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                                                       Calendar No. 316
109th Congress                                                   Report
                                 SENATE
 1st Session                                                    109-198

======================================================================



 
              WATER SUPPLY TECHNOLOGY PROGRAM ACT OF 2005

                                _______
                                

                December 8, 2005.--Ordered to be printed

        Filed under authority of the order of November 18, 2005

                                _______
                                

   Mr. Domenici, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1860]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 1860) to amend the Energy Policy Act of 
2005 to improve energy production and reduce energy demand 
through improved use of reclaimed waters, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment and an amendment to the title and recommends 
that the bill, as amended, do pass.
    The amendments are as follows:
    1. Strike out all after the enacting clause and insert in 
lieu thereof the following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Water Supply Technology Program Act 
of 2005''.

SEC. 2. DEFINITIONS.

    In this Act:
          (1) Advisory panel.--The term ``Advisory Panel'' means the 
        Water Supply Technology Advisory Panel established under 
        section 3(d).
          (2) Program.--The term ``program'' means the water supply 
        technology research, development, demonstration, and commercial 
        application program established under section 3(a).
          (3) Secretary.--The term ``Secretary'' means the Secretary of 
        Energy.
          (4) Water agency.--The term ``water agency'' means any State, 
        instrumentality of a State, municipality, political 
        subdivision, authority, utility, district, association, or 
        other entity that provides water for public use.
          (5) Water supply technology.--The term ``water supply 
        technology'' means--
                  (A) technologies for--
                          (i) desalination and associated concentrate 
                        disposal;
                          (ii) water reuse and recycling;
                          (iii) removing contaminants from water, 
                        including impaired water produced as a result 
                        of energy production activities;
                          (iv) reducing the amount of energy required 
                        to provide adequate water supplies;
                          (v) water use efficiency and conservation; 
                        and
                          (vi) water monitoring and systems analysis; 
                        and
                  (B) any other technologies identified by the 
                Secretary as appropriate to carry out the program.

SEC. 3. WATER SUPPLY TECHNOLOGY RESEARCH, DEVELOPMENT, DEMONSTRATION, 
                    AND COMMERCIAL APPLICATION PROGRAM.

    (a) Establishment.--In accordance with this Act, the Secretary 
shall establish a national program for the research, development, 
demonstration, and commercial application of economically viable and 
cost-effective water supply technologies to--
          (1) increase the amount of water available for human use;
          (2) facilitate the widespread commercialization of newly 
        developed water supply technologies for use in real-world 
        applications, including the conduct of an assessment of 
        economic and other market-related factors relating to the 
        introduction and adoption of water supply technologies in 
        practical applications;
          (3) facilitate collaboration among Federal agencies to 
        provide for the integration of research on, and the 
        development, demonstration, and commercial application of, 
        water supply technologies; and
          (4) reclaim and improve access to previously unusable and 
        nontraditional water resources.
    (b) Other Agreements.--The Secretary may enter into any grant, 
contract, cooperative agreement, interagency agreement, or other 
transaction, as the Secretary determines to be necessary to carry out 
this Act.
    (c) Program Lead Laboratory.--
          (1) In general.--The Secretary shall designate 1 or more lead 
        National Laboratories to carry out water supply technology 
        research, development, demonstration, and commercial 
        application activities under the program.
          (2) Considerations.--In determining the number of lead 
        laboratories to designate under paragraph (1), the Secretary 
        shall consider the amount of appropriations available to carry 
        out the program.
          (3) Selection of university and water agency partners.--Each 
        lead laboratory designated under paragraph (1), in consultation 
        with the Advisory Panel, shall select at least 1 university 
        partner and at least 1 water agency partner to assist the lead 
        laboratory in carrying out the program.
    (d) Advisory Panel.--
          (1) In general.--The Secretary shall establish an advisory 
        panel, to be known as the ``Water Supply Technology Advisory 
        Panel'', to advise the Secretary on the activities carried out 
        under this Act.
          (2) Membership.--Members of the Advisory Panel shall--
                  (A) have expertise in--
                          (i) water supply technology; or
                          (ii) legal or regulatory issues associated 
                        with adopting water supply technologies in 
                        real-world applications; and
                  (B) be representative of institutions of higher 
                education, industry, State and local governments, 
                international water supply technology institutions, 
                Federal agencies, and nongovernmental organizations.
          (3) Duties.--The Advisory Panel shall--
                  (A) periodically assess the performance of water 
                supply technology research, development, demonstration, 
                and commercial application activities being carried out 
                under this Act;
                  (B) advise the Secretary on research priorities to be 
                carried out under this Act;
                  (C) make recommendations to the Secretary for 
                awarding research grants and demonstration project 
                grants; and
                  (D) identify legal, policy, or regulatory barriers to 
                implementing water supply technologies in real-world 
                applications.
    (e) Water Supply Technology Assessment.--
          (1) In general.--In consultation with the Secretary of 
        Agriculture, the Administrator of the Environmental Protection 
        Agency, the Secretary of Defense, the Administrator of the 
        National Aeronautics and Space Administration, the Director of 
        the National Science Foundation, the Secretary of the Interior, 
        the Director of the Office of Management and Budget, the 
        Director of the Office of Science and Technology Policy, and 
        the heads of other appropriate Federal agencies, the Secretary, 
        shall--
                  (A) assess the annual amount of Federal funding 
                levels and authorizations for water supply technology 
                research;
                  (B) assess the scope of the water supply technology 
                research performed by other agencies; and
                  (C) assess whether and to what extent Federal water 
                supply technology research is duplicative.
          ``(2) Technology roadmap.--In consultation with the Secretary 
        of Agriculture, the Administrator of the Environmental 
        Protection Agency, the Secretary of Defense, the Administrator 
        of the National Aeronautics and Space Administration, the 
        Director of the National Science Foundation, the Secretary of 
        the Interior, the Director of the Office of Science and 
        Technology Policy, the heads of other appropriate Federal 
        agencies, the Advisory Panel, and any lead laboratories 
        designated under subsection (d)(I), the Secretary, shall--
                  (A) assess any water supply technology research being 
                performed;
                  (B) identify water supply technology research and 
                development priorities; and
                  (C) develop a technology roadmap to identify critical 
                water supply technology research, development, 
                demonstration, and commercial application activities to 
                guide program activities.
          (3) Report.--Not later than 18 months after the date of 
        enactment of this Act, the Secretary shall submit to the 
        Committee on Energy and Natural Resources of the Senate, the 
        Committee on Resources of the House of Representatives, and the 
        Committee on Energy and Commerce of the House of 
        Representatives a detailed report on--
                  (A) the assessments conducted under paragraphs (1) 
                and (2); and
                  (B) the technology roadmap developed under paragraph 
                (2)(C).
    (f) Program Grants.--
          (1) In general.--The Secretary shall provide competitive 
        grants to entities with expertise in the conduct of water 
        supply technology research, development, and demonstration 
        projects.
          (2) Requirements.--The grants under paragraph (1) shall be 
        provided consistent with the technology roadmap developed under 
        subsection (e)(2)(C).
          (3) Limitation.--Of amounts made available for grants under 
        section 4(b)(2), not more than 25 percent shall be provided to 
        National Laboratories and Federal agencies.
          (4) Criteria.--The Secretary shall establish criteria for the 
        submission and review of grant applications and the provision 
        of grants under paragraph (1).
    (g) Program Review.--
          (1) In general.--The Secretary shall establish an independent 
        third party review process to conduct periodic peer reviews of 
        the program.
          (2) Requirements.--In conducting a review under paragraph 
        (1), an independent third party reviewer shall--
                  (A) review the technology roadmap, technical 
                milestones, and plans for commercial application 
                developed under the program; and
                  (B) assess the progress of the program in achieving 
                the technical milestones and plans for commercial 
                application.
    (h) Report to Congress.--Not later than 3 years after the date of 
enactment of this Act and each year thereafter, the Secretary shall 
submit to the Committee on Energy and Natural Resources of the Senate, 
the Committee on Resources of the House of Representatives, and the 
Committee on Energy and Commerce of the House of Representatives a 
report that describes the activities carried out under this Act, 
including the activities carried out under subsection (d)(3).
    (i) Cost-Sharing Requirement.--Any activities carried out under 
this Act shall be subject to section 988 of the Energy Policy Act of 
2005 (42 U.S.C. 16352).

SEC. 4. AUTHORIZATION OF APPROPRIATIONS.

    (a) In general.--There are authorized to be appropriated to the 
Secretary to carry out this Act, including the completion of the 
roadmap under section 3(e)(2)(C)--
          (1) $5,000,000 for fiscal year 2006; and
          (2) such sums as are necessary for each fiscal year 
        thereafter.
    (b) Allocation.--Of amounts made available under subsection (a) for 
fiscal year 2007 and each fiscal year thereafter--
          (1) not more than 24 percent shall be made available to the 1 
        or more lead laboratories designated under section 3(c)( 1), to 
        be distributed equally between the lead laboratories if more 
        than 1 lead laboratory is designated, for the conduct of 
        activities under the program (including to carry out section 
        3(a)(2));
          (2) at least 60 percent shall be made available for program 
        grants under section 3(f), of which 20 percent, or as the 
        Secretary determines to be appropriate, a higher percentage, 
        shall be made available for demonstration projects; and
          (3) not more than 15 percent shall be used to pay the 
        administrative costs of carrying out the program, including 
        costs to support the activities of the Advisory Panel.

    2. Amend the title so as to read: ``To establish a program 
for the research, development, demonstration, and commercial 
application of water supply technologies, and for other 
purposes''.

                           PURPOSE OF MEASURE

    The purpose of S. 1860 is to establish a program for the 
research, development, demonstration, and commercial 
application of water supply technologies.

                          BACKGROUND AND NEED

    Water shortages impair the production of energy and 
conversely, energy shortages impair the ability to provide 
adequate water supplies. A 2005 report by the Multi-Laboratory 
Energy-Water Nexus Committee, a consortium of twelve national 
laboratories, found ``insufficient supplies of water can 
cripple energy production...insufficient or too costly energy 
can cripple water supplies.'' Electricity production is 
entirely dependent on the availability of water, regardless of 
fuel source. Additionally, the vast majority of energy fuel 
production and processing is entirely dependent on having 
adequate access to water. For example, Sandia National 
Laboratories estimates that for every barrel of oil produced, 
ten gallons of water are required. Similarly, the 
transportation, distribution, acquisition and purification of 
water require large amounts of energy. Pumping and treating 
water for municipal and industrial uses account for two to 
three percent of the world's energy consumption. Water 
availability and energy production are inextricably linked. For 
this reason, water shortages have the potential to impair 
energy production.
    Water shortages are anticipated domestically. A study by 
the Governmental Accountability Office states that ``water 
managers in thirty-six States anticipate shortages in 
localities, regions, or State-wide in the next ten years.'' The 
competing demands of energy production, population growth, 
drought, agricultural needs, environmental needs, and tribal 
interests in the West have resulted in a paucity of available 
water. In the States expected to grow most rapidly--Nevada, 
Texas, Arizona, Florida, California, and New Mexico--
consumptive use already nears or exceeds available supply. 
Moreover, population growth in these regions shows no 
indication of abating. The U.S. Census Bureau recently 
estimated that by 2030, Nevada will have more than four million 
residents, twice as many as in 2000. The availability of water 
suitable for human use is also of great importance in the 
Eastern United States. Despite receiving substantially more 
rainfall than the Western United States, much of the east coast 
is facing water shortages. Boston, Atlanta, and much of Florida 
are nearing the end of readily available water.
    A recent report released by the Center for Strategic and 
International Studies and Sandia National Laboratories states 
that during the 21st century water shortages will increasingly 
be the source of international conflict and have the potential 
to impair energy production capacity. ``The expected rise in 
global population will drive a corresponding rise in demand for 
food, energy, and water as well as tighten the 
interdependencies between the three. Such close linkages also 
give rise to an increasing possibility of political or economic 
upheavals stemming from a lack of any one of the key 
resources.'' Nearly 1.2 billion people, roughly one fifth of 
the world's population, currently live without reliable access 
to water. By 2030 it is estimated there will be an additional 
three billion people in the world. Finding new sources of water 
to meet this population growth will be an increasingly 
challenging international issue.
    Federal water resources research has remained level at 
approximately $700 million in 2000 dollars since the mid-1970s. 
Funding for water supply augmentation research has dropped 
dramatically during the same period. Funding for water supply 
augmentation and conservation dropped from $64 million in 1973 
(in 2000 dollars) to $14 million in 2000. In recent years, the 
Federal Government has invested approximately $130 billion in 
research and development activities. Of this expenditure, 
research related to water resources accounts for only 0.5 
percent. Various sources call for a renewed Federal investment 
in water resources research to address water scarcity. The 
Multi-Laboratory Energy-Water Nexus Committee states that ``it 
is time to reinvest in the research and technology development 
needed to provide the tools to ensure sustainable water 
supplies for energy, moving to less water-intensive electric 
generation sources, and reducing the amount of energy required 
to provide an adequate water supply.'' The Center for Strategic 
and International Studies and Sandia National Laboratories 
study identifies increased investment in water technology by 
developed nations as a way to avoid ``instability or conflict 
related to water supplies.'' A report by the National Research 
Council found that ``the nation's water resources research 
enterprise is not as well organized and financed as it will 
need to be if the science required to address the multiplying 
water problems confronting the United States is to be 
available.''

                          LEGISLATIVE HISTORY

    S. 1860 was introduced on October 7, 2005, by Senator 
Domenici for himself, and Senators Bingaman, Alexander, and 
Frist and was referred to the Committee on Energy and Natural 
Resources. Senators Feinstein and Salazar are also cosponsors. 
The full Committee held a hearing on S. 1860 on October 20, 
2005. At the business meeting on November 16, 2005, the 
Committee on Energy and Natural Resources ordered S. 1860 
favorably reported with an amendment in the nature of a 
substitute.

                        COMMITTEE RECOMMENDATION

    The Senate Committee on Energy and Natural Resources, in an 
open business meeting on November 16, 2005, by unanimous voice 
vote of a quorum present, recommends that the Senate pass S. 
1860, if amended as described herein.

                          COMMITTEE AMENDMENT

    During consideration of S. 1860, the Committee adopted an 
amendment in the nature of a substitute which addresses 
concerns raised during the committee hearing and in written 
submissions and an amendment to the title.
    The substitute makes nine major changes in the bill as 
introduced. The first change removes the designation of Sandia, 
Lawrence Livermore and Oak Ridge National Laboratories as lead 
laboratories. The amendment instead directs the Secretary of 
Energy (hereinafter ``Secretary'') to designate the lead 
laboratory or lead laboratories and directs the Secretary to 
take into account the amount of appropriations made available 
to carry out the program in making their designation. The 
second change directs the lead laboratory or lead laboratories 
to each partner with a water agency to carry out the program. A 
definition of ``water agency'' was also added by the substitute 
amendment. The third change provides that the Secretary shall 
conduct the technology assessment and roadmap. As introduced, 
S. 1860 provided that the Secretary, acting though the National 
Laboratories would conduct the technology assessment and 
roadmap. The fourth change directs the Secretary to submit a 
report on the findings of the technology assessment and roadmap 
within 18 months. As introduced, S. 1860 required the Secretary 
to submit the report within 24 months. The fifth change directs 
the Secretary to establish an independent third party review of 
the activities carried out under the program. As introduced, S. 
1860 provided that the National Academy of Science would carry 
out the review. The sixth change expressly provides that 
activities carried out under the Act shall be subject to the 
cost-sharing provisions of section 988 of the Energy Policy Act 
of 2005. The seventh change provides that not more than 25 
percent of the funding would be provided to the lead laboratory 
or lead laboratories. As introduced, S. 1860 provided that at 
least 40 percent of the funding would be provided to the lead 
laboratory or lead laboratories. The eighth change provides 
that at least 60 percent of the funding would go to competitive 
grants. Of this amount, at least 20 percent shall be provided 
for demonstration projects. As introduced, S. 1860 provided 
that at least 40 percent of the funding would be provided for 
competitive grants, no percentage of funding was allocated for 
demonstration projects. The ninth change deletes the amendment 
to the Energy Policy Act of 2005 (Public Law 109-58), creating 
this Act as a new section 112 of the Energy Policy Act of 2005.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 provides the short title, the ``Water Supply 
Technology Program Act of 2005.''
    Section 2 defines the terms used in the Act.
    Section 3 subsection (a) directs the Secretary to establish 
a national program for the research, development, 
demonstration, and commercial application of economically 
viable and cost-effective water supply technologies to: 
increase the amount of water available for human use; 
facilitate the widespread commercialization of newly developed 
water supply technologies for use in real-world applications; 
facilitate collaboration among federal agencies in their water 
supply technology activities; and reclaim and improve access to 
previously unusable and nontraditional water sources.
    Subsection (b) provides that the Secretary may enter into 
any grant, contract, agreement, or other transaction, as the 
Secretary determines necessary to carry out the Act.
    Subsection (c) directs the Secretary to select one or more 
lead National Laboratory to carry out water supply technology 
research, development, demonstration, and commercial 
application activities under the program. The subsection also 
directs the Secretary to consider the amount of appropriations 
available to carry out the program in determining the number of 
lead laboratories to designate. The subsection also provides 
that each lead laboratory, in collaboration with the advisory 
panel, shall select at least one university partner and one 
water agency partner
    Subsection (d) directs the Secretary to establish a ``Water 
Supply Technology Advisory Panel'' consisting of members that 
have expertise in water supply technology or legal or 
regulatory issues associated with adopting water supply 
technologies in real-world applications. The subsection 
provides that the advisory panel: assess the performance of the 
activities being carried out under the Act; advise the 
Secretary on research priorities; make recommendations to the 
Secretary for awarding grants; and identify legal, policy, or 
regulatory barriers to implementing water supply technologies.
    Subsection (e) directs the Secretary, in collaboration with 
appropriate Federal agencies to: assess the amount of annual 
Federal authorizations and appropriations for water supply 
technology research; assess water supply technology research 
performed by other Federal agencies; and assess whether and to 
what extent the research is duplicative. The subsection also 
directs the Secretary, in collaboration with appropriate 
Federal agencies, the lead laboratory or lead laboratories and 
the advisory panel to: assess any water supply technology 
research being performed; identify research and development 
priorities; and develop a technology roadmap. The subsection 
directs the Secretary to submit a report on the activities 
carried out under this subsection within 18 months after the 
activities are completed.
    Subsection (f) directs the Secretary to provide competitive 
grants to entities with expertise in the conduct of water 
supply technology research, development, and demonstration 
projects. The subsection also provides that the grants shall be 
provided consistent with the technology roadmap and that not 
more than 25 percent of funds made available for grants shall 
be provided to National Laboratories and Federal agencies.
    Subsection (g) directs the Secretary to establish a third-
party review of: the technology roadmap; technology milestones; 
plans for commercial application developed under the program; 
and to assess the progress of the program in achieving the 
technical milestones and plans for commercial application.
    Subsection (h) directs the Secretary to submit a report to 
Congress that describes the activities carried out under this 
Act three years after the date of enactment of this Act and 
each year thereafter.
    Subsection (i) provides that any activities carried out 
under this Act shall comply with section 988 of the Energy 
Policy Act of 2005 (42 U.S.C. 16352) related to cost-sharing.
    Section 4 subsection (a) authorizes $5,000,000 to be 
appropriated for fiscal year 2006 to carry out the roadmap 
under section 3(e)(2)(C) and authorizes to be appropriated such 
sums as necessary for each fiscal year thereafter.
    Subsection (b) provides that, for amounts appropriated for 
fiscal year 2007 and each fiscal year thereafter, not more than 
25 percent shall be made available to the one or more lead 
laboratories. The subsection further provides that, if more 
than one laboratory is designated as a lead laboratory, the 
amount appropriated to the lead laboratories shall be 
distributed equally among the lead laboratories for the conduct 
of activities under the program, including to carry out section 
3(a)(2). The subsection further provides that, for amounts 
appropriated for fiscal year 2007 and each fiscal year 
thereafter, at least 60 percent shall be made available for 
program grants under section 3(f), of which, at least 20 
percent shall be made available for demonstration projects. The 
term ``demonstration projects'' includes: tests of water supply 
technologies intended to assess performance in the natural 
variability of real world parameters and outside of well-
controlled laboratory conditions which reduce the risk for 
commercial application; tests designed to identify problems 
associated with using a water supply technology on a large 
scale and other problems that may arise in applying a new water 
supply technology in a field setting; and tests designed to 
incorporate water supply technology into large-scale production 
and commercial applications. The subsection further provides 
that not more than 15 percent shall be used to pay the 
administrative costs of carrying out the program, including 
costs to support the advisory panel.

                   COST AND BUDGETARY CONSIDERATIONS

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office:

S. 1860--Water Supply Technology Program Act of 2005

    Summary: S. 1860 would authorize research and development 
(R&D;) on water supply technologies at the Department of Energy 
(DOE). The new program would support collaborative research by 
national laboratories, universities, and water agencies on 
practical applications of technologies in such areas as 
desalination, contaminant removal, and water reuse and 
recycling. The bill would authorize the appropriation of $5 
million for the program in 2006 and such sums as may be 
necessary thereafter. Other provisions would direct the 
Secretary of Energy to assess technology needs, set research 
priorities, and coordinate efforts with other agencies and a 
Water Supply Technology Advisory Panel.
    CBO estimates that implementing this bill would cost about 
$94 million over the 2006-2010 period, assuming appropriation 
of the necessary amounts. Enacting this bill would have no 
effect on direct spending or revenues.
    S. 1860 contains no intergovernmental or private-sector 
mandates as defined by the Unfunded Mandates Reform Act (UMRA). 
The bill would authorize a research and development program 
that would benefit participating institutions of higher 
education and water agencies. Any costs incurred by those 
entities would result from complying with conditions for 
receiving federal assistance.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 1860 is shown in the following table. 
The costs of this legislation fall within budget function 270 
(energy).

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2006     2007     2008     2009     2010
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level......................................        5       15       25       35       45
Estimated Outlays..................................................        4        8       17       27       38
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: CBO assumes that the bill will be 
enacted by the end of calendar year 2005 and that the amounts 
necessary to implement the R&D; program will be appropriated for 
each year. CBO estimates that implementing this program would 
require funding levels to increase from the $5 million 
authorized for 2006 to about $45 million by 2010.
    As outlined by the bill, the program would support R&D; by 
multiple parties--at least one national laboratory, one 
university, and a water supply agency--and focus on the 
development, demonstration and commercialization of complex 
technologies. Thus, CBO expects that this water supply program 
would be similar in scale to DOE's other applied research and 
development initiatives, which generally spend between $10 
million and $80 million a year. Estimated outlays are based on 
historical trends for such similar R&D; programs.
    Intergovernmental and private-sector impact: S. 1860 
contains no intergovernmental or private-sector mandates as 
defined by UMRA. The bill would authorize a research and 
development program that would benefit participating 
institutions of higher education and water agencies. Any costs 
incurred by those entities would result from complying with 
conditions for receiving federal assistance.
    Estimate prepared by: Federal Costs: Kathleen Gramp. Impact 
on State, Local, and Tribal Governments: Lisa Ramirez-Branum. 
Impact on the Private Sector: Craig Cammarata.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                      REGULATORY IMPACT EVALUATION

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 1860. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 1860.

                        EXECUTIVE COMMUNICATIONS

    The testimony provided by the Department of Energy at the 
full Committee hearing on S. 1860 in the 109th Congress 
follows:

Statement of Douglas L. Faulkner, Acting Assistant Secretary for Energy 
         Efficiency and Renewable Energy, Department of Energy

    Mr. Chairman and Members of the Committee, I appreciate the 
opportunity to testify today on S. 1016, requiring the 
Secretary of Energy to make incentive payments to the owners of 
qualified desalination facilities to partially offset the cost 
of electrical energy required to operate facilities, and S. 
1860, which would amend the Energy Policy Act of 2005 to 
improve energy production and reduce energy demand through 
improved use of reclaimed waters and other purposes.
    Although supplying and distributing water is largely a 
local responsibility, we believe there is a Federal role in 
providing appropriate scientific and technological support for 
these efforts. S. 1016, however, poses a narrower question: 
Should the Department of Energy subsidize electricity costs at 
desalination facilities? We believe the answer is no. While 
well intended, S. 1016 is not a comprehensive approach to the 
challenge we face. It would subsidize a narrow group of 
electricity users engaged in water desalination efforts, and 
could divert limited Federal funding from efforts to engage in 
a more comprehensive approach.
    It is our view that incentive payments are not the best 
means to remove the energy cost barriers to desalinating water. 
Instead, we feel continued targeted Federal support for 
desalination research and development consistent with the 
Administration's Research and Development Investment Criteria, 
as well as our ongoing efforts to reduce energy demand and 
increase supply through the adoption of comprehensive energy 
legislation, will have a larger impact in the long-run on 
reducing desalination costs than will making incentive payments 
to the owners or operators of individual facilities.
    The Department of Energy finds S. 1860 to be well 
intentioned as it shares our view that we must develop 
innovative new approaches to dealing with the regional, 
national, and global challenges related to water availability 
and quality. However, we have several concerns regarding the 
specific language of this bill.
    First, the bill appears to shift substantial statutory 
authority from the Secretary to the designated National Labs 
and places the lead National Labs in inappropriate roles for 
assessing Federal funding and activities across agencies. We 
are also concerned that the bill appears to leave out the 
private sector and its key role in RD&D; and commercialization.
    The bill places as much as two-thirds of the funding at the 
lead National Labs, largely outside of any merit-based 
competitive process and it does so with little flexibility, not 
recognizing that the allocation of funding will vary with the 
status of technology RD&D; and commercialization, and private 
sector roles. We believe that the funding levels, roles and 
responsibilities for the Labs, Universities, and private sector 
should be determined by the Secretary in order to meet the 
national needs identified by the legislation.
    We share the view that we must develop innovative new 
approaches to dealing with the regional, national, and global 
challenges related to water availability and quality, and this 
is an issue that is commanding significant attention at the 
highest levels of the Administration.
    For example, in August 2004 the White House Office of 
Science and Technology Policy (OSTP) and Office of Management 
and Budget (OMB) identified water as a top Administration 
research and development priority and called upon the National 
Science and Technology Council (NSTC) to ``develop a 
coordinated, multi-year plan to improve research to understand 
the processes that control water availability and quality, and 
to collect and make available the data needed to ensure an 
adequate water supply for the Nation's future.'' The NSTC 
Committee on Environment and Natural Resources has formed a 
Subcommittee on Water Availability and Quality (SWAQ) comprised 
of more than 15 Federal Departments and Agencies who are now in 
the process of developing a comprehensive research plan. Their 
first report, ``Science and Technology to Support Fresh Water 
Availability in the United States,'' was released in November, 
2004. Among the points highlighted by this report are the 
following:
           We do not have an adequate understanding of 
        water availability at national, regional, or local 
        levels.
           Water, once considered a ubiquitous 
        resource, is now scarce in some parts of the country--
        and not just in the West as one might assume.
           The amounts of water needed to maintain our 
        natural environmental resources are not well known.
           We need to evaluate alternatives to use 
        water more efficiently, including technologies for 
        conservation and supply enhancement such as water reuse 
        and recycling as a way to make more water available.
           We need improved tools to predict the future 
        of our water resources to enable us to better plan for 
        the more efficient operation of our water 
        infrastructure.
    The Water Desalination Act of 1996 (Public Law 104-298) 
gave lead responsibility to the Department of the Interior to 
conduct, encourage, and assist in the financing of research to 
develop cost-effective and efficient means for converting 
saline water into potable water suitable for beneficial uses. 
We are looking at ways to better coordinate our efforts with 
those of the Department of the Interior and other agencies 
through the process underway in the NTSC's Subcommittee on 
Water Availability and Quality.
    At the Department of Energy, we have been in serious 
discussions with some of our labs on what we call the ``energy-
water nexus.'' The relationship between energy and water is not 
well understood by the public, and it is surprising to many, 
for instance, that the amount of fresh water withdrawn 
nationally for electricity production is more than twice as 
much as the water used for residential, commercial, and 
industrial purposes, and is comparable to the amount of water 
used for agricultural irrigation. Meanwhile, pumping, storing, 
and treating water consumes huge amounts of electricity--an 
estimated 7 percent of California's electricity consumption is 
used just to pump water.
    We understand that our energy and water supplies are 
interconnected. In fact, as much energy is used for water and 
wastewater purposes as for other major industrial sectors of 
the U.S. economy such as paper and pulp and petroleum refining.
    Although the hearing today focuses on producing drinkable 
water through a technological process, the equally important 
aspect of the larger issue is finding ways to reduce water 
consumption and remove some of the demand pressure from 
regional water supplies. Price and regulatory signals can 
create market incentives to reduce water use. One area for 
consideration is the water intensive process of thermoelectric 
generation from fossil fuels such as coal. For these systems, 
an average of 25 gallons of water is withdrawn to produce a 
kilowatt hour (kWh) of electricity of which nearly one-half 
gallon is consumed by evaporation. Overall, fossil-fuel-fired 
power plants require withdrawals of more than 97 billion 
gallons of fresh water each day.
    The Department's Office of Fossil Energy is supporting 
several research projects aimed at reducing the amount of fresh 
water needed by power plants and to minimize potential impacts 
of plant operations on water quality. One project at West 
Virginia University is assessing the feasibility of using 
underground coal mine water as a source of cooling water for 
power plants. A North Dakota project is attempting to reduce 
the water consumption of power plants by recovering a large 
fraction of the water present in the plant flue gas. A project 
in New Mexico is exploring whether produced waters, the 
byproduct of natural gas and oil extraction which often present 
a disposal issue, can be used to meet up to 25 percent of the 
cooling water needed at the San Juan Generating Station, as 
well as investigating an advanced wet-dry hybrid cooling 
system. In addition, the Department currently has a competitive 
solicitation on the street seeking additional innovative 
technologies and concepts for reducing the amount of fresh 
water needed to operate fossil-based thermoelectric power 
stations, including advanced cooling and water recovery 
technologies. The Department is also investigating whether a 
suite of specially selected, salt-tolerant agricultural crops 
or other plants can be used to remove sodium and other salts 
from coalbed methane produced water so that it can be safely 
discharged or used in agriculture.
    One promising new approach to electricity generation, 
Integrated Gasification Combined Cycle (IGCC) technology that 
converts coal and other hydrocarbons into synthetic gas, offers 
significant environmental and water benefits compared to 
traditional pulverized coal power plants. Because the steam 
cycle of IGCC plants typically produces less than 50 percent of 
the power output, IGCC plants require 30 to 60 percent less 
water than conventional coal- fired power plants. The 
Department is supporting research, development, and 
demonstration on a number of advancements that will 
significantly drive down the costs of IGCC plants.
    The Fossil Energy office is also supporting work at the 
University of Florida investigating an innovative diffusion-
driven desalination process that would allow a power plant that 
uses saline water for cooling to become a net producer of fresh 
water. Hot water from the condenser provides the thermal energy 
to drive the desalination process. Using a diffusion tower, 
saline water cools and condenses the low pressure steam and 
fresh water is then stripped from the humidified air exiting 
the tower. This process is more advantageous than conventional 
desalination technology in that it may be driven by waste heat 
with very low thermodynamic availability. In addition, cool 
air, a by-product of this process, can be used to cool nearby 
buildings.
    The Department's Office of Energy Efficiency and Renewable 
Energy (EERE) is supporting R&D; for innovative wind and solar 
electricity supply technologies that have attributes that may 
prove to be very beneficial to the desalination industry.
    For example, wind power is now becoming a competitive, 
clean, bulk electric power supply option in many areas of the 
Nation, and places no further demand on water supplies for its 
operation. In addition, excellent offshore wind resources are 
available near many coastal areas facing water supply 
challenges. The role that wind could play in powering 
desalination could take a range of forms, from stand-alone 
systems exclusively powered by wind, to desalination plants 
that receive the majority of their energy requirements from 
wind power delivered via electricity grid systems. In either 
case, the relative ease and low cost of storing desalinated 
water, in comparison with storing electricity, will allow 
operating flexibilities that will facilitate using inherently 
variable wind power as a primary energy source for 
desalination.
    We are currently funding a concept design study which will 
set up engineering and economic models to examine viability of 
wind-powered reverse osmosis systems, looking at applications 
for coastal seawater, inland brackish water, and water produced 
during oil or gas recovery. A second project will model solar 
and wind resources for a desalination unit to determine the 
effects of variable loads on desalination, and perform pilot-
scale testing to determine how renewable energy could reduce 
desalination costs.
    We are also undertaking a mapping project to overlay data 
such as fresh and brackish water resources, wind resources, 
water consumption, estimated growth, and electricity supply. 
Two maps will be developed, one of the United States, and one 
for the four-state region of Colorado, Utah, Arizona, and New 
Mexico, identifying locations that have the best economic and 
technical potential for using wind to power desalination. Even 
as we proceed with these activities, we are mindful that the 
energy intensive technique of reverse osmosis we use for 
desalination today may not be the membrane technology of 
tomorrow. But whether that breakthrough comes from a lab 
working specifically on desalination, or through an area of 
broader scientific research remains to be seen. The 
Department's Office of Science, for example, is studying 
microbes and smart membranes that may ultimately have relevance 
to desalination in the future.
    Having said that, it seems certain that desalination will 
play an important role in maintaining and expanding our 
Nation's, and indeed, the world's water supply. Where fresh 
water aquifers are under pressure in many regions, over-drafted 
and subject to saltwater intrusion, brackish aquifers can be 
found throughout the country and the world, a ready source of 
new water. More than 120 countries are now using desalination 
technologies to provide potable water, most commonly in the 
Persian Gulf where energy costs are low. The desalination 
plants of the future must come in a range of sizes so that they 
can be installed where demand exists-smaller footprint 
facilities which can make use of smaller deposits of impaired 
water, at a price the community can afford. For American 
companies, the growing need for desalination will open new 
global markets. Mr. Chairman, this completes my prepared 
statement, and I am happy to answer any questions the Committee 
may have.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill S. 1860, as 
ordered reported.