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Mr. Wm* Reinhardt 2 September 30, 1952 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 were 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 have decided the case 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 necessity 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 construct as 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 facilities. 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. I I believe that our ability to resist such an order 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 Las 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 owner of the water bearing lands and production facilities, an attempt might be made to have the Union Pacific 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 to refuse to finance any unreasonable capital expenditures of the Las Vegas Land and Water Company. I also doubt very much that it would be possible for the Water Company to borrow from outside 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.