In the case of Work, Secretary of the Interior v. Louisiana (1925), the Supreme Court ruled that federal lands submerged under navigable waters within a state's boundaries were not owned by that state but remained in federal ownership. The State of Louisiana had claimed ownership over three leagues from its coast into the Gulf of Mexico based on historical Spanish and French claims, which it argued had been transferred to it upon becoming a U.S. territory and later a state. However, this claim was rejected by Secretary Work who asserted that these lands belonged to all Americans as part of public domain land managed by his department for their benefit. In its decision, the court held that when Louisiana became a U.S. territory through purchase from France in 1803 via the Louisiana Purchase Treaty, any foreign claims ceased to exist and did not transfer with subsequent changes in status or governance.

In the dissenting opinion for Work, Secretary of the Interior v. Louisiana, Justice McReynolds disagreed with the majority's decision to uphold a federal law that allowed oil drilling on submerged lands off California’s coast. He argued that this was an overreach of federal power and violated states' rights. According to him, when California became a state it gained all rights and powers not specifically given to the Federal Government by Constitution including ownership of its offshore lands. Therefore, he believed that only California had authority over these lands unless there were explicit constitutional provisions stating otherwise which in this case did not exist according to his interpretation.