## Facts

- Cascade Town Company owned and operated a privately developed summer resort at Cascade, Colorado, with hotels, cottages, trails, a park, and ornamental features (including a lake, fountain, and convention pavilion) associated with Cascade Creek and its waterfalls.
- Cascade Creek’s visible flow through the resort and canyon was a primary attraction for visitors and also supported limited on-site water uses (including a small waterworks serving resort facilities).
- Empire Water & Power Company planned an upstream diversion of Cascade Creek to generate hydroelectric power.
- The planned diversion would materially reduce the streamflow across Cascade’s lands and through the canyon, threatening the resort’s water supply and diminishing the scenic and recreational value central to the resort’s business.
- Cascade sought equitable relief to prevent the diversion, asserting long-established reliance on the stream’s flow as part of its resort enterprise.
- Empire asserted that Colorado’s prior-appropriation doctrine allowed diversion for beneficial use, including power generation.

## Issues

1. Whether a private resort operator may obtain injunctive relief against an upstream diversion when the principal harm is the loss of scenic and recreational value tied to an established business use of the stream.
2. Whether Cascade had protectable water-related rights (including appropriative uses connected to its resort operations) sufficient to limit Empire’s proposed upstream appropriation for hydroelectric power.
3. Whether a broad injunction prohibiting the diversion should stand, or whether equitable relief should be tailored to accommodate both parties’ lawful uses.

## Decision

- The court affirmed the availability of equitable protection for Cascade’s established stream-dependent resort uses and reliance interests.
- The court rejected the view that Cascade could require an unimpaired natural flow solely to preserve scenery against any upstream development.
- The court modified (rather than vacated) the trial court’s injunction, permitting Empire to divert water to some extent under conditions intended to avoid unreasonable injury to Cascade’s essential resort-related uses and values.

## Legal Principles

- In a prior-appropriation jurisdiction, hydroelectric generation can constitute a lawful beneficial use supporting an upstream diversion.
- A downstream enterprise may obtain equitable protection when it has long relied on a stream in concrete, economically significant operations, even if part of the injury from diversion is recreational or aesthetic in character.
- Scenic or recreational value, standing alone, does not create an absolute right to the full natural flow that overrides other lawful appropriations.
- Injunctive relief in water disputes may be limited and conditional, reflecting equitable balancing between competing beneficial uses rather than a complete bar or complete allowance.

## Conclusion

The court treated the resort’s stream-dependent business and amenity-related interests as legally cognizable for equitable protection, but held those interests were not absolute; it modified the injunction to preserve Cascade’s essential uses while allowing limited upstream diversion for hydroelectric power consistent with Colorado’s beneficial-use framework.


Empire Water & Power Co. v. Cascade Town Co., 205 F. 123 (8th Cir. 1913)