In the 1922 case of Wichita Railroad & Light Company v. Public Utilities Commission of Kansas, the U.S Supreme Court ruled in favor of the state commission. The court held that a public utilities commission has constitutional authority to regulate rates charged by utility companies, even if those companies are owned by out-of-state entities. The Wichita Railroad & Light Company had argued that its interstate character exempted it from such regulation under federal law and constitutionally protected commerce clause rights. However, Justice Oliver Wendell Holmes Jr., writing for a unanimous court, rejected this argument stating that while states cannot interfere with interstate commerce directly or indirectly; they can control their internal affairs including local aspects of national corporations operating within their borders.

In the dissenting opinion for Wichita Railroad & Light Company v. Public Utilities Commission of Kansas, Justice McReynolds disagreed with the majority's decision that upheld a state law allowing public utilities commissions to set rates for private utility companies. He argued that this was an overreach of government power and violated constitutional protections against property seizure without due process. According to him, it is not within the purview of courts or commissions to determine what constitutes a fair return on investment for these businesses; rather, such decisions should be left up to market forces and negotiations between parties involved in business transactions. Furthermore, he contended that if states were allowed unfettered authority in regulating private industries' profits through rate-setting mechanisms, it could lead towards socialism - which would undermine America's capitalist economic system.