In the case of Shell Oil Company v. Iowa Department of Revenue, the Supreme Court ruled in favor of the Iowa Department of Revenue. The issue at hand was whether or not a state could tax royalties from oil and gas wells located within its borders but owned by an out-of-state corporation. Shell Oil argued that this taxation violated both the Due Process Clause and Commerce Clause as it had no physical presence in Iowa, only economic interests through royalty payments received from independent producers who extracted resources there. The court disagreed with Shell's argument, stating that due process was satisfied because income-producing activity occurred within Iowa’s jurisdiction - extraction and sale of natural resources - which created sufficient nexus for taxation purposes. Furthermore, they found no violation to commerce clause as tax did not discriminate against interstate commerce nor cause undue burden on it. This ruling set precedent for states' rights to levy taxes on out-of-state companies deriving income from sources within their jurisdictions.

In the dissenting opinion for Shell Oil Company v. Iowa Department of Revenue, Justice Scalia argued that the majority's decision was inconsistent with previous rulings and principles of federalism. He contended that states should have the right to tax all income generated within their borders, regardless of whether it is derived from interstate commerce or not. In his view, this principle should apply even when a company operates in multiple states and has its headquarters elsewhere. He also criticized the majority for creating an arbitrary distinction between "apportionable" and "non-apportionable" income without clear legal basis or precedent. Furthermore, he disagreed with their interpretation of relevant statutes and case law on state taxation powers over corporations engaged in interstate business activities.