In the case of Kaiser Steel Corp. v. W.S. Ranch Co., 1967, the U.S Supreme Court was asked to review a decision made by the New Mexico Supreme Court regarding water rights and land ownership in New Mexico. The dispute arose when Kaiser Steel Corporation purchased land from W.S Ranch Company with an agreement that included water rights for mining purposes but later discovered that these rights were not legally transferable under state law due to their classification as "domestic" rather than "industrial". The lower court ruled in favor of W.S Ranch, stating that they had fulfilled their contractual obligations since they had transferred all possible interests available at the time of sale. Kaiser appealed this ruling arguing it was misled about its ability to use the water for industrial purposes and sought compensation for damages incurred due to inability to operate its mine fully without sufficient water supply. The U.S Supreme Court declined certiorari (refused to hear) on this case, thereby upholding New Mexico's highest court's interpretation of state law which favored domestic over industrial usage in allocation of scarce resources such as water.

In the dissenting opinion for Kaiser Steel Corp. v. W.S. Ranch Co., it was argued that the majority's decision to uphold a lower court ruling in favor of W.S. Ranch Co., which had sued Kaiser Steel Corp over water rights, was incorrect because it failed to properly consider and apply relevant state law regarding water use and property rights in Colorado where the dispute took place. The dissent pointed out that under Colorado law, landowners have an absolute right to capture and use all precipitation falling on their property unless they interfere with vested downstream users' rights or violate interstate compacts or decrees limiting such usage; neither of these exceptions applied here as per their view. The dissent also criticized the majority's reliance on federal common law principles instead of applying state laws governing local natural resources disputes, arguing this approach undermined states' sovereignty over their own resources management policies while creating unnecessary legal uncertainty for landowners like Kaiser who might face conflicting obligations under different jurisdictions’ rules about resource utilization. Furthermore, they disagreed with how damages were calculated by not considering potential benefits from increased groundwater recharge due to mining activities conducted by Kaiser which could offset some harm caused by its alleged interference with WS Ranch’s surface stream flows.