pipelines needed to store and handle both government and private crude helium. As currently required, the government will continue to collect royalties and sales fees for helium taken from federal lands. The cost of these ongoing activities will be defrayed by allowing the government operator (either BLM or a contractor) to use revenue from helium or other product sales, together with sales of excess property (e.g., helium transportation containers, compressors, and land), to establish a helium production fund. Interestingly, helium-related research money can also be taken from the fund. In the long run, however, the act assumes that all amounts in excess of operational needs will go to the Treasury, first to pay back the indebtedness of the helium program and eventually to the General Fund. The act envisions that after the disposals have been completed, the budget for helium operations will be $2.0 million or less per fiscal year.

The legislation contains a number of specific exceptions not uncommon in privatizations. For example, "the sales shall be at such times during each year and in such lots as the secretary determines, in consultation with the helium industry, to be necessary to carry out this subsection with minimum market disruption." In another instance, the act recognizes that once federal production of grade A helium ceases, federal customers will have to turn to private suppliers. While the implication is that prices might fall somewhat, there is no way to be certain until the market is fully stabilized.

P.L. 104-273 provides considerable additional detail about the liquidation of the Federal Helium Reserve that probably reflects the many concerns that were presented to the Senate Committee on Energy and Natural Resources in 1996, as well as to various other committees and panels throughout the 1990s. Other attempts to reform or eliminate the Federal Helium Reserve had fallen short or failed, and interest groups on all sides were alerted, if not alarmed, by the prospective sale of the Federal Helium Reserve. One result of this concern was the addition of Section 8, which was added to the House version by the Senate committee with a "do pass" recommendation. As stated in the Preface to this report, Section 8 (see Appendix B) of the legislation mandated that the NRC conduct a study and produce a report that assesses whether disposal of the Federal Helium Reserve "will have a substantial adverse effect on U.S. scientific, technical, biomedical, or national security interests." It should be noted that economic interests are not mentioned and that, after the NRC report is transmitted to the secretary of the Interior, the secretary is required to consult with the U.S. helium industry and the heads of any federal agencies deemed to be affected by the legislation. In the event of a determination of ''substantial adverse effect," the secretary would be free to make recommendations, including proposing remedial legislation to Congress, that would mitigate the adverse effect.

Although scientific, technical, and security concerns are prominent in the act, and especially in Section 8, it is clear that production and marketing factors will be important in determining if privatization can serve national needs and avoid "adverse effects," since the only assets subject to disposal are the federal crude helium in storage and the extraction, refining, and sales-related assets that produced BLM's grade A helium. To accurately assess the impact of the sale of the Federal Helium Reserve requires a knowledge of helium's uses (Chapter 3), its present and future supply (Chapter 4), and its market economics (Chapter 5).



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