In the case of Farmers Irrigation District et al. v. State of Nebraska on the Relation of O'Shea, 1916, the U.S Supreme Court was asked to determine whether a state could tax property owned by an irrigation district that had been created under state law but which was used for public purposes. The court held that such taxation did not violate either federal or state constitutions and affirmed a decision from Nebraska's highest court allowing it to proceed. The dispute arose when Nebraska attempted to levy taxes against lands and other properties owned by two irrigation districts in the western part of the state. These districts argued they were exempt from taxation because their properties were being used for public purposes - specifically, irrigating arid land so it could be farmed more productively. However, both courts rejected this argument based on precedents indicating states have broad powers to tax property within their borders unless explicitly prohibited by constitution or statute. They also noted these districts benefited directly from various government services funded through taxes (like roads and schools), making it fair they contribute towards those costs despite serving broader public interests as well.

In the dissenting opinion for Farmers Irrigation District et al. v. State of Nebraska on the Relation of O'Shea, it was argued that the majority's decision to uphold Nebraska's right to regulate irrigation districts and their water usage was an overreach of state power. The dissenters believed that this ruling violated property rights by allowing a state government to control how private entities use their resources without providing just compensation or due process. They also expressed concern about potential negative impacts on agricultural productivity and economic development in rural areas where irrigation is essential for farming operations. Furthermore, they disagreed with the majority's interpretation of relevant legal precedents and constitutional provisions related to states' police powers and public interest considerations in natural resource management cases.