United States Department of Agriculture

Risk Management Agency

1400 Independence Avenue, SW Stop 0801 Washington, DC 20250-0801

BULLETIN NO: MGR-05-006

TO: All Reinsured Companies All Risk Management Agency Field Offices All Other Interested Parties

FROM: Ross J. Davidson, Jr. /s/ Ross J. Davidson, Jr. 5/4/4005 Administrator

SUBJECT: Regional Irrigation Assessments and Associated Reviews

BACKGROUND:

The Loss Adjustment Manual Standards Handbook, FCIC 25010 requires RMA Regional Offices (RO) to advise of areas where there is a suspected lack of irrigation water. Accordingly, Regional Irrigation Assessments are provided by the Billings, Davis, Spokane, Topeka and Oklahoma City ROs as attachments. Federal crop insurance policies require producers to report as irrigated only that acreage for which the producer has adequate facilities and adequate water, or the reasonable expectation of adequate water, at the time coverage begins to carry out a good irrigated practice. The attached Regional Irrigation Assessments provide information about the status of the irrigation water and identifies counties where there is a suspected lack of irrigation water.

Section 7(C)(4) of Manual 14 in effect through the 2004 reinsurance year required a random selection of 5 percent of all crop insurance contracts with irrigated practices for field inspection in areas where water inadequacies are suspected. Section III.A.14 of Appendix IV to the 2005 Standard Reinsurance Agreement states that the Company is responsible for conducting such other reviews (including monitoring programs) as may be determined necessary by FCIC to protect program integrity.

ACTION:

Companies shall randomly select 5 percent of all eligible crop insurance contracts with irrigated practices for field inspections in areas where RMA has identified a suspected lack of irrigation water and report the results to RMA. Companies shall incorporate these reviews in their quality control plan as required by section III.A.13 of Appendix IV. Field inspections will include, but are not limited to, verification that acreage was properly reported under the irrigated practice and that adequate facilities were in place when insurance attached. Field inspections are to be performed as soon as possible after insurance attaches and may be combined with other required quality control reviews.

The Risk Management Agency Administers And Oversees All Programs Authorized Under The Federal Crop Insurance Corporation

An Equal Opportunity Employer

BULLETIN NO: MGR-05-006 Page 2

The report to RMA must include, but is not limited to: • The policy, state, county, crop; • Source of irrigation water (well, reservoir, North River Water System, etc.); • A Yes or No opinion, based on the attached RMA Regional Irrigation Assessments and

results of the field inspections, that there is or is not a reasonable expectation of adequate irrigation water for the crop acreage insured under an irrigated practice;

• A reference to the water adequacy information that the insured had available at the time insurance attached to support the report of acres insured as irrigated;

• The determination that adequate facilities were or were not present when coverage attached;

• Confirm that the producer did or did not receive a copy of the Irrigation Guidelines; and • A narrative section to identify follow up action needed and with which, if any, quality

control review this irrigation field inspection was combined.

Review results, in an Excel format, are to be sent to Risk Management Services Division at RMA.RMSD@rma.usda.gov on or before August 25, 2005.

DISPOSAL DATE:

This bulletin is in effect until December 31, 2005.

Attachment 1: Billings Region Irrigation Assessment for the 2005 Crop Year

The Billings Regional Office has completed our Regional Irrigation Assessment of surface irrigation supplies (as specified on pages 62-63 of the 2005 Loss Adjustment Manual, FCIC-25010, Section 6, Paragraph 40, D, E, and F).

Recent Natural Resources Conservation Service (NRCS) information shows Montana has snow water equivalent (SWE) of about 62 percent of average, and Wyoming has a SWE of about 90 percent of average. Similarly, NRCS projects that in Montana stream flow will range from 40 to 58 percent of average, and in Wyoming that stream flow will range from 19 to 75 percent of average.

The ongoing drought, low reservoir levels, and low snow pack levels, especially in Montana, have left most of the drainages north and west of the Missouri River with a high probability of inadequate irrigation water supply. Given this information, it is suspected that there could again be a lack of irrigation water in Montana and Wyoming counties that rely on surface water runoff for their irrigation sources.

Based on the current snow pack totals and stream flow forecasts, parts of Montana, North Dakota, South Dakota, and Wyoming are in an extended drought. The reservoirs on the Missouri River are near all time low levels. Therefore, it is reasonable to anticipate that reduced stream flows could result in reduced irrigation allotments and receding water levels will leave some irrigation systems “high and dry.” In some cases water may be unavailable. The following are the forecasted USDA NRCS the spring and summer stream flows as of March 1 (also see: http://www.wcc.nrcs.usda.gov/):

Insured crops grown in Montana, North Dakota, South Dakota, and Wyoming that may be affected by lack of irrigation water and inability to pump water include: alfalfa hay, barley, oats, wheat, canola, corn, safflower, dry peas, dry beans, and sugar beets.

Summaries of irrigation related information will continue to be monitored and our office will advise the Administrator’s office of significant changes in the situation. Insurance providers are encouraged to notify the RO of changes to irrigation supply impacting this assessment.

Thank you for the opportunity to provide input regarding this situation. If there are further questions or comments feel free to contact our office.

Attachment 2: Davis Regional Irrigation Assessment for 2005 Crop Year

This Regional Irrigation Assessment is provided in accordance with instructions in the Loss Adjustment Manual, FCIC-25010. The Regional Office Director is required to share information about areas suspected of having inadequate water for irrigation with regional insurance providers.

California: An irrigation assessment is being called for portions of Modoc and Siskiyou counties that are located in the Klamath basin, due to below normal levels of rain and snow pack this year. Average snow pack for the Klamath Basin is only 50% of historic averages. Insured crops potentially impacted are onions, potatoes, cultivated wild rice, forage production, spring oats, spring barley, and spring wheat

The Northern Sierras have received close to average snow pack while the Central Sierras and Southern Sierra snow levels and water content levels are well above normal. Storage in California’s reservoirs are at historic average levels. Stream flow forecasts range close to 100% of average levels in the northern Sierras to >120% of average levels in the central and southern Sierras.

The U.S. Bureau of Reclamation’s Central Valley Project (CVP) has allocated 100% of their contracted allotment to land areas located north of the Delta. Land areas, south of the Delta will receive 65% of their contracted allotment, which is what they normally receive under normal water conditions. The Friant Division of the CVP (which supplies water for the east side of the San Joaquin Valley) has allocated 100% of contracted water to Class 1 water users.

The State Water Project (SWP), whose water source is in the Northern Sierras and supplies water to agricultural water contractors in the southern Jan Joaquin Valley has announced an allotment of 70% of contracted water supplies, which is what they normally receive under normal water conditions.

Based on a review of the data available, there is enough snow pack and water in story to provide adequate water supplies for the Sacramento Valley and for Federal State and local irrigation districts in the San Joaquin Valley.

Utah:

An irrigation assessment is being called for portions of Box Elder, Cache and Rich counties that are located in the Bear River basin located in northern Utah. As of March 1, current reservoir storage for the Bear River basin was only 4% of capacity. The stream flow forecast for the Bear River basin is only 57% of average levels with irrigation supplies expected to be below normal. Impacted crops are apples, barley, corn, forage production, oats, onions, safflower, and spring wheat.

The rest of the state is much improved with snow pack levels and stream flow forecasts expected to be well above average and at levels not seen in the past 6 years.

Page 2

AN EQUAL OPPORTUNITY EMPLOYER

Attachment 3: Spokane Region Irrigation Assessment for the 2005 Crop Year

The Spokane Regional Office has completed our Regional Irrigation Assessment of surface irrigation supplies (as specified on pages 62-63 of the 2005 Loss Adjustment Manual, FCIC-25010, Section 6, Paragraph 40, D, E, and F).

The Pacific Northwest states of Idaho, Oregon, and Washington continue to experience severe drought conditions. The U.S. Drought Index lists the intensity of drought from severe to extreme drought in most of the irrigated areas in the three states. As a result of the developing drought situation, the severe drought (D2) category was just expanded to cover parts of central Washington and north-central Oregon.

The Natural Resources and Conservation Service (NRCS) SNOTEL measurements within the most severe and extreme drought areas reveal irrigation water shortages are expected. Statewide snowpack averages as of March 10 are approximately 53 percent in Idaho, 29 percent in Oregon, and 23 percent in Washington.

Shown below are snowpack levels in the region as of April 1. Warm and dry conditions continue to deteriorate conditions. Snow water equivalent values of the mountain snowpacks across Oregon, Washington, Idaho, are either at or near new low levels for this time of year.

The warm and dry trend has continued through February and March with many areas receiving record low average precipitation numbers.

We have reviewed and continue to track summaries of the streamflow forecast probabilities, basin area reservoir supplies, and SNOTEL data from the Water and Climate Center of the USDA NRCS. Below are spring and summer streamflow forecasts as of April 1.

Based on review of all data available as of April 1, the availability of water for irrigation throughout the year is suspect in virtually all Idaho, Oregon and Washington Counties where producers are able to insure irrigated crops.

Insured crops grown in Idaho, Oregon and Washington that may be affected by lack of irrigation water and inability to pump water include: apples, barley, blueberries, canola, cherries, corn, dry beans, dry peas, forage production, fresh apricots, fresh freestone peaches, fresh nectarines, grapes, green peas, mint, mustard, oats, onions, pears, potatoes, processing beans, raspberries & blackberries, safflower, sugar beets, sweet corn and wheat. There also may be additional crops insured under AGR and AGR-Lite policies where intended commodity reports reflect an irrigated practice.

Severity of irrigation shortages in many areas will depend on how the remaining snow melts and future precipitation. Irrigated crops are identified on the actuarial documents and on our website at http://www.rma.usda.gov.

We will continue to track summaries of irrigation related information in the region and inform the Administrators Office of any deteriorating conditions. We encourage insurance providers to notify the Spokane Regional Office immediately of any changes that would indicate there would not be any shortages of irrigation water. If you have questions, please call our office at 509-353-2147.

Attachment 4: Topeka Regional Irrigation Assessment for the 2005 Crop Year

In accordance with the Loss Adjustment Manual Standards Handbook (FCIC-25010), which directs the Regional Office (RO) to provide a regional assessment in order to identify areas and water districts where inadequate irrigation water supply is suspected, the following is the list of counties from the Topeka RO:

Kansas:

Originally announced on January 12, and continuing through April 25, 2005, the following irrigation districts are expected to deliver less than their normal supply. The irrigation districts and their expected delivery amounts along with the percentage of the full supply are as follows:

Est. Farm Delivery Irr District (Ac. Inches as of 04/25/05) % of Normal Supply

Almena

Kansas-Bostwick Upper Courtland Lower Courtland

Kirwin

Webster

2.5” 50%

0.5” 3% 6.0” 40%

1.5” 13%

1.5” 13%

The counties affected by the above allocations are: Norton, Phillips, Osborne, Republic, Rooks, and Smith. The crops affected are Barley, Corn, Grain Sorghum, Soybeans, Oats, and Sunflowers.

Nebraska:

Southwest and Central and Sheridan County, Nebraska:

The following information was received from the Bureau of Reclamation in McCook, Nebraska. The irrigation districts with estimated water allocations are shown below, with the percent change based on a comparison to a full supply.

Est. Farm Delivery Irr District (Ac.Inches as of 04/25/2005) % of Normal Supply

Mirage Flats

Frenchman Valley and H & RW

Frenchman-Cambridge Meeker, Red Willow & Bartley Cambridge Canal

Bostwick In Nebraska

4.5” 64%

.5” 13%

5.0” 42% 8.0” 67%

.5” 4%

Page 2

Counties affected by the above allocations are Franklin, Furnas, Harlan, Hayes, Hitchcock, Nuckolls, Red Willow, Sheridan, and Webster.

Central Nebraska Public Power and Irrigation and Nebraska Public Power Districts:

The Central Nebraska Public Power and Irrigation District that stores water in Lake McConaughy has announced that they be providing a reduced supply of 6.7 acre-inches to its irrigators. This is down from their normal supply of 18 acre-inches. They indicated they will also have a shorter irrigation season. They will begin the season on June 28th and end on August 23rd. There will be 4 runs instead of the normal 6 runs with half the normal volume per run. The districts feels, however, that by allowing irrigators to transfer surface water shares in conjunction with use of supplemental wells, that most acreage could be properly irrigated. It is important to emphasize that each irrigators water situation could be different depending on the availability of supplemental irrigation sources. CNPPI will unlikely be able to supply additional water to the Paxton-Hershey, Suburban, Keith-Lincoln, Lisco, and Platte Valley Districts as it does not look as though Lake McConaughy will reach the 800,000 acre/ft level by April 1st of this year.

Nebraska Public Power District has indicated that it expects to deliver a full supply of stored water to its irrigators, and will also be able to provide stored water to the Cozad, 30 Mile, 6 Mile and Orchard-Alfalfa canals as they have in past years. These irrigation districts rely on stored water for only about 1/3 of their irrigation water needs. The remaining two thirds of their water comes from direct stream flow which remains uncertain at this time.

Counties affected by the above irrigation districts are Buffalo, Deuel, Dawson, Garden, Gosper, Phelps, Kearney, and Lincoln.

Nebraska Panhandle:

Currently the outlook for water supplies for Irrigation Districts in the North Platte River Valley points to a high probability of less than normal allocations. The ownership of stored water for these districts is 42 to 50% of normal as of the end of March. Projections are that irrigation water deliveries will be similar to last year which was around 55% of the full supply. This could change by planting time, as the month April is critical month for snow pack. The timing of the snowmelt is also critical as to the amount of water available.

The Pumpkin Creek Groundwater Management Sub-Area will have the same allocation as last year which was 14” per acre.

Counties affected include Banner, Scotts Bluff, and Morrill. The affected crops in Nebraska are Barley, Corn, Dry Beans, Grain Sorghum, Oats, Potatoes, Soybeans, Sugar Beets, Sunflowers.

Page 3

Colorado:

South Platte Basin (Northeast Colorado)

Based on present conditions, it appears that all the main plains reservoirs will fill this year in contrast to last year. Surface Water Supply Index (SWSI) value was reported at –0.3 at the end of March. This SWSI value would indicate that water supplies are near normal. Reservoir storage, the major component in computing the SWSI value, was 105% of normal as of the end of March. The Natural Resources Conservation Service reported that April 1 snow pack is 84% of normal.

Arkansas Basin (Southeast Colorado):

The Arkansas basin Surface Water Supply Index (SWSI) value of –1.3 as of the end of March indicates water supplies are below normal. The Natural Resources Conservation Service reported that as of March 1snow pack is 112% of normal. Storage in Turquoise, Twin Lakes, Pueblo and John Martin reservoirs total 69% of normal as of April 1. Snow pack and resulting stream flows from snowmelt account for most of the irrigation supply with storage amounting to around 25 percent of the irrigation supply in the area.

Rio Grande Basin (The San Luis Valley):

The Rio Grande basin SWSI value of +3.2 indicates that for March the basin water supplies were well above normal. April 1 snow pack is reported at 140% of normal. Storage in Platoro, Rio Grande, and Santa Maria reservoirs totaled 77% as of April 1. NRCS forecasts are now predicting runoff to be 145% of average for the Rio Grande near Del Norte and 135% of average for the Conejos near Mogote.

Even though the surface water irrigation outlook is good this year, there still are suspected shortages of irrigation water being pumped from deeper wells in the confined aquifer areas in the Valley. It is not expected that the above normal surface water conditions will recharge this aquifer in time for this year’s irrigation season. This may affect about 40% of the irrigated acreage in the Valley.

Gunnison Basin (West Central Colorado):

The Gunnison Basin Surface Water Supply Index (SWSI) value of +2.6 at the end of March indicates basin water supplies were above normal. The NRCS reported that April 1 snow pack was 127% of normal. Storage in Taylor Park, Crawford, and Fruitland reservoirs totaled 104% of normal as of April 1. Irrigators are looking forward to a full supply this year.

Page 4

Colorado Basin (Northwest Colorado):

The Colorado Basin had a SWSI value of -0.4, which indicated that, for February, the basin water supplies were near normal. The NRCS reported April 1 snow pack was 98% of normal. Storage in Green Mountain, Ruedi, and Williams Fork reservoirs totaled 110% of normal as of the end of March. Snowpack for the entire Colorado Basin is near normal.

Yampa/White Basin (Northwest Colorado):

The Yampa/White Basin SWSI value of – 2.2, indicates, for March, the basin water supplies were below normal. The NRCS reported that April 1 snow pack was 89% of normal. The April 1st runoff forecast prepared by the Natural Resources Conservation Service is predicting below-normal spring runoff for much of the drainage. The percent of average runoff under the most probable forecast is 63% for the North Platte River near Northgate, 75% for the Yampa River near Maybell, 91% for the Little Snake River near Dixion and 68% for the White River near Meeker. These forecasts are all about the same as the previous month except the North Platte River with is 12% lower.

San Juan/Dolores Basin (Southwest Colorado):

The San Juan/Delores Basin had a SWSI value of +2.3 at the end of March indicating water supplies were above normal. Snow pack was 138% of normal as of April 1. Reservoirs are predicted to fill everywhere and efforts were made to release water from Lemon and Vallecito reservoirs to make room for the runoff.

The Colorado counties most critically affected by potential irrigation water shortages at this time are in the Yampa/White and Arkansas Basins. They are:

Moffat, Rio Blanco, and Routt in the Yampa/White and Bent, Crowley, Otero, Prowers, and Pueblo in the Arkansas River Basin.

The counties that could be moderately affected by potential irrigation water shortages at this time are in the South Platte and Rio Grande Basins (deeper wells). They are:

The counties in the South Platte are Adams, Arapahoe, Boulder, Larimer, Logan, Morgan, Phillips, Sedgwick, Washington, Weld, and Yuma, and the Rio Grande are Alamosa, Conejos, Costilla, Rio Grande and Saguache. The affected crops in Colorado are Barley, Corn, Sweet Corn, Dry Beans, Grain Sorghum, Oats, Onions, Potatoes, Soybeans, Sorghum Silage, Sugar Beets, Sunflowers, and Wheat.

If you have any questions or need further assistance, please contact our office.

Wyoming Spring and Summer Streamflow Forecasts as of April 1, 2005

Attachment 5: Oklahoma City Irrigation Assessment for the 2005 Crop Year

As required in FCIC-25010 at section 6, Paragraph 40 part E., Regional Irrigation Assessments, the following information reflects conditions as of mid to late April 2005. Conditions could improve before the actual planting and acreage reporting dates from May - July in any of the areas identified in this report with an expected water shortage. Most Texas and New Mexico spring crop acreage reports are due from July 1 – July 30

Ogallala Aquifer: (Andrews, Gaines, and Yoakum Counties in Texas)

Andrews, Gaines, and Yoakum Counties in Texas have been reported as counties suspected of having inadequate irrigation water supply. Crops grown in this area for which insurance is provided are cotton, grain sorghum, peanuts, and wheat. All of the water used for irrigation in these counties comes from the Ogallala Aquifer, one of the largest aquifer systems in the world, extending from southern South Dakota and eastern Wyoming through Colorado, Nebraska, Kansas, Oklahoma, New Mexico, and Texas.

Andrews, Gaines, and Yoakum counties are on the extreme southern edge of this aquifer and changes in climatic conditions over geologic time have resulted in changes in erosion patterns within the aquifer itself, causing the Ogallala to be cut off from its original supply of water and formation materials. The southern portion of the formation in Texas and New Mexico is now a plateau, cut off on all sides. The saturated thickness of the aquifer does vary throughout the formation and can be as shallow as 20 feet in some areas.

Some but not all of the wells pumping water for irrigation in this area of the aquifer have experienced water supply problems in various degrees for the past several years. Unlike surface water situations where water district allocations form the basis for the amount of water available for the season, groundwater shortages tend to be more dependent upon individual well location and pumping ability as a basis for water availability.

As such, adequacy of water determinations in these situations must be made on an individual, case by case basis. Please refer to the Irrigated Practice Guidelines in the FCIC –25010 as to adequacy of water for irrigation determinations for policyholders in these three counties who experienced water availability or delivery problems last year.

Elephant Butte Reservoir: (New Mexico - Dona Ana County; Texas - El Paso and Hudspeth Counties) -Elephant Butte Reservoir provides water for irrigation districts in Dona Ana County New Mexico

and the adjoining counties of El Paso and Hudspeth in Texas.

Hudspeth County Texas:

Hudspeth County will remain on our watch list for the 2005 crop year but will be re-evaluated in 2006. The only crop grown in Hudspeth County for which insurance is provided is cotton.

Unchanged from last year, HCCRD anticipates they will be able to provide about 25 per cent of the water they would receive in a normal irrigation season, and have notified all irrigators in the district by letter. Individually owned wells may still provide a reliable source of water in the upper one-third of the county at the current time. But, due to the high salinity content of groundwater in this area the water should be tested and deemed appropriate for crop use before applying it to insured crops.

HCCRD will issue monthly advisories to water users as a method of notification for any changes to the current status of water in the district

Dona Ana County New Mexico:

The water situation has improved significantly in Dona Ana County since last year and we are removing Dona Ana County from our list of areas suspect of a water shortage for the 2005 crop year or until notified otherwise

The principal source of water for Elephant Butte Reservoir comes from snow-pack runoff from the southern Rocky Mountains in Colorado and New Mexico. Winter snow-pack normally occurs from November – January. Reservoir recharge from runoff occurs from March – May. A normal run-off would contribute about 937,000 acre-feet of water annually and it is usually the first of June before any of that runoff actually reaches Elephant Butte Reservoir. The reservoir currently has 310,270 acre –feet of water and currently anticipates that inflows will approach normal levels this year based on mountain snow pack. In addition, the district anticipates, based on current expectations for inflows to Elephant Butte, being able to provide a full 2 acre-foot allocation to each water user in the district, a return to normal.

El Paso County Texas:

We are removing the El Paso Water district from our watch list for the 2005 crop year but will reevaluate the situation in 2006. The district’s current allotment is the same as last year at 90,000 acre-feet. Last years initial allocation was 8 acre inches and this year’s initial allocation is up significantly at 22 acre inches. The expected overall

2

allocation is anticipated to be 2.75 acre feet or 33”. Additional allotments will be determined in June. Any additional allotment will depend upon actual inflows to Elephant Butte from this spring’s snow-melt in May - June or intermittent spring/summer storms.

Lower Rio Grande Valley: (Cameron, Hidalgo, Willacy, and Starr Counties, Texas)

We are removing the Lower Rio Grande Valley from our list of areas suspect of a water shortage for 2005 and subsequent years until notified otherwise.

The available water situation has returned to normal allowing full water allocations to each of the water districts servicing growers in the counties listed above. In addition, Mexico has agreed to deliver 578,000 acre feet of water to the United States by September 30, 2005 and 470,000 acre feet a year over the next three years to keep current with the 1944 treaty between the U.S. and Mexico.

Conchas Reservoir: (Quay County New Mexico) –

We are removing Conchas from our list of areas suspect of water shortages for 2005 because the Reservoir has received 61,000 acre feet of water but will re-evaluate the situation in 2006

The water situation has improved significantly since last year with 136, 000 acre feet of water compared to 75,000 acre feet last year, but the Conservancy is still being cautious with an initial allocation of only 3” in June. In a normal year 50,000 to 70,000 acre feet of water would recharge the reservoir and allow for normal allocations.

Red Bluff Reservoir: (Reeves, Pecos, and Ward Counties, Texas) –

The water situation at Red Bluff has improved significantly over last year and we are removing Red Bluff from our list of areas suspect of a water shortage for the 2005 crop year or until notified otherwise

As of April 12th, the reservoir had about 130,000 acre-feet in storage compared to 89,000 acre-feet last year. In addition the reservoir anticipates full allocations from New Mexico for the remainder of their water needs during the 2005 crop year. Letters were to water users within the district in March notifying them of the initial allocation for 25,000 acre-feet of water and that they were to notify the water district by April 15th of the amount of water they would be purchasing for the season. Red Bluff does not anticipate a water shortage for this year

3