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Only $1.5-$2 million in clawbacks for Spaceport should Virgin Galactic leave

By   /   December 12, 2012  /   No Comments

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.

Richard Branson at Spaceport dedication, courtesy AFP

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.

How much?

“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.

“We think that for [New Mexico] to be competitive it has got to pass a bill that brings it into parity with the other states,” Whitesides said, adding the legislation is “a no-brainer.”

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/

Click here to LEARN HOW TO STEAL OUR STUFF!

Rob Nikolewski is the National Energy Corrrespondent for Watchdog.org. He is based in Santa Fe, N.M. Contact him at rnikolewski@watchdog.org and follow him on Twitter @NMWatchdog.

  • jim

    Branson (dba Virgin) has been on a free ride ever since Richardson gave him the ticket. (at our expense)

    And now he’s THREATENING the NM Legislature-and therefore the taxpayers of NM (Sierra and Dona Ana Counties in particular). This is absolute coercion and should not be tolerated. In essence Branson is biting the hand that has been feeding him. Neither Spaceport nor Branson has delivered on any of their promises of prosperity. In fact, it’s been quite the opposite.

    Let him bail–good riddance-we don’t need an imported bully. Then let NM move forward in a positive non-corruptive atmosphere.

  • erikhawkes

    Clawback

    1. Money or benefits that are distributed and then taken back as a result of special circumstances.

    http://www.investopedia.com/terms/c/clawback.asp

    This is the State demanding a do-over. I first heard the term Clawback in late 2008. It is a new term. It is generally referenced when a public-private partnership collapses and the State wants their money back.

    https://sites.google.com/site/erikhawkes/Home/how-ppps-really-work

    This is also theft. Once money or benefits are distributed to another individual or entity, the giver cannot confiscate those assets unless ordered to do so by a court of law. This is the new era of American Fascism. The State as a predator with Claws.

    https://sites.google.com/site/erikhawkes/Home/clawback

  • L.E. Liesner

    We in Otero County were offered the same deal like Sierra and Dona Ana counties to tax ourselves for spaceport, fortunately we turned it down. Now we see that the trial lawyers have so much power over the legislature that the spaceport is going to become a state wide burden upon the taxpayers. Sweetheart deals made by the last administration just added to the problems we face today. As a last thought, if conservative legislators were holding up this project they would be under attack like a duck on a June bug.

  • erikhawkes

    Augustin Plains Ranch (public-private partnership)

    private ownership of the public water supply is very bad … where’s the news media coverage of all this? they’ve not said a word about this proposed project being a public-private partnership.

    silence!

    http://adventuresofagreenhorn.blogspot.com/2012/12/augustin-plains-ranch-public-private.html

  • Jason M

    Just like NM to get an inch from the finish line and sit down.

    Looks like Texas is gonna gain again from NM’s idiocy. The Dems will score a victory and the Spaceport will rot in place.

    That’s New Mexico!

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