I seek to offer an amendment and address the House. Mr. Chairman, our amendment, the Dent-Higgins-Esty amendment, ensures the continued supply of helium for end users while requiring the BLM, Bureau of Land Management, to honor existing…
I seek to offer an amendment and address the House.
Mr. Chairman, our amendment, the Dent-Higgins-Esty amendment, ensures the continued supply of helium for end users while requiring the BLM, Bureau of Land Management, to honor existing contracts for the supply and delivery of this vital resource. Most importantly, the amendment protects American manufacturers who use helium from the uncertainty of a disrupted helium supply. It's absolutely essential.
Some of my colleagues have repeatedly stated that helium has been given away by BLM at rock-bottom prices to ``a monopoly of refiners.'' Respectfully, the current price structure says otherwise.
Since BLM began selling off helium under this program, during most years far less than all the helium available to be purchased was purchased. In fact, during some years, no helium was purchased at all.
If the price were really so low, wouldn't all the available helium have been purchased? Instead, the BLM price set for the purchase of crude helium has been higher than the crude price for helium purchased elsewhere in the United States. Further, there is absolutely no bar to the taxpayer getting much more revenue from helium sales today. BLM can impose higher prices for helium right now. In fact, over the past 3 years, BLM has raised its prices by 30 percent.
When the Congress in 1996 decided to privatize helium in the BLM reserve, a few companies stepped up and spent tens of millions of dollars to build a helium enrichment unit, which the BLM operates, a highly unusual public-private partnership. If there are only a few companies who refine helium out of the BLM reserve today, it is because they, and not their competitors, chose to make investments that have benefited our Nation's manufacturers and society generally.
Our amendment does not seek to preserve a so-called ``monopoly'' over our Federal helium supply. Instead, our amendment seeks to uphold these existing contract and property rights while ensuring a continued supply of helium for domestic manufacturers. In fact, many welders, the Welders Association, Welders Distributors Association, strongly support this amendment because they are deeply concerned. I'm just going to quickly read what they said. They are deeply concerned about ``the effect of the remedies fashioned in H.R. 527 on the stability of the existing market for helium particularly as they affect the ability to meet contractual obligations for product supply.''
With that, I reserve the balance of my time.
At this time, I would like to yield 1 minute to my colleague from New York (Mr. Higgins).
Mr. Chairman, I yield 1 minute to the gentlelady from Connecticut (Ms. Esty).
Mr. Chairman, how much time remains?
Mr. Chairman, I just want to quickly address a few of the issues.
My friend, Mr. Holt, said that these reservoirs will be depleted. I agree. The issue is who's going to invest in an enrichment and refining facility at a reservoir that's going to be depleted in 5 years. Nobody's going to make that investment. That's really what's at issue here.
The prices of helium have gone up. BLM can charge more. Our amendment is about respecting preexisting contracts and about protecting property rights while ensuring continued supply of helium to American manufacturers.
Without this amendment, there will be a real disruption of supply for helium because they won't be contractually able to release that helium. They will be under no obligation to release it, so I think that is the greatest threat. This amendment protects the helium supply. As has been mentioned, MRIs, computer chips, and fiber optics all need this. American manufacturing needs this. Support this amendment. Vote for a helium supply. And again, vote to support our welders.
I yield back the balance of my time.
Gases and Welding
Distributors Association,
Doral, FL, April 25, 2013.
Hon. Charlie Dent,
House of Representatives,
Washington, DC.
Dear Mr. Dent: The Gases and Welding Distributors
Association (``GAWDA'') offers its support to your proposed
amendment to H.R. 527, legislation to reauthorize the sale of
the Federal Helium Reserve.
GAWDA is a national trade association representing the
interests of some 500 companies that distribute compressed
and liquefied gases and related welding equipment, and
includes some 300 additional companies that supply products
or services to the gases and welding industry. GAWDA
distributor members sell a variety of products, including
helium, oxygen, argon, nitrogen and carbon dioxide, as well
as specialty gases and mixtures, to customers involved in
manufacturing, construction, welding, research, health care,
and biomedical engineering.
Most GAWDA members are small businesses. Approximately 85
percent of GAWDA distributors have less than $10 million in
annual gross revenue, so they have limited leverage in
negotiating supply agreements for products. In the vast
majority of cases, GAWDA distributors will contract
exclusively with a single manufacturer (or in the case of
helium, a refiner) for a comprehensive menu of gas products.
The contract generally will provide all of the distributor's
needs for all of those gases.
In addition, the distributor will generally contract with
its customers in an exclusive ``requirements'' arrangement to
supply all of the customer's needs for a variety of gases as
well. A small distributor might have a couple of dozen
contracts to supply helium and other gases to customers,
while a large distributor might have several hundred or more
of these requirements contracts.
The GAWDA distributor will typically purchase bulk helium
in gaseous form from a refiner; the distributor will then
repackage the helium into compressed gas cylinders and
deliver them to customers for their use.
GAWDA distributors are concerned, however, about the effect
of the remedies fashioned in H.R. 527 on the stability of the
existing market for helium, particularly as they affect the
ability to meet contractual obligations for product supply.
A periodic auction mechanism would set up a spot market for
helium. If an established refiner is not able to secure all
of the crude helium that it requires to meet the supply
obligations set out in its contracts, then some distributor
customers will receive less than their contractual allotments
of helium, or perhaps none at all. The distributor will be
forced to seek other sources of supply, presumably only if a
force majeure clause in the agreement allows the distributor
to obtain replacement product from another supplier.
In turn, if the distributor defaults, the distributor's
customers might be forced to seek alternative supplies of
helium for at least part of their needs for that period, and
to pay above market prices to the winning auction bidder(s)
to ensure a continuous supply of product. This also raises
questions of the effect on the contractual obligations to
sell and purchase the other gases in the contracts.
This same scenario will play out each time an auction is
held, several times a year. Refiners, distributors and end
users will not know which parties will have adequate supplies
of helium to meet existing contractual demands. This will
generate legal questions about contract default, partial
product allocations, mitigation of damages, and obligations
to cure, as well as commercial questions about which parties
may be able to meet supply obligations on a consistent basis.
The distributor will have to resolve these issues with each
customer for that auction period; when another auction takes
place, and different sales volumes of helium are awarded by
BLM to new bidders, the distributors will have to go through
the same
legal and commercial exercise to ensure that each of their
customers will receive enough product to meet its
requirements.
An unreliable product stream for helium will make it
difficult for any distributor to entertain long-term,
exclusive supply arrangements with customers that foster
stable commercial relations and support economic growth.
Your amendment would protect those existing agreements
between the Bureau of Land Management and refiners for a
sufficient period to allow refiners and distributors to
develop alternative arrangements and to access new supplies
of crude helium. That approach will help to ensure a reliable
supply of this critical product to all end users.
Thank you for your assistance with this issue.
Best Regards,
Richard P. Schweitzer,
General Counsel.
Mr. Chairman, I demand a recorded vote.