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Report: Federal Helium Program Full of Hot Air

POSTED: 05:31 PM ET, 08/21/2008 by Derek Kravitz

"Washington Watchdogs," a periodic feature of the Post's Investigations blog, looks at the findings of the federal government's official investigators.

The federal government, the chief supplier of the nation's crude helium, has entered into sweetheart deals with a group of private refiners, potentially costing taxpayers more than $100 million, according to an inspector general's report (PDF) released this week by the Department of Interior.

The report faulted the Bureau of Land Management's Amarillo field office for making improper deals with four refiners mining a crude helium pipeline stretching from a field northwest of Amarillo, Tex., to central Kansas. The refiners -- operating behind a private shell company formed in July 2000 -- negotiated huge profits by overcharging for construction equipment construction, the report found. Investigators said the arrangement could have more than doubled the government's equipment costs by the time the contracts expire in 2015.

The report didn't name the private company involved in those agreements, but Bureau of Land Management and Department of Interior officials confirmed today that Amarillo-based Cliffside Refiners L.P. was the subject of the investigation.

The Inspector General's office said it began investigating the helium deals after whistleblower flagged a "less-than-arms-length relationship" between government workers in the Amarillo field office and helium contractors. Helium is a key ingredient in federal space shuttle operations and weapons development programs.

According to the report, a former Amarillo field office manager said the bureau agreed to the deals in violation of contracting and procurement rules "because it did not want to fight the refiners," who had lobbied Congress on behalf of a 1996 law privatizing helium refinement and production. The report blamed the violations in part on a lack of oversight by the bureau's New Mexico office and Fluid Minerals Division.

Tony Herrell, deputy state director of the New Mexico office, said his office was taking the report "very seriously," but cautioned that the findings had not been independently substantiated yet.

"We want to bring in a team of experts in contracting and agreements to do a thorough review so we can do the right thing," Herrell said. "We realize after the initial reading that they've done their investigation but have not done the verification."

Herrell noted that the agreements with Cliffside Refiners is based off of an existing anti-trust law and that it has been "mutually beneficial" for the government and the company, which has a limited partnership in Delaware, a tax haven for many private firms.

By Derek Kravitz |  August 21, 2008; 5:31 PM ET Washington Watchdogs
Previous: A New Report on Missing White House E-Mails | Next: Michelle Obama, David Axelrod and the University of Chicago Medical School


Please email us to report offensive comments.

What's Hundred Million to Republicans the De-regulators, the No Bid, No Over Sight, The definition of a Republican is to prove Gov't doesn't work and they're such innate criminals that it's a no brain-er --- they will do anything and everything to screw the system to their corporate power - Every one of these vermin will have some ca ca ma mee excuse if it ever gets to the revelation of corruption that is the epitome of Republicans

Posted by: Darwin26 | August 22, 2008 2:10 AM

Considering how important to science and manufacturing Helium is, this debacle is pretty bad news. It looks like privatization is a complete failure in this case.

Posted by: Nym | August 22, 2008 3:42 AM

Helium is one of the few things in this world that I know a lot about and this article is more suited for the tabloid press. Either the author is intellectually dishonest or hasn't researched his subject.
1. Delware Corporations are "sham" companies. Can he be serious?
2. Every year the government auctions helium to whomever wants to buy it.
3. The equipment was bid competively.
4. When the government produced helium and sold it commercially it was with 50 year old technology, bureaucratically overloaded,as was the cost to the tax payers.
5. The revenue the gov't now receives pays off the costs the taxpayers were burdened with going back to the 1960's.
Was this really published in the Washington Post?

Posted by: Jim | August 22, 2008 6:32 AM

Follow the money. We'll find still more corrupt Bushies.

Posted by: Frodot | August 22, 2008 6:47 AM

Seems Cliffside Refiners is a subsidiary of
Praxair, Inc. ( This is a huge enterprise worldwide....smells like Dick Cheney to me!

Posted by: avahome | August 22, 2008 10:20 AM

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