In the case of Oklahoma ex rel. Oklahoma Tax Commission et al. v. Barnsdall Refineries, Inc. et al., 1935, the U.S Supreme Court was tasked with determining whether or not a state could impose a tax on oil and gas produced within its borders but sold in another state without violating the Commerce Clause of the Constitution which prohibits states from interfering with interstate commerce. The court ruled that such taxes were indeed constitutional as long as they did not discriminate against out-of-state businesses or unduly burden interstate commerce. The decision upheld an Oklahoma law imposing a gross production tax on oil and gas extracted within its borders regardless of where it was ultimately sold, rejecting arguments by several oil companies that this constituted an illegal interference with interstate trade. This ruling affirmed states' rights to levy taxes on natural resources extracted within their boundaries even if those resources are destined for sale elsewhere, thereby setting important precedent regarding taxation powers under federalism principles.

In the dissenting opinion for Oklahoma ex rel. Oklahoma Tax Commission et al. v. Barnsdall Refineries, Inc. et al., Justice Stone argued that the majority's decision to strike down an Oklahoma tax on oil and gas production was incorrect because it violated principles of federalism by interfering with a state's right to levy taxes within its borders as it sees fit. He contended that the Court had overstepped its bounds in invalidating a state law based on what he saw as dubious constitutional grounds, arguing that there was no clear evidence of discrimination against interstate commerce or violation of due process rights in this case. Furthermore, he believed that even if such violations were present, they should be addressed through legislative action rather than judicial intervention.