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( C O P T ) litifi Omaha - December 1ft, 1951* M r. A. S , S to d d a rd : (c c - Mr* B. B, B en n ett Los A n g e le s , C a l i f o r n i a ) R e fe r r in g t o y o u r n o t a tio n t o me on you r l e t t e r o f December 10 t o M r. S u tton and Mr. H u ls iz e r r e l a t i v e t o th e s u g g e s tio n s in M r, B e n n e ttf s l e t t e r o f December 4 t o M r. R ein h a rd t f o r a change in th e c o r p o r a te se tu p o f th e w a te r p ro d u c in g and d i s t r i b u t i n g f a c i l i t i e s in Las V ega s: I am in h e a r ty a c co rd w ith M r. R e in h a r d t’ s b e l i e f , e x p re s s e d in h is l e t t e r t o you o f December 4 , t h a t th e recom m endations c o n ta in e d in th e a n a ly s is p r e s e n te d by Mr, B e n n e t t's l e t t e r sh ou ld be g iv e n s e r io u s c o n s id e r a t io n . In f a c t , I am w i l l i n g t o g o somewhat f u r t h e r , and, s u b je c t t o what may be d e v e lo p e d by M e s s rs . S u tto n and H u ls is e r from t a x and a c c o u n tin g s t a n d p o in t s , t o say t h a t I am so im p ressed w ith Mr. B e n n e t t's p r e s e n t a t io n and, t o my m ind, th e soundness o f h is r e a s o n in g , as t o f e e l j u s t i f i e d i n a c o n c lu s io n th a t a change in th e c o r p o r a te setu p o f th e Las Vegas Land W ater Company sh ou ld be worked out and p r o ­g r e s s e d t o a consummation. In th e fu r n is h in g o f w a t e r , and e l e c t r i c i t y a ls o f o r t h a t m a tte r , t o o u ts id e p a r t ie s our r a i l r o a d com panies have a ttem p ted t o hedge th e t r a n s a c tio n s abou t so as t o keep them ou t o f th e c la s s o f p u b lic u t i l i t i e s in r e n d e r ­in g th e s e r v i c e . We have f e l t , n ot e n t i r e l y w ith o u t some m is g iv in g s in a fe w c a s e s , th a t an e x p re s s u n d ersta n d in g th a t we w ere fu r n is h in g o n ly s u rp lu s w a te r and power would p r o t e c t u s . The s i t u a t i o n a t Las Vegas has now rea ch ed th e p o in t where th e "s u r p lu s w a t e r " argument has l o s t m ost, i f not in f a c t a l l , o f i t s s t r e n g t h , The LA&5L has a c e r ­t i f i c a t e o f a p p r o p r ia t io n o f w a te r from th e S ta te o f Nevada a u t h o r iz in g i t t o a p p r o p r ia t e from th e w a te r b e a r in g lan d s i t owns in Las Vegas th e amount o f w a te r w hich can be b e n e f i c i a l l y used by i t f o r r a i l r o a d and d o m e stic purposes n ot i n e x c e s s o f 2 .5 c u b ic f e e t p e r seco n d . A c c o rd in g t o M r. B en n ett o n ly an a lm o st n e g l i g i b l e p o r t io n o f t h is ap­p r o p r ia t e d amount i s used by th e R a ilr o a d Company, but i t has o u ts ta n d in g c o n tr a c t s f o r th e fu r n is h in g o f w a te r w ith c e r t a in i n d u s t r i a l and o t h e r o u ts id e u sers (my r e c o r d s show 17 o f t h e s e ) . The agreem ent o f November 30, 1950 betw een LA&SL, UP and LVL&W makes r e fe r e n c e t o th e s e p r iv a t e co n ­t r a c t s and th en g o es on t o s a y t h a t " a l l o f th e r e s t o f th e w a te r produced from s a id lan d s above d e s c r ib e d i s d e liv e r e d t o th e W ater Company b y Second P a r t y " ( U . P . ) , Th is