The United States Supreme Court case of United States v. Chandler-Dunbar Water Power Company in 1907 revolved around the issue of water rights and power generation. The federal government sought to condemn a portion of the St. Mary's River, which formed part of the boundary between Michigan and Canada, for public use as a ship canal under its powers granted by eminent domain laws. The Chandler-Dunbar Water Power Company owned an island in this river where it generated hydroelectric power and contested this action arguing that they had vested riparian rights to use the water for power generation purposes. However, the court ruled in favor of the U.S., stating that navigable waters are held by states in trust for public uses such as navigation or fishing but not private commercial exploitation like generating electricity from hydropower plants on islands within those waters.

The dissenting opinion in the United States v. Chandler-Dunbar Water Power Company case argued that the federal government did not have the authority to confiscate private property without compensation, even if it was for a public purpose such as improving navigation on a river. The dissenters believed this violated the Fifth Amendment's Takings Clause, which states that private property cannot be taken for public use without just compensation. They also disagreed with majority's interpretation of Congress' power under Commerce Clause, arguing that while Congress had broad powers to regulate interstate commerce including navigation, it didn't extend to outright seizure of privately owned lands or properties without due process and fair compensation. Furthermore, they contended that state laws should govern water rights unless there is clear conflict with federal law.