In 1928, the La Plata River and Cherry Creek Ditch Company, a Colorado corporation, owned a ditch diverting water from the La Plata River in Colorado for irrigation purposes. On July 5, 1928, the company filed suit in the District Court for La Plata County against Hinderlider, the State Engineer of Colorado, and his subordinates. The complaint alleged that since June 24, 1928, the defendants had administered the river's water in a manner that deprived the company of water it claimed the right to divert, and it sought a mandatory injunction.
The defendants admitted shutting the company's head-gate but maintained that their actions complied with the La Plata River Compact, an agreement between Colorado and New Mexico approved by Congress. The compact allocated shares of the river's flow between the states, including provisions for unrestricted use when flow was high and rotation of the entire flow during low-flow periods in summer months. In 1928, the state engineers of both states implemented a rotation schedule of ten-day alternating periods to maximize beneficial use when the river was low.
The La Plata River originates in Colorado's mountains, flows into New Mexico, and joins the San Juan River. Both states had long used its waters for irrigation under the appropriation doctrine, where priority of beneficial use determines rights. A 1898 Colorado decree had adjudicated the Ditch Company's rights to 39.5 cubic feet per second, subject to five senior priorities totaling 19 second feet. On June 24, 1928, the stream flow at the Colorado gauging station measured 57 second feet.
The District Court dismissed the suit after the first trial in 1930, finding the compact justified the defendants' actions. The Colorado Supreme Court reversed that judgment. After remand and a second trial on the same evidence, the trial court again entered a decree favorable to the Ditch Company in 1936, which the state supreme court affirmed in 1937. The United States Supreme Court granted review following an appeal.
The compact had been negotiated after authorization by the legislatures of both states in 1921, ratified by them in 1923, and approved by Congress in 1925.
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