In the case of United States v. City and County of San Francisco in 1939, the U.S. Supreme Court ruled on a dispute between the federal government and San Francisco over water rights to Yosemite National Park's Hetch Hetchy Valley. The city had been granted rights by Congress in 1913 to build a dam and reservoir for its municipal water supply, but later sought additional rights for hydroelectric power generation without compensation to the federal government. The court held that while Congress had allowed use of park land for water supply purposes, it did not grant any property interest or right beyond this specific purpose; therefore, any further exploitation such as power generation would require separate authorization from Congress with appropriate compensation due if required under law. This decision affirmed that public lands are held in trust by the government for all citizens' benefit and cannot be exploited without express congressional approval.

In the dissenting opinion for United States v. City and County of San Francisco, Justice McReynolds disagreed with the majority's decision that San Francisco had breached its contract with the U.S. government regarding Hetch Hetchy Valley water rights. He argued that there was no substantial evidence to support this claim, noting that it was based on mere assumptions rather than concrete facts. Furthermore, he contended that even if a breach did occur, it would not justify depriving an entire city of its primary water supply without first providing an alternative source or compensation as required by law and basic principles of fairness. In his view, such drastic action should only be taken in cases where public safety is at risk or when there are clear indications of fraud or gross negligence - conditions which were not met in this case according to him.