“What I’d like to do today, if I can, is mention a number of different subjects. I’ll talk just a little about CALFED and where that leads us, because there are so many people who work on water issues here. I’d like to touch on perchlorate. Tom Soto is here. His mother, Nell Soto, has been a great leader in the State Legislature on this subject. And, then I’d like to touch on the Middle East, because I have just returned from there, and have some observations that I’d like to share with you today.

Let me begin with CALFED. This is the culmination of more than 10 years of work. The thrust of it is – we cannot solve our problems if every other month a new court case is brought. We’ve got to get all of the stakeholders, whether they’re environmentalists, urban agencies, water contractors, cities, agricultural people, or anybody else, out of the courtroom and at the negotiating table.

We have to move a water program forward in a balanced way, because the last major addition to our infrastructure – outside of resources that MWD has built in the Diamond Reservoir – took place when Pat Brown was governor, and the California Water Project was built. Well, that was in the mid-60s, and we were a State of 16 million people.

We’re going to be 50 million people in the next twenty years and if we don’t act we’ll have the same water infrastructure for 50 million, as we did for 16 million. You and I both know what that means. You and I know what happened with electricity. But water issues could be much more serious, unless we work fast and we work smart. And that’s really what CALFED is all about.

I see us with a number of challenges remaining. The first is the number of storage projects. I’m convinced that we cannot solve our water issues without new storage. And so the staff of CALFED, presented the four most likely, most promising, most feasible storage projects, whereby we could take water from the wet years, when it rains a lot, and store that water for the dry years, when we would have it for all of California. And those four projects, are either off-stream reservoirs, or they involve modification to existing dams. They include Sites Reservoir and a raised Shasta Dam.

There’s a lot of talk now about this particular raise. But what I want to stress is, the feasibility studies have to be done, the environmental studies have to be done, and they have to be done quickly to determine the best cost-benefit result from a raise whether it is 6 feet or whether it’s 18 feet.

We could also improve water quality through a raise of Los Vaqueros reservoir and a project in the Upper San Joaquin Valley .

Now, we need to get our share of Federal funding. And, as a member of the Senate Appropriations Committee, and with Lucille Roybal-Allard on the House Appropriations Committee, we will do everything we can to get our Federal share.

But it’s not going to be enough. The State – and I’m delighted that there are very prominent representatives here from Governor Schwarzenegger’s staff – the State needs to increase its contribution level.

We’ve discussed this with key officials, and they tell us they’re working to provide us with their share of the funding. And we need major contributions from major water agencies as well. We’ve also spoken with these major agricultural water agencies. We urge them to do the same thing. But it is my hope that the Met will lead the way and announce that it will be making substantial contributions to specific, identified projects, that will help meet this region’s enormous supply needs. Commitment from Californians to financially support these projects will make it much easier for Lucille and I as we work to secure necessary Federal dollars.

Now last week, the Bay Delta Authority approved the General Finance Plan. It’s $8 billion over the next decade. The Federal government would provide 21 percent, the State 30 percent, and the remainder, about half, would have to come from local governments and water users. That’s difficult in an era of deficits. But there’s a huge downside if we don’t do this, and don’t act early, and don’t act firmly. It is extraordinarily important that the Met lead the way, that user-entities remember that there is a “beneficiaries pay” component to CALFED, and that we move aggressively on the financial picture.

Now, another piece of CALFED that I want to speak briefly about, is conservation, recycling, and desalination because this represents the future of California . It’s one of the most important ways we have of meeting our State’s water needs. We’ve made tremendous strides in reducing the cost of desalination, which when I first looked was 2,200 dollars an acre-foot, now I’ve been told it’s down to 700/800 dollars an acre-foot. And there are a number of recycling projects in Southern California and the Bay Area, which require a Secretary of Interior sign-off to approve them before they can receive Federal funding. I hope that comes very fast because these projects are important.

We also have one other factor, which is major, and which is complicating the water picture for our State. It’s called global warming and it’s inordinately serious.

A recent report from the Intergovernmental Panel on Climate Change found that global warming could shrink our State’s snowpack by an amount greater than the annual water consumption of Southern California’s 16 million people. The bottom line: if just one-third of our annual snowpack is lost, it would mean losing more than 4 million acre-feet of water. That’s enough water to serve 8 million households.

Global warming is a real phenomenon. No one should doubt it now. It is happening, and we need to respond to it. CALFED provides us with the rationale and the mechanism to do so. So I am here today to say to you that your work is just beginning. There’s a long way to go. The key is for us to work together, and to move this program in a balanced fashion.

There’s another problem I’d briefly like to mention: the Colorado River basin. It’s a major source of water for seven states, and for more than 25 million people. It’s an absolutely critical resource for the people of the Southwest. It is now entering its fifth year of drought. And it could get worse before it gets better.

In 1968, a Central Arizona Project Agreement was signed, which gives the Arizona Central Project Area secondary priority of water rights to California. It is key and critical that we maintain these water rights. I know there are efforts that are going to be made because this is a voluntary agreement, by certain forces in Arizona, to see if we would give up those water rights. We should not. But we should work cooperatively with Arizona. And that’s the reason why I support regulating reservoirs on the All American Canal, that can cost-effectively increase the water available for Lower Basin states.

The Laguna Dam, above Yuma , for example needs dredging. That alone could produce 1000 acre-feet of water. But the problem is that the water comes off the Colorado , and it isn’t regulated. So if too much comes, a lot of it is wasted. The regulating reservoir would prevent that from happening. It’s estimated that it could save about 1000 acre-feet of water. So it is a very worthy investment. And that’s where our cooperative efforts should go. I stand by to help in any way I can.

Let me just mention perchlorate because this too is a big, big problem. Perchlorate is a chemical that was used in the manufacture of rocket fuel. It was used by the Department of Defense – they’re the responsible culprit –and by sub-contactors all throughout the United States.

What perchlorate does, when it leaches into groundwater, is it impedes thyroid operation by interfering with iodine intake. It may well affect the physical and mental development of young children.

In California, it’s now been found in 350 drinking water sources. It’s seeped into the Colorado River, from a big Kerr-McGee site in Henderson, Nevada. I want to thank Kerr-McGee. We have been on them – they have reduced the penetration of perchlorate into the wash of the Colorado River dramatically. And I’d just like to say to them, good work, thank you, and keep it up.

But this is only the tip of the iceberg. Perchlorate is now being found in food products. Last month, the FDA reported that perchlorate had been found in 90 percent of the lettuce samples taken in California, Arizona, Texas, Florida and New Jersey. The very salad we just ate could be infiltrated with perchlorate. Understand that. Also, understand that there is no national safety level of perchlorate. And that’s a big problem.

Perchlorate has also been found in 101 of 104 milk samples taken in retail stores around the country. That’s an FDA study released in November, a month ago, so it’s current. That’s why it’s time to comprehensively address the perchlorate problem.

I believe we need to do the following: identify the scope of the problem. We need to know the true extent of contamination. We need to get EPA to set a national standard as soon as possible. We’ve been on them. I need you to join me and pound, pound, pound. It is unacceptable to have perchlorate in milk and lettuce, and we must stop it.

Thirdly, the Defense Department needs to acknowledge its role, and they’ve been reluctant to do so, and take steps to remediate the problem. We have been working, and we’ve been able to secure this year, in funds for MWD, $700,000, a half a million to study the effectiveness of biological treatment for the removal of perchlorate, and 200,000 for the final design of wellhead treatment for perchlorate and nitrate in the city of Ontario. And I really urge MWD to move with this rapidly and become a very loud voice to push for solution.

There’s much that remains to be done. My staff has worked with MWD, and in January I will be introducing a perchlorate bill. Lucille might even be interested in doing the same thing in the House. I’ll tell you quickly some of the things it would do.

It would establish an Interagency Task Force that would coordinate Federal activities. This is EPA, it’s DOD, it’s Department of Energy, it’s NASA, and it’s others. It would require the EPA to set that standard no later than July 31, 2007. In my view, that’s too long. But they say they can’t do it before. They don’t meet any deadlines. So we need something that’s codified in legislation, and then hold their feet to the fire.

And this bill would authorize $200 million for perchlorate cleanup, and provide grants for cleanup of contaminated water supplies, including wellheads. It would provide grants for research and development of new, cheaper, more efficient cleanup technologies. The technology right now is very expensive, and we need to work to get the cost down so more can be done quicker.

The bottom line of all of this is, we now have perchlorate in more than 35 states, and so there is a growing national interest. It’s not just a California problem, it’s a national problem, and we need to address it as such.

Now if I can, I’d like to just spend a few minutes and talk to you a little bit about what I found this past week in the Middle East. I joined a delegation of senators, led by Senator Chuck Hagel of Nebraska, Joe Biden of Delaware, Lincoln Chafee of Rhode Island. And the four of us went to the Middle East. There’s good news and there’s bad news, and I want to share both with you.

The first part of our trip we spent in Israel. This was really important to me, because the Israeli-Palestinian dispute is really a linchpin problem in a growing clash of civilizations between the Muslim world and the Western Christian world. It is extraordinary important that it gets solved.

I’ve watched for decade after decade where hatreds between the two parties have grown; the increase in terrorist acts; the diminution of the Israeli and Palestinian economies; the real horror with which people live on a daily, annual, and decade-long basis.

And so some of us, under the auspices of the Aspen Strategy Institute, Henry Kissinger, Madeline Albright, Chuck Hagel, and myself, have developed a group of Palestinian business leaders and Israeli business leaders to try to put together a dividend for peace – specific economic projects for areas, which could show that there was a dividend once we have a peaceful solution.

We met with Prime Minister Sharon. We met with the Israeli Foreign Minister Silvan Shalom. Sharon indicated his willingness to facilitate Palestinian elections and the need for the new Palestinian leadership to tamp down terrorism.

We then spent two and half hours with Mahmoud Abbas, or Abu Mazen, as he is called, who will become the new Prime Minister of the Palestinians in the election that’s being held next month. I was so heartened by that meeting, because he indicated he was prepared to do all of those things that Ariel Sharon required. And this morning, if you pick up a newspaper, you will see Prime Minister Sharon saying for the first time, this is historic, “this is a time of real opportunity.” It is a real window for peace, ladies and gentlemen.

Three things have happened. The pullout from Gaza, first. Secondly, the passing away of Yasser Arafat and the development of a new generation of Palestinian leadership that’s prepared to say that the intifada hasn’t worked and the time has come for a two-state bilateral solution. And thirdly, when Sharon failed to get enough votes for his budget, the Labor Party and the Likud Government formed a coalition government which should give the Likud Party more flexibility in negotiating for peace.

This is the time. This is the time for President Bush to use his second wave of political capital to put a high-level mission in Israel and to move the two sides together. We all know what the parameters of an agreement are. The President Clinton had them at Taba. A group of Palestinians and Israelis formed them in the Geneva Accord. It is doable. But the United States needs to lead the way. The United States needs to mobilize our European allies.

We spoke with King Abdullah of Jordan, with President Mubarak of Egypt, with moderate Arab leadership at the International Security Conference in Bahrain last week. Everybody is now willing to help. They need leadership and the solution to this could be the most fitting legacy any president could possibly leave. All the stars are realigning to make it possible. That’s the good news.

The bad news was getting into a C-130 and going from Kuwait into Baghdad. And then into a Blackhawk helicopter, sitting behind a very young, very intense machine gunner, and landing in Fallujah. And meeting with our military members, talking with about 20 Californians serving in uniform over there who were wonderful. They’re from this area, Los Angeles, from the Imperial Valley, from the San Fernando Valley, one was a grandmother, and some looked like they were still in high school. And they were proud of being there. They were proud of being part of our American military. And I was so proud of them.

We heard from General Sattler, our Commander in Fallujah, that he needs a trained Iraqi division up there, to go into Fallujah – large parts of it have been demolished – to do what they call “find and fix,” which is to seek out and take down remaining insurgents. He can house them. He asked us to pass on the word and I’ve been trying to do just that.

We then flew back to Baghdad. We flew very low and very fast about a hundred feet over the ground, up over high tension wires. They do this so that the helicopters can’t be targeted. And as we went over Baghdad you could see the fear. You saw raw sewage on some of the streets. You saw very little commerce and normal activity going on.

Then we landed and went into the Green Zone. We learned that a half hour before a missile had hit a cell phone center, and killed four people. Another missile hit somewhere else, killing 20 people. And, two days ago where we entered the Green Zone – which is where our Embassy with Ambassador Negroponte, where General Petreaus and all our command staff our located – just two days ago, a bomb at the entry, blew up and killed 91 people. So it is truly a war zone.

We were told off the record, by regular military, we need more and better equipment. We were told, by General Abizaid and General Petraeus, that there is no way we will militarily lose the war. But, we will not win it militarily either. And this is the rub. This is where, in my view, there need to be major corrections taken in where we’re going.

We have always needed more people. The National Security Adviser to President Chirac of France spoke to us in Bahrain. And he said, “You know, we went into Algeria,” – a country with 7 million people, Iraq has over 25 million people – “with a half a million troops, and we lost.” We’re in with 25 million people, and close to 150,000 troops going up from 130,000 now. There aren’t enough. There aren’t enough to secure the borders. King Abdullah of Jordan, a Sunni Nation, is very concerned with Shia infiltration from Iran, Shia infiltration from Syria into Iraq to influence the elections, which are coming up on January 30.

I think we made a major mistake and I want to tell you what it is. It was a policy, called de-Baathification. We canceled out all of the Iraqi army. We canceled out all of the Iraqi police. We canceled out all of the Iraqi Baathist Sunni ministers, managers, and supervisors of the oil infrastructure, of the sewage infrastructure, of the electricity infrastructure, of the hospitals.

Everybody who ran anything in Iraq was taken off the payroll, simply because they were of the same party as Saddam Hussein. It was a huge mistake. They have now become part of the problem. They feel they have no future. They have become 80 percent of the insurgents.

It’s a very serious situation and it needs to be changed. You have to deal with the people you defeat in war. You can’t just banish them and think they’re going to go away and starve somewhere quietly in a meadow. It doesn’t happen.

And so, my view is that there really needs to be major attention given to the development of a unity ticket for the elections coming up on January 30. A ticket that is Sunni, that is Shia, that is Kurd, that is Christian, that represents all of the country, so that Sunni Baathists also feel they have a part in this new country. If you make people part of the problem, they aren’t going to be part of the solution. And that’s kind of the bottom line, right now with respect to Iraq.

I wanted to share these views with you. I wanted to tell you also that it’s going to be an interesting new session.

And I want to leave you with just a couple of observations of Los Angeles and these are as a former mayor who was a mayor for nine years, who can read the streets. Your city is really moving ahead. All of the economic indicators are positive. In driving through the city it is, for the most part clean. It is increasingly upwardly mobile. There are signs of the economy recovering. Tourists are coming back to Los Angeles. And I think you all deserve a big round of applause. It is really a city on the move.

So, I’m delighted to be here. We have a lot of work ahead of us. I thank you for your attention, and I look forward to serving you in this next Congress of the United States. Thank you very much.