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File: 4705-11-22 Mr. Roy A. Wehe 408 Paoifio Mutual Building 660 Market Street San Francisco, California Bear Roy: November 15, 1951 You will be interested to know that when I examined seme of the affidavits of well completion filed by the LVL&WCo. with the Nevada State Engineer after my return from Carson Olty, I found that the affidavits did not purport to state the exact cost of the well and its connecting pipe line. There is nothing in the law whieh requires a statement of the actual cost of drilling we U s and the forms which are prescribed by the State Engineer state that at least a stated amount of money has been spent. For that reason, 1 do not think we are in a vulnerable position but 1 am having the filings reviewed so that we will know the true facts. I am also asking the Auditor to furnish additional information with respect to the Railroad capital Investment and aleo to furnish the Commission an Annual Report covering the water production facilities. The complaint against the Commission is being filed this week but X expect to have another conference with Mr. Allen after X have obtained additional information. I I have told Mr. Reinhardt on several occasions I believe it would be wise for the Railroad to transfer the water production facilities to the Water Company. In fact X believe there should be a Water Company owning both production and distribution facilities completely divorced from the Railroad and from the real estate interests of the LVL&WCo. It seems to me that such a Water Company would be In a strong position to demand proper rates before embarking upon extensive capital expenditures. The Railroad Company could easily refuse to advance the money for such expenditures and X do not believe that the Water Company owing a substantial debt to the Railroad Company could borrow additional money from other sources unless its earnings were satisfactory. Mr• Reinhardt is now inclined to believe that this may be a good idea and has asked me to prepare a brief memorandum setting forth the advantages of such handling so that it can be considered by the President and other interested officers.