The city of Merced, other municipalities, and irrigation in the vicinity of Merced in the San Joaquin Valley of California depend on ground water for water supply. Water-level data for 1977-81 show that there has been no significant change in water levels, indicating that during this period, recharge in the Merced area balance natural discharge and withdrawals by pumping. Lithologic logs of shallow test wells drilled around Merced indicate shallow fine-grained material in the aquifer that could interfere with surface artificial recharge to the aquifer system. Short-term and seasonal fluctuations of water levels in wells perforated at different depths and in different aquifers show dissimilar patterns in some areas. The expansion and refinement of the observation-well network will provide a data base for water-management decisions and for assessments of ground-water conditions in the future. (USGS)