In the case of Lane, Secretary of the Interior v. Watts in 1914, the United States Supreme Court ruled on a dispute involving land rights and water usage. The plaintiff was Franklin K. Lane, then serving as Secretary of the Interior under President Woodrow Wilson; he sued to prevent defendant John A. Watts from diverting water from an irrigation canal that ran through his property in Nevada for use on non-reclamation lands not part of any project authorized by Congress under Reclamation Act (1902). The court held that while private individuals could acquire certain rights to public lands before they were withdrawn for reclamation purposes, those rights did not extend to using government-built canals or other improvements without express authorization by law or contract with federal authorities. This decision affirmed federal control over its reclamation projects and clarified limitations on individual claims against such resources.

In the dissenting opinion for Lane, Secretary of the Interior v. Watts, Justice Holmes argued that the government should not be held liable for damages resulting from a flood caused by a dam built on public land. He contended that while it was unfortunate that private property was damaged as a result of this event, it did not necessarily mean that the government had acted unlawfully or negligently in constructing and maintaining the dam. Furthermore, he asserted that there were inherent risks associated with living near such structures and these risks should be borne by those who chose to do so rather than being shifted onto taxpayers through litigation against the government. In essence, his argument centered around limiting governmental liability in cases where its actions inadvertently cause harm to private individuals or their property.