In the case of Sanitary District of Chicago v. United States, 1924, the Supreme Court ruled in favor of the U.S. government and against the Sanitary District of Chicago. The dispute arose over a canal built by the district to divert water from Lake Michigan into Mississippi River tributaries for sanitation purposes. The federal government argued that this diversion was lowering lake levels and thus impeding navigation on connecting bodies of water which were under federal jurisdiction as interstate commerce routes. The court held that while states have rights over their internal waters, these rights are subject to national interests such as maintaining navigable capacity for interstate commerce - a power vested in Congress by Constitution's Commerce Clause (Article I Section 8). Thus, even though Illinois had authorized construction and operation of this canal system within its borders, it could not interfere with federally protected navigation rights without congressional approval. This decision reinforced supremacy clause principles where state actions can be overridden when they conflict with valid federal laws or constitutionally granted powers; also highlighted how environmental changes caused locally can impact broader regions thereby necessitating oversight at higher governmental level.

In the dissenting opinion for Sanitary District of Chicago v. United States, Justice McReynolds argued that the Court had overstepped its jurisdiction by intervening in a matter he believed should be handled at the state level. He contended that Illinois was within its rights to divert water from Lake Michigan for sanitary and navigational purposes, as it did not significantly impact other states' use of the Great Lakes waters or violate any federal laws or treaties. Furthermore, he suggested that if there were grievances about this diversion, they should be addressed through interstate negotiation rather than Supreme Court intervention. In his view, such an approach would better respect states' sovereignty and their ability to manage their natural resources without undue interference from federal authorities.