In the case of City of Pawhuska v. Pawhuska Oil & Gas Company et al., 1918, the Supreme Court examined whether a city ordinance that prohibited drilling for oil or gas within city limits was unconstitutional as it deprived property owners of their rights without due process. The plaintiff, Pawhuska Oil & Gas Co., had leased land in the town with known oil and gas reserves but were prevented from extracting these resources due to this ordinance. They argued that this constituted an unlawful taking under the Fifth Amendment. However, the court ruled against them stating that such regulations fell within police power exercised by states and municipalities to protect public health and safety. It held that while property rights are important, they're not absolute and can be restricted for public welfare reasons - even if it means preventing certain profitable uses of one's property.

In the dissenting opinion for City of Pawhuska v. Pawhuska Oil & Gas Company, it was argued that the city had no right to tax oil and gas wells within its limits because they were located on allotted lands owned by Native Americans, which were exempt from taxation under federal law. The dissenting justices believed that this exemption applied not only to land but also to personal property situated thereon, including oil and gas wells. They contended that Congress intended these exemptions as a means of protecting Native American tribes during their transition from tribal life to civilization and individual ownership of property. Therefore, any state or local laws imposing taxes on such properties would be in direct conflict with federal law and thus invalid. Furthermore, they disagreed with the majority's interpretation of previous court decisions regarding similar issues involving taxation rights over Indian lands.