Tombstone probably made "first use' of that water.
The US government's lawyer (and I"m guessing it's one lawyer not well versed in land use or water rights) is saying that just because the US government owned the land that its rights supersede everybody else's.
Of course that's nonsense ~ if only because the KIng of Spain once owned all that land and he didn't advance any such notion. He can be demonstrated to have supported the "first use" doctrine. When he passed along title to others later he did not pass on a title with greater rights than he himself possessed.
The US government is just out of luck with any argument that asserts more right to the land than the King of Spain had (and after all, the various treaties the US signed when it acquired those territories all claimed that existing rights and titles would be respected).
We were magnanimous!
The Forest Service will have to learn to live with it.
They may have to be taught to live with it, but I seriously doubt they want to learn about anything that doesn't enhance their power, authority, or budget.