In the case of United Fuel Gas Company v. Hallanan, State Tax Commissioner of West Virginia et al., 1921, the Supreme Court was tasked with determining whether a state could impose a tax on gas produced within its borders but sold and delivered in another state. The United Fuel Gas Company argued that such taxation violated the Commerce Clause of the U.S Constitution which prohibits states from interfering with interstate commerce. However, West Virginia's tax commissioner maintained that since production occurred within their jurisdiction, they had every right to levy taxes on it. The Supreme Court ruled in favor of West Virginia stating that while states cannot interfere with interstate commerce directly or indirectly by imposing burdensome regulations or charges upon it; however, this does not prevent them from taxing property or business operations located within their boundaries even if those operations are part of larger interstate transactions. Therefore, as long as gas remained within control and possession of producer before being transported out-of-state for sale and delivery - thus making it an intrastate transaction at point when taxed - then there is no violation against Commerce Clause.

In the dissenting opinion for United Fuel Gas Company v. Hallanan, it was argued that the tax imposed by West Virginia on natural gas produced within its borders and transported to other states violated the Commerce Clause of the U.S. Constitution. The dissenting justices believed that this case should have been decided in favor of United Fuel Gas Company because they saw no distinction between a tax levied upon goods while still at rest in their original state and a tax levied upon those same goods as soon as they start moving towards another state, both being equally burdensome to interstate commerce. They also pointed out inconsistencies with previous court decisions regarding similar cases involving coal companies where such taxes were deemed unconstitutional interference with interstate commerce. Therefore, they contended that this decision contradicted established legal precedents without providing any compelling justification for doing so.