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<br />001428 <br /> <br />the Lower Basin to have a contract with the Secretary. The Supreme Court further concluded <br />that Congress intended the Secretary, principally through the Secretary's section 5 contract <br />power, to carry out the allocation of the waters of the mainstream of the Colorado River among <br />the Lower Basin States and to decide which water users within each State would get water and <br />on what terms. Accordingly, the Secretary acts as water master of the Colorado River in the <br />Lower Basin. <br />The Decree excludes Federal establishments from the BCP A requirement for a contract <br />with the Secretary, but the water allocated to a Federal establishment is included within the <br />apportionment of the Lower Division State in which the Federal establishment is located. Waters <br />available to a Lower Division State within its apportionment but with a priority date later than <br />June 25, 1929, have been allocated by the Secretary to water users within that State after <br />consultation with the State. <br />Many Colorado River water rights originated as "perfected rights" that are specified in the <br />Decree as rights acquired in accordance with State law and exercised by the actual diversion of a <br />specific quantity of water for beneficial use on a defined area of land or to definite municipal or <br />industrial works, and in addition will include water rights created by the reservation of <br />mainstream water for the use of Federal establishments under Federal law whether or not the <br />water has been applied to beneficial use. The highest priority Colorado River water rights are <br />present perfected rights (PPR's) that the Decree defines as those perfected rights existing on <br />June 25, 1929 (the effective date of the BCPA). The Decree also recognizes Federal Indian <br />reserved rights for the quantity of water necessary to irrigate all the practically irrigable acreage <br />on five Indian reservations along the Colorado River. The Decree defines the rights ofIndian <br />and other Federal reservations to be Federal establishment PPR's. PPR's are important because <br />in any year in which there is less than 7.5 maf of Colorado River water available for consumptive <br />use in the Lower Basin States, PPR's will be satisfied first in the order of their priority without <br />regard to State lines. <br />In 1996, Arizona enacted a State-authorized program establishing an Arizona State Water <br />bank that would allow offstream storage of Colorado River water and subsequent interstate <br />delivery of such stored water through redemption of credits pursuant to Interstate Storage <br />Agreements. In the future, other Lower Division States may enact comparable measures. <br /> <br />ill. Purpose of this Rule <br /> <br />Arrangements that facilitate more efficient use of the limited Colorado River water resource <br />are beneficial to all water users. This proposed rule addresses offstream storage of Colorado <br />River water and development of storage credits by authorized entities within the Lower Division <br />States. Authorized entities include a State water banking authority, or other entity of a Lower <br />Division State holding entitlements to Colorado River water, expressly authorized pursuant to <br />applicable laws of Lower Division States to: (1) Enter into Interstate Storage Agreements; (2) <br />develop intentionally created unused apportionment; (3) acquire the right to use intentionally <br />created unused apportionment; or (4) develoo or redeem storaQe credits for the benefit of an <br />authorized entity in another Lower Division State. <br />The rule will establish a framework for the Secretary to follow in approving and <br /> <br />14 <br />