In the case of Hope Natural Gas Company v. Hall, State Tax Commissioner et al., 1926, the U.S Supreme Court was tasked with determining whether a state tax imposed on natural gas extracted from beneath West Virginia and transported to other states violated the Commerce Clause of the Constitution. The Hope Natural Gas Company argued that since it sold its product in interstate commerce, it should be exempt from taxation by individual states under this clause. However, after careful consideration, the court ruled against them stating that as long as a commodity remains within state boundaries and has not yet begun its journey into another state or been committed to an interstate carrier for transportation out-of-state; then it is subject to local taxation even though intended for exportation or actually exported subsequent to assessment.

In the dissenting opinion for Hope Natural Gas Company v. Hall, Justice Stone argued that West Virginia's tax on the gross proceeds of natural gas extracted within its borders and transported to other states was unconstitutional. He contended that this tax violated both the Commerce Clause and Due Process Clause of the U.S Constitution because it placed a burden on interstate commerce by taxing goods destined for out-of-state markets at a higher rate than those sold in-state. Furthermore, he believed it unfairly taxed property outside its jurisdiction since much of the value derived from these sales came from transportation and marketing efforts occurring beyond state lines. Thus, according to Justice Stone, such taxation constituted an extraterritorial application of state power which is not permissible under constitutional law.