In the case of Krug, Secretary of the Interior, et al. v. Santa Fe Pacific Railroad Co., 1946, the U.S Supreme Court was tasked with determining whether certain lands in Arizona were "mineral lands" and therefore not subject to a grant made by Congress to Santa Fe Pacific Railroad Company for railway construction purposes. The railroad company had been granted alternate sections of public land on each side of its rail line under an act passed in 1866 but this did not include mineral-rich areas as per federal law at that time. However, it was later discovered that some parts contained valuable potash deposits which led to a dispute over ownership rights between the government and Santa Fe Pacific Railroad Company. The court ruled against Santa Fe Pacific Railroad Co., stating that these particular lands were indeed 'mineral' due to their high concentration of potash - a valuable resource used primarily for fertilizer production - thus they should have been excluded from any grants given by Congress for railway construction purposes according to existing laws at that time.

In the dissenting opinion for Krug v. Santa Fe Pacific Railroad Co., Justice Frankfurter disagreed with the majority's interpretation of the Act of July 27, 1866. He argued that Congress intended to grant lands to railroads only if they were "public lands," not reserved or otherwise appropriated by the government. According to him, this was evident from both statutory language and legislative history. Furthermore, he believed that a railroad company could not acquire rights in land after it had been withdrawn from public domain by Presidential Proclamation for Indian reservation purposes before its line was definitely fixed and approved by federal authorities as required under Section six of said act. Therefore, he concluded that Santa Fe Pacific Railroad Company did not have any valid claim on such lands within an Indian Reservation established prior to their survey approval date.