In the case of Phillips Petroleum Co. v. Oklahoma et al., 1950, the U.S Supreme Court was tasked with determining whether or not a state could tax natural gas produced within its borders but sold and delivered to consumers in another state. The State of Oklahoma had imposed such a tax on Phillips Petroleum Company, which challenged it as an unconstitutional burden on interstate commerce. The court ruled in favor of Phillips, finding that once the gas entered into interstate commerce (i.e., when it crossed state lines), it was no longer subject to taxation by the producing state under the Commerce Clause of the Constitution. This decision clarified how states can levy taxes on resources extracted within their borders and has significant implications for businesses involved in extracting and selling natural resources across state lines.

In the dissenting opinion for Phillips Petroleum Co. v. Oklahoma et al., Justice Frankfurter argued that the majority's decision was a departure from established principles of federalism and state sovereignty, particularly in relation to taxation powers. He contended that states should have the right to tax natural gas companies operating within their borders, as long as those taxes do not interfere with interstate commerce or violate other constitutional provisions. According to him, there was no evidence that Oklahoma's gross production tax did either of these things; therefore it should be upheld. Furthermore, he disagreed with the majority's interpretation of previous court decisions on similar issues and believed they were misapplying them in this case.