In the case of Colonial Pipeline Co. v. Traigle, Collector of Revenue of Louisiana in 1974, the Supreme Court ruled that a state could not tax an interstate pipeline company based on its total value including property and operations outside the taxing state's jurisdiction. The court held that such taxation violated both due process and commerce clauses as it would result in multiple states being able to tax the same income or property which is unconstitutional under federal law. This decision was significant because it clarified how interstate businesses should be taxed by individual states, ensuring they are only taxed for their activities within each respective state.

In the dissenting opinion for Colonial Pipeline Co. v. Traigle, Justice William O. Douglas argued that Louisiana's tax on natural gas transported through pipelines in the state did not violate the Commerce Clause of the U.S. Constitution as it was a fair approximation of services rendered by the state to pipeline companies like Colonial Pipeline Co., and thus should be upheld. He contended that Louisiana provided significant benefits to these companies, including rights-of-way across public lands and waterways, protection from third-party damage claims, and access to courts for dispute resolution among others - all of which justified taxation under its jurisdictional reach even if no sales were made within its borders or consumption occurred therefrom.