority's ruling in favor of Erie Railroad undermined this authority according to Holmes’ view.