In Hodel, Secretary of the Interior v. Irving et al., 1986, the U.S. Supreme Court ruled on a case involving inheritance rights for Native American land allotments under federal law. The plaintiffs were members of the Oglala Sioux Tribe who challenged an amendment to the Indian Land Consolidation Act (ILCA) that allowed small fractional interests in allotted lands to escheat to tribes upon an owner's death if there was no will or eligible heirs within two degrees of consanguinity. They argued this violated their constitutional right against property takings without just compensation and due process rights by not allowing them to pass down these interests through descent or devise as non-Indigenous people could do with their property. In a 8-1 decision, the court held that this provision did constitute a taking without just compensation and struck it down as unconstitutional.

In the dissenting opinion for Hodel v. Irving, Justice O'Connor argued that the escheat provision of the Indian Land Consolidation Act violated the Fifth Amendment's Takings Clause. She contended that it was unconstitutional to take property without just compensation and transfer it to another private party, even if this action served a public purpose. The majority's argument that fractionated interests were not economically valuable did not convince her because she believed economic value should be determined by market forces rather than legislative decree. Furthermore, she disagreed with their assertion that these interests had little-to-no use or value due to their fractional nature; in her view, they still held sentimental or symbolic worth for owners who wished to maintain ties with tribal land and heritage. Lastly, Justice O’Connor expressed concern over potential abuse of power by Congress if allowed such broad authority under its trust responsibility towards Native Americans.