The following cases are now pending in Oklahoma (we are counsel for the water districts in the first 5 cases listed below):

1. Elk City v. Beckham-3 and Beckham-3 v Elk City (Western District of

Oklahoma)

These two cases are both pending in the Western District and are likely to be consolidated. Elk City sued first in state court. That case was removed. Elk City sought remand and certified questions to the Oklahoma Supreme Court. Both of these motions were denied. The Court recently determined that USDA was a necessary party and a summons was issued for USDA. Rulings by the Court so far suggest that the Court will follow the Glenpool v Creek-2 case wherein the 10th Circuit held that the borrowing authority of Oklahoma rural water districts for USDA/FmHA loans was did not violate the Oklahoma Constitution.

2. Logan County RWD #1 v. City of Guthrie (Western District of Oklahoma)

We are filing a motion to join the USDA in this case for the same reasons that USDA was joined in the Elk City case. Guthrie, like Elk City claims that USDA loans are void. Discovery in this case ends 7/1/06. Trial is set for the fall.

3. Okmulgee-2 v. City of Okmulgee (Eastern District of Oklahoma)

This case was only recently filed with no answer due yet from the defendant. I fully expect that Okmulgee will raise the same constitutional issue present in the Elk City case.

4. Washington-3 v. City of Owasso (Northern District of Oklahoma)

This case was filed to enforce an existing injunction entered in the original case of Rural Water Dist. No. 3 v. Owasso Utilities Authority 530 F.Supp. 818 (D.C.Okl., 1979). In the 1979 case the Court entered a permanent injunction against Owasso from further expansion into Washington-3's

service area. Recently Owasso violated that injunction. I expect this case to settle quickly based on my meeting with James Milton today (who was retained by Owasso).

5. Wagoner-8 v Haskell (Eastern District of Oklahoma)

This case has been settled however there is a dispute pending on finalizing the settlement. We have encountered problems with the lender (assignee of USDA) approving the settlement. Haskell did not raise the constitutional issue seen in the Elk City case.

6. Holdenville vs Wewoka (Eastern District of Oklahoma)

We are not directly involved in this case but have exchanged emails with counsel for Wewoka offering our assistance. This case is similar to the Melissa and College Station cases in Texas where the cities sought to block USDA funding. This case appears to combine the issue raised in the Elk City case on constitutionality. (As a matter of policy we do not accept representation of municipalities for possible conflict reasons. In the Wewoka matter would limit our involvement solely to supporting 1926(b) issues in a manner favorable to federally indebted entities entitled to 1926(b) protection.)

Best regards

Steven M. Harris

Doyle Harris Davis & Haughey

1350 S. Boulder - Suite 700

Tulsa, Oklahoma 74119

918-592-1276

918-592-4389 (fax)

www.commercialaw.com

seve.harris@commercialaw.com