This Small Business Innovation Research (SBIR) Phase I project concerns the production of hydrogen fuel for use in Next Generation Vehicles. Hydrogen is an environmentally clean fuel, but it is difficult to transport and store. A low-cost method of producing hydrogen from natural gas in the 1,000-1,000,000 scfd range is required, so that hydrogen can be manufactured close to the point of use. This project develops a methane reformer fitted with a hydrogen-selective palladium-alloy membrane to separate hydrogen from carbon dioxide. The process is expected to produce 99 percent pure hydrogen at low cost and operate in small-scale hydrogen production plants. To be feasible, efficient high-temperature hydrogen-selective membranes are required in the process. Palladium-alloy membranes have the required selectivity, but currently, such membranes are 10-25 microns thick and are very expensive for an industrial process. This research explores the use of sputter-coated palladium-alloy membranes only 1,000 Angstroms thick. These membranes have been produced in small rolls and have hydrogen/carbon dioxide selectivities of greater than 2,000. The Phase I objective is to show that palladium-alloy membranes can be adapted for use at temperatures as high as 250 degrees C to allow high fluxes. The membranes must also be mechanically strong enough for incorporation into membrane modules. If approved, Phase II would scale up membrane production to industrial-scale modules, which would be installed with a small reformer to produce hydrogen in pilot-scale equipment. These on-site hydrogen production units would make the use of hydrogen as a fuel much more attractive. The systems are also likely to find an immediate use in the on-site production of hydrogen for users in chemical, metallurgical and electronics industries.