118 U.S. 557 (1886), argued 14–15 Apr. 1886, decided 25 Oct. 1886 by vote of 6 to 3; Miller for the Court, Bradley, Waite, and Gray in dissent. In Wabash, the Supreme Court held that the states have no power to regulate railroad rates for interstate shipments. Substantially modifying the standard employed since Cooley v. Board of Wardens (1852), the Court said the Commerce Clause allows the states to enact “indirect” but not “direct” burdens on interstate commerce. State rate regulations were “direct” burdens on commerce and therefore could not govern interstate transportation.
Wabash did not deny the states all power over interstate railroading. The Court, for example, upheld state safety regulations as permissible “indirect” burdens. Yet Wabash created an important regulatory void by making rate regulation of interstate shipments an exclusive federal power. Prior to Wabash, the federal government had left the subject of railroad regulation almost entirely to the states. In response to the decision, Congress established the Interstate Commerce Commission (1887). Thus, Wabash precipitated the advent of the modern independent regulatory agency and initiated the shift of governmental responsibility for economic affairs from the states to the national government. Wabash remains a landmark even though the “direct” versus “indirect” test it propounded to define the domain of exclusive federal power over interstate commerce was abandoned in the 1930s in favor of a functional balancing approach.