In the case of Ivanhoe Irrigation District et al. v. McCracken et al., 1957, the United States Supreme Court was asked to review a contract between an irrigation district and the federal government regarding water supply from a federally funded project in California. The plaintiffs argued that certain provisions of this contract were inconsistent with state law and violated their rights under the U.S Constitution's Fifth Amendment by depriving them of property without due process or just compensation. The court ruled against these claims, stating that Congress had broad authority over such projects under its constitutional power to regulate interstate commerce and dispose of public lands. It also found no violation of due process or takings clause as there was no evidence showing any significant harm caused by these contractual terms on landowners' interests. Furthermore, it held that while federal reclamation laws required compliance with state water laws where applicable, they did not prevent incorporation into contracts for conditions necessary to achieve national policy objectives related to conservation and efficient use of limited water resources.

In the dissenting opinion for Ivanhoe Irrigation District et al. v. McCracken et al., Justice William O. Douglas argued that the majority's interpretation of the Reclamation Act of 1902 was incorrect and overly broad, leading to a misapplication of its provisions in this case. He contended that Congress intended to limit water rights under the act only to landowners who were actually using their lands for farming or other productive purposes, not those merely holding them as investments or speculating on future increases in value. Furthermore, he disagreed with the majority's view that federal reclamation law superseded state water laws; instead, he believed they should work together harmoniously unless there was clear evidence of Congressional intent otherwise.