In the United States v. California case of 1935, the U.S. Supreme Court ruled in favor of the federal government, asserting its ownership over three nautical miles of submerged lands off California's coast. The dispute arose when both entities claimed rights to these offshore areas believed to be rich in oil deposits. The State argued that it had inherited these lands from Spain upon admission into the Union and hence owned them under common law principles; however, this was rejected by Justice George Sutherland who delivered a unanimous decision for the court stating that such land belonged to Federal Government as per international laws and treaties signed by US with other nations which superseded any state claims or common law principles. This ruling set an important precedent regarding jurisdictional boundaries between states and federal government over coastal waters.

In the dissenting opinion for United States v. California, Justice James Clark McReynolds argued that the federal government did not have exclusive jurisdiction over submerged lands off the coast of California. He contended that these lands were part of California's territory when it became a state and remained so unless explicitly transferred to federal control by Congress or through treaty. According to him, there was no such explicit transfer in this case; hence, he disagreed with the majority ruling which held that these submerged lands belonged exclusively to the U.S. government under its authority over navigable waters and foreign affairs as per Constitution's Commerce Clause and Treaty Clause respectively. Furthermore, he expressed concern about potential implications on states' rights if such broad interpretation of federal powers is accepted without clear constitutional or legislative mandate.