In the United States v. Pan American Petroleum Corp., the Supreme Court was asked to determine whether or not a contract between the U.S. government and Pan American for oil extraction on public lands violated federal law, specifically, if it exceeded limitations set by Congress regarding how much land could be leased to any one company for oil production. The case arose when Secretary of Interior Wilbur granted a lease extension in 1928 that allowed Pan American to control more than double the amount of acreage permitted under existing laws at that time. In its decision, the court ruled against Pan American and held that such leases were indeed illegal as they contravened Congressional statutes limiting petroleum companies' access to public lands for drilling purposes. This ruling reinforced limits on corporate exploitation of natural resources on public lands.

In the dissenting opinion for UNITED STATES et al. v. PAN AMERICAN PETROLEUM CORP. et al., it was argued that the majority's decision to uphold a tax on petroleum produced from Indian lands violated principles of federalism and tribal sovereignty, as well as exceeded Congress' power under the Commerce Clause. The dissenting justices believed that because these lands were held in trust by the U.S government for benefit of Native American tribes, they should be considered sovereign entities exempt from such taxation. They also contended that oil production did not constitute interstate commerce and thus fell outside Congress' jurisdictional purview according to their interpretation of the Constitution's Commerce Clause.