Letter from E. E. Bennett (Los Angeles) to William Reinhardt, August 17, 1949

LOS ANGELES - Aug. 17, 1949 File: 174-2 Mr. Wm. Reinhardt: Referring to our conversation relative to the power of the Nevada Public Service Commission to compel the Water Company to construct a pipe line from the Lake Mead-Boulder City pipe line, in order to increase the water supply in the City of Las Vegas: Primarily, the Las Vegas Land and Water Company holds itself out to furnish water to the City of Las Vegas and we have continually refused to extend that service beyond the city limits. Within the city limits it is primarily the duty and the obligation of the Water Company to extend its mains and to increase its existing facilities to furnish water to all Inhabitants of the City of Las Vegas and to that end to construct the necessary pipelines and water facilities to so serve the city. Under that general law we could undoubtedly be required to drill additional-wells if that Mas practical and feasible from an engineering standpoint or to increase our reservoir supply. However, it is my opinion that we could not be compelled to make a large expenditure of money for the construction of the pipe line referred to, where It could be reasonably shown that our present facilities or any proposed minor enlargements thereof, would be sufficient to take care of the normal needs of the City of Las Vegas. It must be remembered there is an abundant supply of water and that any water secured through this pipe line extension would really by "standby" water to secure the city possible protection in its water supply for a few summer months. A case somewhat in point is that of Murray v. Public Utilities Commission, 150 Pacific, Page 47, decided by the Supreme Court of Idaho. In that case, the Public Utilities Commission in a hearing of one Murray doing business as the Pocatello Water Company, for an increase in rates, ordered Murray to construct a pipe line from an adjacent creek to Murray's reservoir. The length of the pipe line and the cost thereof is not brought out in the opinion. The petitioner Murray appealed to the Supreme Court on the ground, among other things, that the Commission exceeded its authority in ordering this pipe line constructed by the water company and the Idaho Supreme Court stated that such an order must be reasonable before It Is valid and In discussing the tests of reasonableness, the court stated: Mr. Wm. Reinhardt: -2- Aug. 17, 1949 "In this connection the commission and court must bear in mind the provisions of our state Consti-tution that no person shall be deprived of his prop-erty without due process of law, and that private property may not be taken for public use until a just compensation shall be paid therefor, as well as the similar provisions in the federal Constitution. Sec-tions 13 and 14, art. 1, Idaho Constitution. To com-pel the proprietor of a utility to make enlargements or extensions under such circumstances that he could not make a fair return upon, his whole investment would process of law. In order to justify the commission in ordering enlargements, the commission should be satisfied plant is not reasonably sufficient to render adequate service (Washington ex rel. 0. R. & N. Co. v. Fairchild, 224 U.S. 510, 32 Sup. Ct. 535, 56 L. Ed. 863); second, that the extension or enlargement is within the scope of the original professed undertaking of the proprietor of the utility (N. P. R. Co. v. N. Dak., 236 U.S. 565, 35 Sup. Ct. 429, at page 433, 59 L. Ed. ); third, that after the making of the enlargements or extensions the owner will be insured a fair return upon his whole investment (Smyth v. Ames, 169 U.S. 466-546, 10 Sup. Ct. 418, 42 L. Ed. 819); fourth, that the particular enlargements or extensions are reasonably necessary to insure reasonably adequate service (N. P. R. Co. v. N. Dak., supra, and Washington ex rel. 0. R. & N. Co. v. Fairchild, supra)." I think, in our particular case, we could very well sustain our contention that such an order issued by the Nevada Public Service Commission would be highly unreasonable and that we could not hope to secure a fair return upon the investment. On this point, and having in mind the statement in the editorial we discussed, that such a pipe line would cost a million and quarter, would it be possible, before your proposed discussion with the City Fathers, to secure some rough approximation of the layout of such a pipe line, the probable cost thereof, and the amount of water which we might be able to divert from the exist-ing pipe line over and above that now used by the industries in and around, the basic magnesium plant? I think the resulting figures would be so large that the City Fathers would themselves realize that the cost thereof would be such an additional burden on the water users of Vegas by way of increased water rates, that they would lose interest in it. EEB:AF ' E. E. Bennett