1. 2011 ANNUAL SALINITY SUMMIT J. Tom Ray, P.E, D-WRE Water Resources Program Manager Lockwood, Andrews & Newnam, Inc.

2. Outlook (a few quick points) Texas – State and Local build an effective, cooperative program – on the path to large- scale production? Federal – what can current CR and FY12 budget tell us about the immediate outlook?

3. TEXAS – Progress & Challenges Seawater Desalination Initiative – 2002 2006 – Pilot Studies Initiated Demonstration Brownsville Ship Channel (Pilot) South Padre Island (Pilot) Permitting strategies (State and Federal) – 2011 BOR Collaboration on treatment process for Texas testing OUTLOOK: Benefits of research, regulatory reviews, pilot and future demos lead to large-scale production

4. TEXAS – Progress & Challenges Financial – Brownsville project ($22.5 M) requires $9.5 M State appropriation (Legislative Appropriations Request for Fiscal Years 2012–2013 ) $13.7 M bond issue for South Padre failed in Nov 2011 Federal funding support? – Agency budget increase & Congressional adds Research – site specific questions (environmental & facility performance) Regulatory – no permitting cycle(s) experience Technical – biological fouling & cost-effective techniques OUTLOOK: Potential for federal funding – does desal hold strong enough national interest?

5. FEDERAL - FY12 Budget (BOR) Bureau FY12 budget request is $965,600,000 as opposed to FY10's $951,158,000. Of this amount, $23.616,000 is for Title XVI. And $2,086,000 is for de-sal funding. That's around 2% for Title XVI of the total budget and around.2 of 1% for desal 1. What is the future of these projects on the Hill with no Member requests being entertained for FY11 and FY12? 2. What is the future with House Republicans in general and Water & Power Chair McClintock in particular being opposed to recycling? 3. How will Senator Feinstein being the Chair of Energy and Water in the Senate impact these funds?

6. FEDERAL – HR1 (CR) “historic reduction” HR 1 - $100 billion in cuts for current fiscal year Debate under “Open Rule” Prohibitions on use of funds Section 1746 – greenhouse gases Section 1747 – changes pertaining to waters of the US BUT, not reduction at all cost! New House members attempt balance of two goals Deficit reduction “Important goals” Debate details give insight to “big picture” of budget reduction The McClintock Example Chair, Water & Power Subcommittee of the Natural Resources Cmt 1.Amd 297 – Klamath Dam removal studies @ $1.9 M - passed 2.Amd 315 - Solar research cut of $247M - rejected 3.Mr. McClintock not expected to submit amendments to cut Title XVI and WaterSMART funding – related?

7. 1. President’s FY 12 budget – Desal nominal 2. HR 1 (CR) more cuts – with balance 3. Important for Desal to establish national priority 1. Long-term progressive, collaborate effort 2. Number of challenges, including need for federal partnership 3. Outlook for federal funding FY12 Agency funding – NO Increases CR – Historic cuts but respects balance Texas Federal

9. Key Committees Authorizing Corps of Engineers: Committee on Transportation and Infrastructure/Subcommittee on Water Resources and Environment in the House; Environment and Public Works in the Senate/Transportation and Infrastructure in the Senate. Bureau of Reclamation: Committee on Natural Resources/Water and Power in the House; Committee on Natural Resources/Subcommittee on Water and Power. Appropriations Committee on Appropriations/Energy and Water Subcommittee for both the House and the Senate.

10. PROPOSED AGENCY FUNDING. Key proposed funding levels for the key agencies as proposed by the President for FY12: Corps of Engineers Investigations FY10 funding level was $160,000,000. Proposed FY12 funding level is $104,000,000. Construction FY10 funding level was $2,031,000,000. Proposed FY12 funding level is $1,480,000,000. Bureau of Reclamation FY10 funding level was $951,158,000. Proposed FY12 funding level is $965,600,000. USEPA FY10 funding level, clean water SRF was $2,100,000,000. Proposed FY12 funding level is $1,550,000,000. FY10 funding level for drinking water SRF was $1,387,000. Proposed FY12 funding level is $990,000,000.