The Interstate Commerce Commission, acting on a complaint from the Railroad Commission of Louisiana,[2] found that "an unlawful and undue preference and advantage" was thereby given to the Texas cities,[3] ordered the company to change the rate structure to end discriminatory pricing.

[4] The Tenth Amendment reserves for the states or the people all powers not expressly delegated to the federal government.

In effect, the Interstate Commerce Commission was attempting to set the rate that the railroad could charge from Dallas to Marshall, a section of rail line completely within the borders of Texas.

Associate Justice Charles Evans Hughes, writing for the majority, rejected the railroad's argument, finding that congressional authority "necessarily embraces the right to control... operations in all matters having a close and substantial relation to interstate traffic, to the efficiency of interstate service, and to the maintenance of conditions under which interstate commerce may be conducted upon fair terms.

As a leading case in the ability of governments to regulate activities occurring only within single subdivisions, on the grounds that those activities affect regulation on a larger scale, the Shreveport Rate Cases have been cited in many subsequent rulings, both in the United States and in other countries.