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(3) f . Second; A witter having direct bearing upon com­putation of the net earnings, particularly as to the effect of same upon rates, is the question of allowance by the Commission of a deduction for depletion. From inquiry we learn that the principle of depletion allow­ance in connection with an underground water supply has not been recognised by the California Railroad Commis­sion because of the continual replenishment, and we do not feel that we have been able to develop any logical arguments to sustain a contention before the Nevada Commission for such allowance. We do feel, however, that there is an excellent opportunity, and one for which we can furnish a California precedent for allow­ance by the Commission of a considerably greater depre­ciation rate than would normally be allowed for recently installed water producing facilities and extensions of distributing lines to serve a mushroom growth. This upon the contention that it is practically certain that our revenues will flatten out after the boom passes. Third; The Railroad Co. now serves the P.F.E. Co. and a number of HR lessees with water, making a monthly charge therefor. The Railroad contracts specify that in so doing the Railroad shall not be considered a pub- lie utility, and this is entirely proper under Nevada laws. We consider it advisable, however, if our rev­enues will not be seriously affected, that in event of transfer the Water Co. take over all of this service. We are checking on the rates charged by the Railroad as against the rates that would be charged by the Water Co. for these services, and will report later. In conclusion, we concur in Mr. Hulsiser*s recommenda­tion that the producing and distributing systems be consolidated under ownership of the Water Co. CC -Mr. W. H. Guild Mr. E. E. Bennett Mr. W. R. Bracken