What is happening:

When Right-clicking either Dirt or Sand with water above it with a sugar cane in hand it places the sugar cane in the midst of the water.

What is supposed to happen:

Nothing, Sugar Cane should not be able to be placed in water

Steps to reproduce:

1.  Have an area with a minimum size of 2x1
2. Have one bock have a depth of one and the one beside it the depth of two
3. Fill the area with water
4. Block below the water must be one of the blocks Sugar Cane can be placed on like dirt or sand
5. Place the Sugar Cane on the block and see it take the place of the water.

Notes: This can be either in naturally generated water or placed water. This does not work if there is no water adjacent to the block the Sugar Cane is standing on. The water can either be flowing or static, as long as there is water.