In the case of El Paso Water Company v. El Paso in 1893, the Supreme Court ruled on a dispute between a city and its water company over who had the right to control and distribute water resources. The El Paso Water Company claimed that it held exclusive rights to supply water within certain areas of the city based on an earlier contract with local authorities. However, when drought conditions led to severe shortages, the City of El Paso attempted to assert its own authority over these resources by drilling new wells without seeking permission from or compensating the company. The court ultimately sided with the City of El Paso, ruling that while private companies can be granted specific privileges or franchises by municipal governments (such as operating public utilities), they cannot hold monopolistic control over essential natural resources like water. This decision affirmed municipalities' inherent powers and responsibilities for managing such resources in times of crisis for public welfare.

In the dissenting opinion for El Paso Water Company v. El Paso, it was argued that the city of El Paso did not have a valid claim to water rights from the Rio Grande River because they had failed to use those rights for over 20 years. The justice believed that under Texas law, this constituted an abandonment of those rights and therefore they should revert back to public domain. Furthermore, he disagreed with the majority's interpretation of "beneficial use" in relation to water rights, arguing that simply intending or planning to use water at some point in future does not constitute beneficial use under Texas law; actual usage is required. He also pointed out inconsistencies between state laws regarding property and water right claims which further complicated matters.