In the case of Mescalero Apache Tribe v. Jones, Commissioner, Bureau of Revenue of New Mexico et al., 1972, the U.S Supreme Court ruled in favor of the Mescalero Apache Tribe. The tribe had been operating a ski resort on land that was not part of their reservation but was leased from the federal government. They were also involved in construction activities off-reservation to support this enterprise. The state attempted to impose taxes on these operations which led to litigation as it raised questions about tribal sovereignty and state jurisdiction over Native American tribes' economic activities outside reservations. The court held that while states have some authority over tribal members when they are off-reservation, they cannot tax tribes for using or leasing lands held in trust by the federal government even if those lands are located outside reservations. This decision affirmed that Indian tribes enjoy sovereign immunity and their commercial enterprises could not be subjected to state taxation without clear authorization from Congress.

In the dissenting opinion for Mescalero Apache Tribe v. Jones, Justice Rehnquist disagreed with the majority's decision that New Mexico could not tax a ski resort operated by the tribe off its reservation. He argued that there was no federal law or treaty preventing such taxation and thus it should be allowed under state jurisdiction. The justice contended that tribal immunity from state taxes only applied within reservations, and extending this to activities outside of these boundaries would disrupt states' abilities to govern their own territories effectively. Furthermore, he believed this case differed significantly from previous ones where tribes were protected from state interference due to specific treaties or laws; in those cases, tribal rights had been clearly infringed upon whereas here they were not directly threatened.