MODERN THEORIES OF STRUCTURE FORMATION UNEQUIVOCALLY PREDICT THAT DENSITY PERTURBATIONS SEEDED IN THE BIG BANG COLLAPSE TO PRODUCE ``HALOS'' OF DARK MATTER FILLED WITH HOT VIRIALIZED GAS. THE PHYSICS OF THIS HOT HALO GAS FUNDAMENTALLY DETERMINES THE MASS-SCALE OF GALAXIES AND LIKELY PLAYS A CRITICAL ROLE IN THEIR SUBSEQUENT EVOLUTION. SINCE THIS VIRIALIZED HALO GAS IS TYPICALLY INVISIBLE HOWEVER COSMOLOGICAL SIMULATIONS HAVE LARGELY OVERLOOKED IT UNDERSTANDABLY FOCUSING ON MORE OBSERVABLE PROPERTIES OF GALAXIES SUCH AS THEIR ISM CONTENT AND STAR FORMATION HISTORIES. HOWEVER AS NEW OBSERVATIONAL TECHNIQUES BEGIN TO PROBE THE DIFFUSE GAS IN GALAXY HALOS THEY ARE FINDING RESULTS INCONSISTENT WITH PREDICTIONS FROM COSMOLOGICAL SIMULATIONS. THOUGH HALO GAS IS FUNDAMENTAL TO GALAXY FORMATION IT CANNOT BE EXPLAINED WITH CURRENT MODELS; HALO GAS THUS REPRESENTS THE NEW FRONTIER IN TESTING AND ADVANCING OUR MODELS OF GALAXY FORMATION. ONE PARTICULARLY SURPRISING DEVELOPMENT HAS BEEN THE NEAR-UBIQUITOUS FINDING THAT GALAXY HALOS ARE FULL OF TINY DENSE CLOUDS OF NEUTRAL GAS. IN A RECENT PAPER (MCCOURT ET AL 2016) WE SHOW THAT THESE UNEXPECTED OBSERVATIONS IMPLY THAT GALAXIES CONTAIN AN ENORMOUS NUMBER OF TINY CLOUDLETS DISPERSED THROUGHOUT THE HALO LIKE THE WATER DROPLETS IN A FOG. WE DETAIL A NEW HYDRODYNAMICAL PROCESS WHICH WE CALL ``SHATTERING '' THAT EXPLAINS THE TINY CHARACTERISTIC SIZE FOR THESE CLOUDLETS. WHILE WE CAN EXPLAIN MANY OBSERVABLE PROPERTIES OF THIS COLD GAS (SUCH AS ITS BROAD LINE-WIDTH AND TINY VOLUME-FILLING FRACTION) WE TREATED THE AMOUNT OF COLD GAS AS A FREE PARAMETER; THIS IS FUNDAMENTALLY DETERMINED BY GALAXY FORMATION RATHER THAN GAS DYNAMICS. THIS PROPOSAL EXTENDS THE WORK OF MCCOURT ET AL (2016) BY FOCUSING ON THE ORIGIN OF THE COLD GAS IN GALAXY HALOS. SINCE COLD GAS REPRESENTS THE FUEL FOR STAR FORMATION AND FEEDBACK IN GALAXIES THIS QUESTION IS CRUCIAL FOR STUDIES OF GALAXY EVOLUTION. WE CONSIDER TWO POSSIBILITIES: 1) THAT COOL CGM GAS IS EXPELLED FROM THE GALAXY DISK IN LARGE-SCALE OUTFLOWS OR 2) THAT IT IS PRODUCED IN-SITU BY THERMAL INSTABILITY. IN BOTH CASES WE FOCUS ON OBSERVATIONAL TESTS OF OUR MODEL AND ON METHODS TO INCORPORATE OUR RESULTS INTO FUTURE COSMOLOGICAL SIMULATIONS VIA A SUB-GRID MODEL. ADDITIONAL SCIENCE RESULTS WILL INCLUDE UNDERSTANDING THE UNEXPLAINED ENTRAINMENT OF COLD GAS IN GALACTIC WINDS AS WELL AS UNDERSTANDING THE SURPRISINGLY STRONG MAGNETIC FIELDS SEEN IN GALAXY HALOS AT LOW REDSHIFT WHICH LIKELY DOMINATE OVER THERMAL PRESSURE IN HALO GAS. TO OUR KNOWLEDGE NO MODELS CURRENTLY EXIST FOR EITHER OF THESE RESULTS. THE WORK OUTLINED IN THIS PROPOSAL FOCUSES ON RECENT OBSERVATIONS WHICH CANNOT YET BE REPRODUCED IN COSMOLOGICAL SIMULATIONS. AS PART OF OUR PROPOSED WORK WE WILL PRODUCE A SUB-GRID MODEL FOR UNRESOLVED COLD CLOUDS IN HYDRODYNAMICS AND WILL DETERMINE THE RESOLUTION NEEDED TO REPRODUCE THESE EFFECTS IN FUTURE COSMOLOGICAL SIMULATIONS. OUR WORK IS TIMELY AND REPRESENTS THE NECESSARY NEXT STEP IN ADVANCING OUR THEORIES OF THE CGM.