In the case of Dugan et al. v. Rank et al., the U.S Supreme Court was presented with a dispute over water rights in California's Central Valley region, specifically related to the operation of Friant Dam and Madera Canal by federal officials under authority granted by Congress through Reclamation Laws. The plaintiffs, private landowners who held riparian and overlying property rights to water from San Joaquin River, claimed that their rights were being infringed upon due to diversion of river waters for public use without compensation. The court ruled in favor of the defendants (federal officials), stating that while it recognized state law governed appropriation and beneficial use of water, when United States acquires lands within a State for specific purposes authorized by Congress - such as reclamation projects - it also obtains implied right to unencumbered use of those lands which may include usage or diversion of local waters necessary for project completion. However, this does not mean government can infringe on existing superior vested rights without just compensation. In this instance though, evidence showed plaintiffs' predecessors had long acquiesced in diversions reducing flow downstream where they could have protested earlier; hence their claims were barred now.

In the dissenting opinion for Dugan et al. v. Rank et al., Justice Black disagreed with the majority's decision, arguing that it violated principles of federalism and property rights. He contended that the U.S government did not have an absolute right to use water from a river passing through private lands without compensation, even if it was for public projects like navigation or flood control. According to him, this interpretation could potentially allow the federal government to seize any private property without recompense under its Commerce Clause powers - a dangerous precedent in his view. Furthermore, he believed that California state law should govern water rights disputes within its borders rather than federal common law as decided by the court majority.