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(2) \ allocation of such waters by Issuance of drilling permits must he predicated upon his judgment as tio <stV0,X X sifei X jL In psn*** tioular aquifer and portion thereof without affecting production of another producing well or other producing wells tapping the same aquifer, and with regard as to the oharaoter of beneficial use, domestic requirement being the highest character of such use. Mr. Smith sounded the warning that with the known gradual depletion of existing water resources, the community could not look to any success in influencing location of indus­tries which would be dependent upon this source for water re­quired in their operations, and for the Same reason the commun­ity would experience difficulty in encouraging investment in projects of any character that would tend toward increasing the population and the development of the Valley. He gave as the firm opinion of his Department that the community should take immediate steps to correct this unstable situation by the develop­ment of a standby source of water supply, and offered the services of his office in developing such a source. Pending the consumma­tion of such effort, he urged the utmost cooperation of every water user in conserving the present underground supply, thereby deferring the ooourrence of acute shortage. 3 . As to the standby supply, the talk generally assumed the possibility of acquisition of the DPC facilities now serving Basie Magnesium. Mr. Frank Case, of Anaoonda, however, stated that Basic is now using praotloally all of the water produced, and while he understood that the remaining magnesium producing units were to be shut down shortly, he had no advice as to intent to discontinue produetion of chlorine and caustic soda. ' M-. One of the Chamber of Commerce Directors made the statement that some years ago he, in conjunction with an engineer of the Reclamation Department, made a study of the recharge and runoff in the Charleston Mountains, and his recol­lection was that it was estimated water of a volume represent­ing 22,000,000 gallons per day which is now lost through runoff might be conserved by storage. The State Engineer was asked as to whether any study had been made of the possibility of conserving that runoff. Mr. Smith advised that no such study had been made, but would be included in the study now in progress. 5. It was brought out that a water conservation statute of 1939 provided for the formation of water conservation diet-riots, and that under this law such a district was formed in the Las Vegas Artesian Belt.' The functions of such a district, he advised, were to cooperate with the State Engineer in matters pertaining to production and use of underground waters, looking to the best Interests of the district as a whole. While duly organised under the statute, the Las Vegas Artesian Belt District had not functioned. Mr. Smith urged its reorganization and active