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VV..1...J.-. :it C. Purnose and Need for Proposed Action The proposed rule would establish a procedural framework to be follDwed in the development and review of interstate agreements for off stream storage of Colorado River water allocated to but not otherwise used by water entitlement holders within the State where the water is to be stored. It also provides for off stream storage of unused basic apportionment or unused surplus apportionment by an authorized entity in a Lower Division State on behalf of an authorized entity in another Lower Division State. In an interstate transaction authorized by the proposed rule, the authorized entity paying to store the water would develop storage credits which may be redeemed in the future with Colorado River water for use in another State. The proposed rule is based on the understanding that this type of off stream storage is a beneficial use of Colorado River water. In addition, an authorized entity would be able to store Colorado River water off stream at its own expense and develop storage credits on its own. The entity could later redeem those storage credits from an authorized entity in another Lower Division State. Any redemption of storage credits from an authorized entity in one Lower Division State to an authorized entity in another Lower Division State must be in accordance with the BCPA, the Decree, other applicable laws (including State laws), and the terms and conditions of interstate storage agreements among authorized entities. Such agreements would be subject to approval by the Secretary. Consistent with the BCP A, the Decree, and all other applicable laws, the Secretary would operate the Colorado River to make unused apportionment available in a manner that-would permit the redemption of storage credits held in one Lower Division State for use by authorized entities in another Lower Division State. LC R.gion DEAll 3 12197 The procedures contained in the proposed rule would apply to all entities with entitlements to use Colorado River water in the Lower Division States. The proposed rule is permissive in nature and is intended to encourage and facilitate voluntary interstate water transactions to better accommodate regional water needs. The proposed rule is designed to help the Secretary more efficiently fulfill his responsibilities to manage the Colorado River. The actions and transactions contemplated under the proposed rule are within the current authority of the Secretary, the BCP A, and Decree. The Decree confirmed that the Secretary was entrusted with sufficient authority and given the responsibility to direct, manage, and coordinate the operation of dams and related works on the Colorado River in the Lower Basin. The Supreme Court concluded, among other things, that the Secretary derives significant authority from the contract authority under section 5 of the BCP A that requires water users in the Lower Basin to have a contract with the Secretary. The Supreme Court further concluded that Congress intended the Secretary, through the Secretary's section 5 contract power, to carry out the allocation of the waters of the mainstream of the Colorado River among the Lower Basin States and to decide which water users within each State would receive contracts. Accordingly, the Secretary acts as water master of the Colorado River in the Lower Basin.