In the case of Oklahoma Tax Commission v. Texas Company, 1948, the U.S. Supreme Court ruled in favor of The Texas Company (Texaco). The dispute arose when Oklahoma attempted to impose a gross production tax and an excise tax on petroleum produced from restricted Indian lands within its borders. Texaco argued that these taxes were not applicable as they had already paid royalties to the federal government for drilling rights under leases approved by the Secretary of Interior according to federal law governing such transactions with Native American tribes. The court agreed with Texaco's argument stating that state taxation interfered with matters pertaining exclusively to federal jurisdiction and policy concerning tribal affairs and resources on reservation land protected by treaties between tribes and the U.S Government. Therefore, it was held that Oklahoma could not levy those taxes without congressional authorization which was absent in this case.

In the dissenting opinion for Oklahoma Tax Commission v. Texas Company, Justice Jackson argued that the majority's decision was inconsistent with previous rulings and could lead to confusion in future cases. He believed that the Court had previously established a clear rule: if a state has jurisdiction over property or transactions within its borders, it can tax them without violating due process rights. However, he felt this case deviated from that principle by ruling against Oklahoma's right to tax oil produced on tribal lands within its borders. Jackson also expressed concern about potential implications of this decision on states' abilities to collect taxes and maintain their economies effectively, as well as possible negative impacts on relationships between states and Native American tribes.