H.R. 527: Helium Stewardship Act of 2013

113th Congress, 2013–2015. Text as of May 06, 2013 (Referred to Senate Committee).

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IIB

113th CONGRESS

1st Session

H. R. 527

IN THE SENATE OF THE UNITED STATES

May 6, 2013

Received; read twice and referred to the Committee on Energy and Natural Resources

AN ACT

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, and for other purposes.

1.

Short title

This Act may be cited as the Responsible Helium Administration and Stewardship Act .

2.

Definitions

Section 2 of the Helium Act (50 U.S.C. 167) is amended—

(1)

in paragraph (1), by striking the semicolon at the end and inserting a period;

(2)

in paragraph (2), by striking ; and and inserting a period; and

(3)

by adding at the end the following:

(4)

Federal Helium Reserve

(A)

In general

The term Federal Helium Reserve means the Bureau of Land Management Cliffside Gas Field and supporting infrastructure.

(B)

Inclusions

The term Federal Helium Reserve includes—

(i)

the Cliffside Gas Field helium storage reservoir; and

(ii)

all associated infrastructure owned, leased, or managed under contract by the Secretary for storage, transportation, withdrawal, purification, or management of helium.

(5)

Qualifying domestic helium transaction

The term qualifying domestic helium transaction

(A)

except as provided in subparagraph (B), means any new or newly renegotiated agreement for the purchase or sale of at least 15,000,000 standard cubic feet of crude helium or bulk liquid helium delivered in the United States in the most recent full fiscal year; and

(B)

does not include any purchase of crude helium from the Secretary.

(6)

Tolling agreement

The term tolling agreement means an agreement between a helium refiner and another party under which the helium refiner agrees to process the other person’s helium at an agreed upon price.

.

3.

Sale and auction of crude helium

(a)

In General

Section 6 of the Helium Act (50 U.S.C. 167d) is amended to read as follows:

6.

Sale of helium

(a)

Phase A: Finalizing Debt Payoff

(1)

In general

Subject to paragraph (2), the Secretary shall offer for sale crude helium for Federal, medical, research, scientific, and commercial uses in such quantities, at such times, and under such conditions as the Secretary determines necessary to carry out this subsection with minimum market disruption.

(2)

Minimum quantity

The Secretary shall offer for sale during each fiscal year under paragraph (1) a quantity of crude helium equivalent to the quantity of crude helium produced from the Federal Helium Reserve during fiscal year 2012.

(3)

In-kind purchase by Federal agencies and grantees

Federal agencies, and holders of 1 or more Federal research grants, may purchase refined helium under this subsection for Federal, medical, research and scientific uses from persons who have entered into enforceable contracts to purchase an equivalent quantity of crude helium from the Secretary.

(4)

Prices and determinations

Sales of crude helium by the Secretary under this subsection shall be at prices established by the Secretary that shall not be less than the price in the last sale of crude helium from the Federal Helium Reserve before the date of enactment of the Responsible Helium Administration and Stewardship Act, except that any sale to a person referred to in paragraph (3) for a purchase authorized by that paragraph shall be at a price specified by the Secretary.

(5)

Duration

This subsection applies during the period—

(A)

beginning on the date of enactment of the Responsible Helium Administration and Stewardship Act; and

(B)

ending on the expiration of the one-year period following such date of enactment.

(b)

Phase B: Maximizing Total Recovery of Helium and Increasing Returns to the American Taxpayer

(1)

In general

The Secretary shall offer for sale at auction, as described in subsection (d), crude helium for medical, research, scientific, and commercial uses in such quantities, at such times, and under such conditions as the Secretary determines necessary—

(A)

to maximize total recovery and conservation of helium from the Federal Helium Reserve;

(B)

to manage crude helium sales according to the ability of the Secretary to extract and produce helium from the Federal Helium Reserve;

(C)

to respond to helium market supply and demand and minimize market disruption; and

(D)

to give priority to meeting the helium demand of Federal users through purchases under paragraph (2).

(2)

In-kind purchase by Federal agencies and grantees

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 under this paragraph 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 under this subsection or such other price as may be specified by the Secretary.

(3)

Eligible person

For purposes of this subsection, the term eligible person means a helium distributer who is registered as such with the Secretary.

(4)

Duration

This subsection applies during the period—

(A)

beginning on the expiration of the period described in subsection (a)(5)(B); and

(B)

ending on the date on which the volume of recoverable crude helium at the Federal Helium Reserve (other than privately owned quantities of crude helium stored temporarily at the Federal Helium Reserve under section 5 and this section) is 3,000,000,000 standard cubic feet.

(5)

Maximum annual sales

Notwithstanding any provision of subsection (d), for each fiscal year, the Secretary may not offer or provide for sale under this subsection a total volume of crude helium that exceeds the lesser of—

(A)

the projected maximum total production capacity of the Federal Helium Reserve during that fiscal year; and

(B)

the maximum refining capacity of persons connected by pipeline to the Federal Helium Reserve during that fiscal year.

(c)

Phase C: Access for Federal users

(1)

In general

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 to carry out this subsection.

(2)

Purchase by Federal agencies and grantees

Federal agencies, and holders of 1 or more Federal research grants related to helium or the use of helium, may purchase refined helium under this subsection for Federal uses (including medical, research, and scientific uses) from persons who have entered into enforceable contracts to purchase an equivalent quantity of crude helium from the Secretary.

(3)

Effective date

This subsection applies beginning on the day after the date described in subsection (b)(4)(B).

(d)

Auction and minimum prices determination

(1)

In general

Sales of crude helium by the Secretary in auctions under subsection (b) shall be conducted under the conditions described in this section and at no less than the minimum price established by the Secretary.

(2)

Auction

The Secretary shall conduct such auctions of crude helium as soon as practical but no later than beginning 180 days after the first day of the period described in subsection (b)(4), under the following conditions:

(A)

60 percent of the volume of crude helium made available in each auction shall be made available to entities that can show the Secretary they have either adequate refining capacity or tolling agreements for refining in place, in accordance with the conditions set forth in paragraph (3).

(B)

20 percent of the volume of crude helium made available in each auction shall be made available to any bidder, in accordance with the conditions set forth in paragraph (3).

(C)

In each auction after the first auction under this subsection after the date of the enactment of the Responsible Helium Administration and Stewardship Act, the Secretary shall make available an additional volume of crude helium, in an amount equivalent to the amount made available under subparagraph (B) that the Secretary certifies can be refined, through tolling agreements or otherwise. Of such additional volume, a person may not acquire in the auction a volume in excess of the volume they demonstrate to the Secretary they have the ability to refine through either refining capacity or tolling agreements.

(D)

The Secretary shall conduct such auctions at such times as the Secretary determines necessary to ensure a reliable supply of helium and a fair return to taxpayers, but no less frequently than 2 times each fiscal year.

(E)

For purposes of the first auction under this subsection after the date of the enactment of the Responsible Helium Administration and Stewardship Act, the Secretary may revise the percentage under subparagraph (A) so as to make available for auction 100 percent of the volume of crude helium intended to be offered.

(F)

The Secretary may adjust the percentages and amount specified in subparagraphs (A) through (C), respectively, in any auction if the Secretary determines the adjustment is necessary to—

(i)

respond to market supply and demand and minimize market disruption; or

(ii)

increase participation in helium auctions.

(G)

The Secretary may conduct an auction no more frequently than once each fiscal year of an amount of helium equal to up to 10 percent of the volume of crude helium to be made available at auction during the following fiscal year. Such amount of crude helium shall be made available to any bidder, in accordance with the conditions set forth in paragraph (3). Notwithstanding paragraph (3)(C), for crude helium sold in such an auction the Secretary shall begin charging a storage fee under clause (i) of that paragraph beginning 1 year after the date of such auction, and shall begin charging increasing storage fees under clause (ii) of that paragraph beginning 270 days after beginning charging storage fees under clause (i) of that paragraph.

(3)

Auction conditions

(A)

Bidding method

The Secretary shall conduct each auction by sealed bid for predetermined volume lots, unless the Secretary determines that an alternative bidding method may result in more revenue to the Federal Government or may increase participation in the auction.

(B)

Bidder qualifications and limits

In carrying out an auction under subsection (b), the Secretary—

(i)

may accept bids only from persons the Secretary determines are seeking to purchase helium for their own use, for refining, or for delivery to users; and

(ii)

may not award to a person more than 30 percent of the total volume of crude helium offered in that auction, except that the Secretary may adjust such limitation based on the number of bidders in the auction.

(C)

Storage fees

In each auction the Secretary—

(i)

shall begin charging each winning bidder a storage fee for crude helium purchased by the bidder that remains in the Federal Helium Reserve, beginning on the date the Secretary receives payment of the purchase price for the helium; and

(ii)

beginning 270 days after the date of the auction, shall charge increasing storage fees that will encourage the withdrawal of the helium no later than 2 years after the date of the auction.

(4)

Determination of minimum sale price

The Secretary shall make a determination of the minimum sale price for sales described in paragraph (1) using—

(A)

a confidential survey of qualifying domestic helium transactions to which any holder of a contract with the Secretary for the acceptance, storage, and redelivery of crude helium in the Cliffside Gas Field helium storage reservoir is a party;

(B)

current market crude helium prices as represented by the sale price at any auction held by the Secretary in the preceding 2 years;

(C)

the volume-weighted average cost among helium refiners, producers, and liquefiers, in dollars per thousand cubic feet, of converting gaseous crude helium into bulk liquid helium;

(D)

the additional layer of cost and profit associated with the sale or resale of bulk liquid helium; and

(E)

the sale price for crude helium offered in the most recent auction under paragraph (2)(G).

(5)

Authority of Secretary

The Secretary shall—

(A)

require all persons that are parties to a contract with the Secretary for the acceptance, storage, and redelivery of crude helium 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;

(B)

appoint a qualified independent third party to perform data collection and analysis for the purposes of the survey under paragraph (4)(A); and

(C)

adopt such administrative policies and procedures as the Secretary considers necessary and reasonable to ensure robust protection of the confidentiality of data submitted by private persons.

(6)

Changes in minimum price

If the Secretary believes that the minimum price as determined by the survey under paragraph (4)(A) may not be reflective of the current market value of helium, or if a higher minimum price may result in greater conservation of the Federal crude helium resource, the Secretary may change the minimum price charged for crude helium sold under this section by up to 10 percent of the price determined under paragraph (4). If at any sale in which the minimum price is increased under this paragraph all crude helium offered is sold at the increased price, the Secretary shall consider that increased price to be the minimum price determined under paragraph (4) for all future sales of crude helium under this section unless that price is further changed in accordance with this paragraph.

(7)

Ensuring fair and nondiscriminatory acts and practices

The Secretary may issue such rules and regulations with respect to ensure bidding, transfer, and refining of helium produced from or held in the Federal Helium Reserve as may be necessary to ensure fair and nondiscriminatory acts and practices.

(8)

Auction records

(A)

Furnishing records

Every person participating in auctions of helium from the Federal Helium Reserve shall furnish to the Secretary on request such records of transactions in helium auctions as the Secretary may require to reconstruct bidding or trading in the course of a particular inquiry or investigation being conducted by the Secretary for enforcement or surveillance purposes. In requiring information pursuant to this paragraph, the Secretary shall specify the information required, the period for which it is required, and the time and date on which the information must be furnished.

(B)

Reporting requirements

The Secretary may issue rules to require persons participating in helium auctions to file such reports as the Secretary determines to be necessary for purposes of this Act.

(C)

Recordkeeping requirements

Rules under this subsection may require specified persons to make and keep for prescribed periods such records as the Secretary determines are necessary or appropriate to ensure that such persons can comply with reporting requirements under this subsection.

(D)

Limitation on disclosure of information

Notwithstanding any other provision of law, the Secretary shall not be compelled to disclose any proprietary information required to be kept or reported under this subsection. Nothing in this subsection authorizes the Secretary to withhold information from Congress, prevents the Secretary from complying with a request for information from any other Federal department or agency requesting information for purposes within the scope of its jurisdiction, or prevents the Secretary from complying with an order of a court of the United States in an action brought by the United States or by the Secretary.

(e)

Helium Production Fund

(1)

In general

All amounts received under this Act shall be credited to the Helium Production Fund, which shall be available without fiscal year limitation for purposes considered necessary by the Secretary to carry out this subsection.

(2)

Administrative expenses

Amounts in the Helium Production Fund may be used by the Secretary to conduct helium auctions and otherwise administer this Act.

(3)

Repayment amounts

During the period described in subsection (a)(4), amounts in the Helium Production Fund in excess of amounts the Secretary considers necessary to conduct helium auctions and otherwise administer this Act shall be paid to the general fund of the Treasury and credited against all amounts required to be repaid to the United States under this Act as of October 1, 1995.

(4)

Capital investments and maintenance

Amounts in the Helium Production Fund in excess of amounts the Secretary considers necessary to carry out paragraphs (1) through (3) may be used to fund the following capital investments in upgrades and maintenance at the Federal Helium reserve:

(A)

Wellhead maintenance at the Cliffside Gas Field helium storage reservoir.

(B)

Capital investments in maintenance and upgrades of facilities that pressurize the Cliffside Gas Field helium storage reservoir.

(C)

Capital investments in maintenance and upgrades of equipment related to the storage, withdrawal, transportation, purification, and sale of crude helium at the Cliffside Gas Field helium storage reservoir.

(D)

Any other scheduled or unscheduled maintenance of the Cliffside Gas Field helium storage reservoir and helium pipeline.

(5)

Excess funds and deficit reduction

Amounts in the Helium Production Fund in excess of amounts the Secretary considers necessary to carry out paragraphs (1) through (4) shall be paid to the general fund of the Treasury and used to reduce the annual Federal budget deficit.

(f)

Extraction of helium from deposits on Federal land

All amounts received by the Secretary from the sale or disposition of crude helium on Federal land shall be paid to the general fund of the Treasury and credited against all amounts required to be repaid to the United States under this Act as of October 1, 1995.

(g)

Maintenance of helium supply

The Secretary shall ensure that there is no disruption in the supply of helium from the Federal Helium Reserve during the transition between phases of helium sales under subsections (a), (b), and (c).

.

(b)

Report

Not later than 1 year after the date of enactment of this Act and annually thereafter, the Secretary of the Interior shall submit to the Committee on Natural Resources of the House of Representatives and the Committee on Energy and Natural Resources of the Senate a report describing all expenditures by the Bureau of Land Management for operation and maintenance of the Federal Helium Reserve (as that term is defined in the amendment made by section 2(3)), investments made by the Bureau for such reserve, and scheduled or unscheduled maintenance of such reserve or its infrastructure to be conducted by the Bureau.

4.

BLM transparency requirements to facilitate market and supply chain information

The Helium Act (50 U.S.C. 167 et seq.) is further amended by redesignating sections 15 and 17 as sections 17 and 18, and by inserting after section 14 the following:

15.

Pipeline access

(a)

Annual report

The Secretary, acting through the Bureau of Land Management, shall make available on the Internet the current refining capacity on the Federal Helium Reserve pipeline, including—

(1)

refinery capacity and future capacity estimates;

(2)

ownership of federally auctioned helium held in the Federal Helium Reserve;

(3)

volume of helium delivered to individual buyers through such pipeline;

(4)

for each helium refiner—

(A)

the number of tolling agreements entered into before October 1, 2013; and

(B)

for each fiscal year thereafter—

(i)

the number of tolling agreements entered into;

(ii)

the number of tolling requests received; and

(iii)

the total volume of helium refined under each tolling agreement entered into;

(5)

pipeline pressure constraints; and

(6)

other factors that will increase transparency for persons interested in entering refining contracts with existing refiners.

(b)

New refining capacity

The Secretary shall take any applications for new refining capacity on the Federal Helium Reserve pipeline. To create more competition, any new refining capacity added to the Federal Helium Reserve pipeline system shall be granted access to crude helium that is equal to the access provided to existing refining facilities.

(c)

Access by purchasers of helium

The Secretary shall manage Federal Helium Reserve pipeline access in a competitive manner to ensure that all persons purchasing helium have equal access to timing and delivery of the helium, subject to the capacity of the system.

(d)

Scheduling deliveries

The Secretary shall, to the greatest extent practicable, make the scheduling of crude helium deliveries through the Federal Helium Reserve pipeline open and transparent to all purchasers of helium through the auction process, and to the public if the Secretary believes that it is in the national interest.

(e)

Scheduling priority

(1)

In general

In scheduling crude helium deliveries through the Federal Helium Reserve pipeline the Secretary shall grant pipeline access in the following order of priority:

(A)

Helium held in the Reserve as a result of a purchase under subsection (b)(2).

(B)

Helium sold at auction being delivered to fulfill a tolling agreement.

(C)

Other helium sold at auction.

(D)

Helium held in the Reserve as a result of a crude helium exchange resulting from any temporary shutdown of the Reserve or of a refinery on the Reserve pipeline.

(E)

Helium held in inventory in the Reserve before the date of enactment of the Responsible Helium Administration and Stewardship Act.

(2)

In scheduling such deliveries of helium described in each of subparagraphs (A) through (E) of paragraph (1), the Secretary shall grant pipeline access based on the following order of priority:

(A)

The price paid to the United States for the helium, giving higher priority to helium for which a greater price was paid.

(B)

The date the helium was purchased from the Secretary, giving higher priority to helium purchased on an earlier date.

(C)

Any other factor the Secretary considers appropriate to prioritize delivery.

16.

BLM reporting requirements to facilitate supply chain information

(a)

In general

In order to provide the market with appropriate and timely information affecting the helium resource, the Director of the Bureau of Land Management shall establish, no later than 90 days after the date of enactment of the Responsible Helium Administration and Stewardship Act, a real-time reporting process, including reporting over the Internet, to provide data that will affect the helium industry, including such effects for all persons in such industry from crude helium suppliers to end users.

(b)

Included information

Information provided under this section shall include the following:

(1)

Annual maintenance schedules and quarterly updates thereof, which shall be available on the Internet, to the extent practicable, and shall include the following:

(A)

The date and duration of planned shutdowns of the Federal Helium Reserve pipeline.

(B)

The nature of work to be undertaken, whether routine, extended, or extraordinary.

(C)

The anticipated impact on the helium supply.

(D)

The efforts to minimize any impact on the supply chain.

(E)

Any concerns regarding maintenance of the Federal Helium Reserve pipeline, pressure of such pipeline, or deviation from normal operation of such pipeline.

(2)

For each unplanned outage, the following:

(A)

The beginning of the outage.

(B)

The expected duration of outage.

(C)

A description of the problem.

(D)

The estimated impact on helium supply.

(E)

A plan to correct problems, an estimate of the potential timeframe for correction, and the likelihood of plan success within the timeframe.

(F)

Efforts to minimize negative impacts on the helium supply chain.

(G)

Updates on repair status and the anticipated online date.

(3)

Minutes of meetings between the Bureau of Land Management and the Cliffside Refiners Limited Partnership, including—

(A)

publication of the minutes of each meeting between the Bureau of Land Management and the Cliffside Refiners Limited Partnership, including attendees and their affiliations, on the Internet site of the Bureau within 1 week after the meeting; and

(B)

indication in the minutes of any action taken that could affect the supply or operating status related to the Federal helium program.

(4)

Current predictions of the lifespan of the Federal Helium Reserve, including how much longer such crude helium supply will be available based on current and forecasted demand and the projected maximum production capacity of the Federal Helium Reserve for the following fiscal year.

.

5.

Helium resource assessment and helium–3 separation

(a)

Helium gas resource assessment

Not later than 2 years after the date of enactment of this Act, the Secretary of the Interior shall—

(1)

in coordination with appropriate heads of State geological surveys—

(A)

complete a national helium gas assessment that identifies and quantifies the quantity of helium, including the isotope helium-3, in each reservoir, including assessments of the constituent gases found in each helium resource, such as carbon dioxide, nitrogen, and natural gas; and

(B)

make available the modern seismic and geophysical log data for characterization of the Bush Dome Reservoir;

(2)

in coordination with appropriate international agencies and the global geology community, complete a global helium gas assessment that identifies and quantifies the quantity of the helium, including the isotope helium-3, in each reservoir;

(3)

in consultation with the Secretary of Energy, acting through the Administrator of the Energy Information Administration, complete—

(A)

an assessment of trends in global demand for helium, including the isotope helium-3;

(B)

a 10-year forecast of domestic demand for helium across all sectors, including scientific and medical research, commercial, manufacturing, space technologies, cryogenics, and national defense; and

(C)

an inventory of medical, research, scientific, industrial, commercial, and other uses of helium in the United States, including Federal and commercial helium uses, that identifies the nature of the helium use, the amounts required, the technical and commercial viability of helium recapture and recycling in that use, and the availability of material substitutes wherever possible;

(4)

complete an assessment of options for ensuring a domestic helium supply in the future, including—

(A)

an analysis of how the Federal Helium Reserve has influenced domestic and global helium supply and prices historically; and

(B)

an assessment of options for how the Federal Helium Reserve could promote the long term availability and security of domestic helium supplies; and

(5)

submit to the Committee on Natural Resources of the House of Representatives and the Committee on Energy and Natural Resources of the Senate a report describing the results of the assessments required under this subsection.

(b)

Helium-3 separation

(1)

Interagency cooperation

The Secretary of the Interior shall cooperate with the Secretary of Energy, or a designee of the Secretary of Energy, on any assessment or research relating to the extraction and refining of the isotope helium-3 from crude helium at the Federal Helium Reserve (as that term is defined in the amendments made by section 2) or along the Federal Helium Reserve pipeline system, including—

(A)

gas analysis;

(B)

infrastructure studies; and

(C)

cooperation with private helium refiners.

(2)

Feasibility study

The Secretary of the Interior shall assess the feasibility of establishing a facility to separate the isotope helium-3 from crude helium at—

(A)

the Federal Helium Reserve; or

(B)

an existing helium separation or purification facility connected to the Federal Helium Reserve pipeline system.

(3)

Report

Not later than 1 year after the date of enactment of this Act, the Secretary of the Interior shall submit to the Committee on Natural Resources of the House of Representatives and the Committee on Energy and Natural Resources of the Senate a report that contains a description of the results of the assessments conducted under this subsection.

6.

Additional connections to the Federal Helium Reserve

The Secretary of the Interior may allow any person not connected to the Federal Helium Reserve, as that term is defined under section 2 of the Helium Act (50 U.S.C. 167), as amended by this Act, to connect to the Federal Helium Reserve for the purpose of storing helium, subject to such storage fees as may be required by the Secretary. Withdrawal of such helium shall be governed by that Act.

Passed the House of Representatives April 26, 2013.

Karen L. Haas,

Clerk