H.R.527 Responsible Helium Administration and Stewardship Act

Week Ending April 25, 2013

H.R.527 Responsible Helium Administration and Stewardship Act

The bill report explains that the purpose of H.R. 527 is to amend the Helium Act to complete the privatization of the Federal helium reserve in a competitive market fashion that ensures stability in the helium markets while protecting the interests of American taxpayers. The Federal Helium Reserve is to be closed later this year.

Today, helium is vital in a variety of industries other than defense, the report explains. It is essential to cooling and maintaining superconductive magnets on MRI machines, which accounts for more than a quarter of helium used in the United States. It is also used in semiconductor manufacturing, fiber optics, welding, LCD screens, rocket fuel, medical lasers, as a cooling medium for nuclear reactors and in scientific and other research. The BLM Federal Helium Reserve continues to be the largest supplier of helium to U.S. industry.

The federal government currently supplies about 30 percent of the world’s supply of helium. Originally created as a federal helium extraction and purification plant, the BLM Reserve is today managed in a single reservoir and pipeline system located in Texas, Oklahoma and Kansas. As noted above, the 1996 Helium Privatization Act called for the shutdown of federal helium refining operations and dismantling of the facility by 1999. It also called for the sale and complete privatization of the Helium Reserve by 2015.

The 1996 law established a formula for pricing the helium based not on the market price, but on the minimum price necessary to recover the $1.3 billion federal debt to build the Helium Reserve. As a result of the federal pricing formula, users had no incentive to preserve helium, recover it, or search for new sources. BLM will be able to pay off the debt sooner than expected without selling off all of the helium. When the debt is paid off, which is predicted to occur in October 2013, the Reserve will close with helium still remaining in the Reserve and no way to access it. Without new domestic sources of helium available, U.S. industries will be forced to look overseas to other helium supplying countries such as Algeria, Qatar, and Russia.

The bill begins by renaming the Federal Helium Reserve as the Bureau of Land Management (BLM) Cliffside Gas Field and supporting infrastructure. The asset includes the Cliffside Gas Field helium storage reservoir; and all associated infrastructure owned, leased, or managed under contract by the Secretary of the Interior for helium storage, transportation, withdrawal, purification, or management.

The Secretary of Interior is directed to offer for sale at auction crude helium for medical, research, scientific, and commercial uses in such quantities, at such times, and under such conditions as the Secretary determines necessary to maximize total recovery and conservation of helium from the Federal Helium Reserve; to manage crude helium sales according to the ability of the Secretary to extract and produce helium from the Federal Helium Reserve; respond to helium market supply and demand and minimize market disruption; and to give priority to meeting the helium demand of Federal users.

Any Federal agency, and any holder of 1 or more Federal research grants, may purchase refined helium for Federal, medical, research, and scientific uses from an eligible person. The Secretary shall then provide an equivalent volume of crude helium to the eligible person as if the eligible person was the successful bidder for the helium at auction. Provision of helium by the Secretary as such shall not be considered a sale of helium by the Secretary at auction. The Secretary shall provide such helium at the minimum price established by the Secretary for the most recent auction held.

The Secretary may not offer or provide for sale a total volume of crude helium that exceeds the lesser of the projected maximum total production capacity of the Federal Helium Reserve during that fiscal year; and the maximum refining capacity of persons connected by pipeline to the Federal Helium Reserve during that fiscal year. Currently there is over 3 billion standard cubic feet of crude Helium stored. The stored volume is not to fall below that amount.

The Secretary may offer for sale crude helium for Federal uses (including medical, research, and scientific uses) in such quantities, at such times, and under such conditions as the Secretary determines necessary.

Auction sale prices must not go below the Secretary’s established prices, auctions are to be held at least twice yearly, and 60% of sales must go to bidders showing their ability to refine the Helium. 20% may go to any bidder. A winning bidder will then face storage fees which will accelerate after 270 days for the purpose of encouraging removal of the Helium no later than two years after the auction.

All persons that are parties to a contract with the Secretary for the acceptance, storage, and redelivery of crude helium are required to disclose, on a strictly confidential basis in dollars per thousand cubic feet, the weighted average price of all crude helium and bulk liquid helium purchased, sold, or processed by the persons in all qualifying domestic helium transactions during the fiscal year as determined by an independent third party.

If the Secretary believes that the minimum price for Helium does not reflect the current market value or if a higher minimum price would result in greater conservation of Helium resources the Secretary may change the price by up to 10%. Once that 10% is added the resulting amount will then become the minimum price.

Money received from the sale of Helium is to be credited to the Helium Production Fund and shall be available to the Secretary to carry out the requirements in this bill.

Sponsor: Rep Hastings, Doc [WA-4]

VOTES
House:

On passage Passed by the Yeas and Nays: 394 – 1 (Roll no. 128).

Motion to recommit. On motion to recommit with instructions Failed by recorded vote: 186 – 211 (Roll no. 127).

Text of the motion: The instructions contained in the motion seek to require the bill to be reported back to the House with an amendment to add at the end of the bill a new section on banning exports to hostile nations that seek nuclear weapons or missile technology.

House Amendments:

An amendment, offered by Mr. Collins (GA), numbered 1 to ensure that excess funds are used to reduce the annual Federal budget deficit.  On agreeing to the Collins (GA) amendment; Agreed to by voice vote.

An amendment, offered by Mr. Dent, numbered 2 to ensure the continued supply of helium for end users while requiring the Bureau of Land Management (BLM) to honor existing contracts for the supply and delivery of helium. The amendment affirms that the federal government will honor existing contracts that are set to expire October 1, 2015. On agreeing to the Dent amendment; Failed by recorded vote: 87 – 312 (Roll no. 126).

An amendment, offered by Mr. Holt, numbered 3 to consider the long-term future of the Federal Helium Reserve by requiring an assessment of how closing the Federal Helium Reserve could influence helium availability, including options for insuring a reliable helium supply in coming decades. On agreeing to the Holt amendment; Agreed to by voice vote.

An amendment, offered by Mr. Thornberry, numbered 4  to affirm the authority of the Secretary of the Interior to allow private entities to connect to and store helium in the Federal Helium Reserve for an appropriate fee. On agreeing to the Thornberry amendment; Agreed to by voice vote.


Senate:

Cost to the taxpayers: CBO estimates that enacting H.R. 527 would increase net offsetting receipts (a credit against direct spending) by $340 million over the 2014-2023 period
Pay-as-you-go requirements: pay-as-you-go procedures apply
Regulatory impact: The bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) and would impose no costs on state, local, or tribal governments.
Earmark Certification: Not provided
Constitutional Authority:
By Mr. HASTINGS of Washington:
H.R. 527.
Congress has the power to enact this legislation pursuant
to the following:
Article IV, Section 3

HELIUM-3

Helium-3 (H-3) is an isotope of helium that is frequently used in applications related to national security, medicine, industry, and science. H-3 absorbs neutrons, and it is this neutron detection that allows the defense industry to use H-3 to prevent the smuggling of nuclear and radiological materials into the U.S. The oil and gas industry also uses neutron detectors for well logging. The world is currently experiencing an acute shortage of H-3 and if alternative or additional supplies are not found this shortage will impact federal investments in homeland security, scientific research and other areas.

The most common source of H-3 in the United States is the nuclear weapons program. H-3 is a byproduct of the decay of tritium, a radioactive isotope of hydrogen. Since the federal government produces tritium for use in nuclear warheads, the tritium needs of the nuclear weapons program is the determining factor for how much H-3 is produced.

Until 2001, H-3 production by the nuclear weapons program exceeded the demand, and the program accumulated a stockpile. After the terrorist attacks of September 11, 2001, the federal government began deploying neutron detectors at the U.S. border to help secure the nation against smuggled nuclear and radiological material. This created a significant new federal demand for H-3 while at the same time the use of H-3 in medical imaging also increased. As annual demand exceeds the annual supply, the stockpile shrinks. Federal officials have projected that there is insufficient H-3 to meet likely increasing future demand and industry is currently working with the Department of Energy to manage future predicted shortfalls.

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