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Mr* Wm. Reinhardt 2, September 3C, 1S1 assist the City in presenting a vigorous demand for the drilling or acquisition of additional wells and the con­struction of additional storage facilities equivalent to the storage capacity proposed by the District. If such an order ware made and complied with, a very substantial expenditure would be required. While In Las Vegas I was informed that the bond election will not be held until February, 1953, so it is probable that the Commission will h*ve decided the ease prior to that time. It is,of course, always possible that the people will not vote the bonds, in which event the Company will face the ne-ceselty of operating the water system at Las Vegas for a considerable period of time. It appears to me that it is the plan of the District to have the Water Company con* struct am much of the facilities projected by the District as possible, with the thought that if the bonds fail, the City will at least have the benefit of greatly expanded water futilities. You have Instructed me to oppose the request that we drill additional wells or provide additional storage and to resist in Court, if necessary, any order of the Commis­sion requiring substantial capital improvements. 1 believe that our ability to resist such an ordor from the Commission would be improved if the Railroad Com­pany were not the owner of the water production facilities at Las Vegas. The instant case involves only the Lae Ve­gas Land and 'Water Company, but if that Company attempted to avoid carrying out an order of the Commission on the ground that it was without the necessary funds and was not the earner of the water bearing lands and production facil­ities, m attempt might be made to have the Union Paeifie Railroad Company itself declared to be a public utility. This question is discussed quite fully in my letter to you of December 4, 1951. If the Railroad Company dispossessed itself of the water production facilities, it would be in a better position t© refuse to finance any unreasonable capital expenditures of the Las Vegas Land and Water Com­pany* 1 also doubt very much that it would be possible for the later Company to borrow from outsldo sources sub­stantial amounts of capital, particularly if the Railroad Company held a first mortgage upon all of the properties of the Water Company to secure its advances. If such a transfer Is made, it must be made immediately to be of any benefit.