The U.S. Supreme Court case Wagnon v. Prairie Band Potawatomi Nation (2005) centered around the issue of whether a state could impose a tax on fuel distributors who sold gasoline to an Indian tribe for resale at its reservation gas station. The Kansas Department of Revenue, led by Joan Wagnon, argued that it had the right to levy such taxes under state law while the Prairie Band Potawatomi Nation contended this was in violation of their tribal sovereignty as recognized by federal law and treaties. The court ruled 7-2 in favor of Kansas, stating that because the legal incidence of the tax fell on off-reservation transactions between non-Indian entities (the distributor and retailer), it did not infringe upon tribal sovereignty or self-governance rights.

In the dissenting opinion for Wagnon v. Prairie Band Potawatomi Nation, Justice Stevens argued that Kansas' motor fuel tax was not a legal imposition on the tribe's sovereignty. He contended that this case differed from previous ones where taxes were imposed directly on tribes or tribal members; here, the tax was levied on off-reservation distributors before they sold to tribes. Thus, he believed it did not infringe upon tribal self-governance or sovereignty as it wasn't directly taxing them but rather their suppliers. Furthermore, he pointed out that if states could never impose any economic burden indirectly affecting tribes without clear congressional approval (as majority suggested), then many state regulations would be invalidated and Congress’s silence in such matters should not be interpreted as disapproval of state law.