New Mexico taxpayers have made a $209 million investment into Spaceport America but if its anchor tenant, Virgin Galactic pulled out, the state would get only a “very limited” amount of money back in financial clawback provisions, the director of the Spaceport Authority told Capitol Report New Mexico.
Virgin Galactic has signed a 20-year lease with Spaceport — billed as the world’s first commercial port built specifically for sending tourists and payloads into space — but the company headed by billionaire Richard Branson said last month it may leave southern New Mexico if the state legislature does not pass liability protection guarantees for manufacturers and suppliers of private spaceflight operators such as Virgin Galactic.
Should the legislation not pass — as it has in the last two Roundhouse sessions — and Virgin made good on its threat, what kind of financial clawbacks are in place for New Mexico?
“There are some, they do owe a little bit of money [should Virgin Galactic pull up stakes], but not a great deal,” authority executive director Christine Anderson told Capitol Report New Mexico Tuesday night (Dec. 11) after giving a presentation in Santa Fe.
“I think somewhere in the ballpark of about $1.5 to $2 million, so it’s very limited,” Anderson said. “That’s the way the agreement was written was written several years ago, before my time certainly. So it’s important, this piece of legislation is really important.”
Last month, Virgin Galactic President George Whitesides told SpaceNews, an online publication of record for civil space, military space, commercial space and satellite communications business, “We’re going to look at what the legislature does and then evaluate our stance toward the spaceport after the session,” adding, “It’s a serious issue and a big deal for us. If we’re the only tenant at the spaceport, then it is unlikely the spaceport will be healthy.”
Other states [such as Texas, Virginia, Colorado and Florida] competing with Spaceport fully indemnify manufacturers and suppliers in event of an accident. New Mexico law is limited to protecting firms operating spacecraft from claims filed by clients who have signed informed consent agreements and waived liability before they fly.
But the bill hasn’t gotten past the committee level at the Roundhouse and the legislation has its share of critics from trial lawyers and legislators, who say the exemption is unnecessary.
“Where does it end,” asked Sen. Eric Griego (D-Albuquerque) in a committee hearing last February, “just because a company says they’re going to move to Nebraska or China we have to do the same?” In the same meeting, Sen. Lisa Curtis (D-Albuquerque), who is a trial lawyer, argued that by rejecting the exemption, New Mexico could actually attract more people to Spaceport because the state would have stronger protections for passengers.
“This piece of legislation only applies to the passengers,” Anderson countered on Tuesday night. “If that spacecraft falls on you or me, or your house or my house we can sue … and even the passengers on board can sue even if they sign it if an accident is due to gross negligence.”
Roundhouse legislators will tackle the bill again in the upcoming 60-day session that begins Jan. 15.
As for the Spaceport lease agreement with Virgin Galactic, back in 2008 the Branson-backed enterprise reached a deal with then-Gov. Bill Richardson – himself the driving force behind making the venture in a remote area 24 miles from Truth Consequences a reality by convincing lawmakers in Santa Fe to fund the $209 million project with taxpayer dollars as a venture to draw industry and development to the state.
Should Virgin leave and New Mexico get just $1.5-$2 million in clawbacks, it will bring up memories of the closing of Schott Solar earlier this year.
In that instance, Schott Solar shut down its firm in Albuquerque and the company didn’t have to return any of the $16 million it received from the state under an agreement signed during the Richardson administration.
In October, Richardson signed a contract to lobby for the Mojave Air and Space Port in California. The Mojave director told the Albuquerque Journal Richardson was hired to help get manufacturers exemption legislation passed by the California legislature.
Current Gov. Susana Martinez has warmed to Spaceport and posed for pictures with Branson at the futuristic facility’s dedication in October of 2011. At a price tag of $200,000 per passenger, Virgin Galactic will offer 2.5-hour suborbital flights beyond the confines of the earth’s atmosphere. A number of people, including actor Ashton Kutcher, have already signed up.
While Virgin Galactic — described as a “horizontal launch” customer — draws most of the attention to Spaceport, it has yet to launch customers into suborbit. Anderson said Tuesday the company hopes for an inaugural flight in late 2013 or early 2014.
There are other firms using Spaceport already, though, and Anderson says there have been 17 “vertical launches” by companies such as Armadillo Aerospace. But Anderson says Armadillo has threatened to leave as well if the exemption legislation is blocked.
Here’s more from our interview with Spaceport Authority director Anderson:
And here’s a quick interview with Paul Gessing of the free-market think tank, the Rio Grande Foundation. The foundation was a critic of Spaceport from its beginning but now that the state has sunk $209 million into the project, Gessing hopes it can turn a profit for taxpayers:
Full disclosure: Capitol Report New Mexico is funded by the Rio Grande Foundation.
Update: Anderson and Gessing appeared in Santa Fe before the Friends of Capitalism, a citizens group that describes itself as believing in “Free Enterprise, Individual Rights, Low Taxes, Small Government, and minimal government intrusion into the private lives of all citizens.” Here’s the group’s website: http://friendsofcapitalism.com/