State lawmakers pushing to shield manufacturers in New Mexico from space travelers’ lawsuits say the legal protection is the last hurdle to recruiting new companies to the spaceport, about 30 miles southeast of Truth or Consequences. The proposal will go before the Legislature this year, for the third time.
Critics say the effort is the latest in a series of demands from commercial space companies threatening to locate their companies in other states that offer a better deal, such as legal protections and millions of dollars in state-funded incentives.
The liability waiver legislation also has faced strong opposition from the New Mexico Trial Lawyers Association, which has called the effort an unprecedented rollback in legal protections.
New Mexico law already protects spacecraft operators such as Virgin Galactic, the lone tenant at Spaceport America, from lawsuits filed by space passengers who pay as much as $200,000 per ticket to someday fly into suborbital space.
But officials with Virgin and the New Mexico Spaceport Authority say other states hoping to lure companies to their own spaceports have gone one step further, adding legal protection for manufacturers.
Now backers say New Mexico needs to catch up to win new aerospace companies for New Mexico’s spaceport, bringing along a host of high-tech, high-paying jobs.
“I hate to see us not try and be competitive enough to maintain what we’ve got,” said Sen. Mary Kay Papen, D-Las Cruces, a vocal advocate for the expanded liability protections, who is expected to sponsor a Senate version of the bill.
“I think we have invested a lot,” she said. “I think we need to do everything we can, within reason, to protect our investment.”
A House version of the bill will be sponsored by Rep. James White, R-Albuquerque.
Who can sue
Under both the existing and proposed liability protection, only space travelers are or would be prohibited from filing lawsuits.
Residents on the ground who suffer injury or losses related to the space travel still have the ability to sue under the spaceport liability protections, lawmakers say.
The legal protections for spaceflight are not a new feature for risky activities in New Mexico. The state provides legal liability waivers for businesses such as ski-lift operators and horseback riding stables.
Opponents of the expanded spaceport liability waiver question whether the expanded liability protections truly are the final obstacle to other spacecraft operators and manufacturers moving their businesses to Spaceport America.
Sen. Cisco McSorley, D-Albuquerque, who voted to stall the liability bill in committee in 2012, said there’s a sense of frustration among lawmakers over recurring requests for state assistance from aerospace companies. The requests date back to the initial push for New Mexico to invest more than $200 million in taxpayer dollars to build a first-of-its-kind spaceport, he said.
“They always said every time they ever asked (the Legislature) for something, ‘This is the last time we’re ever going to need anything,’ ” McSorley said.
“If I thought for sure this was the last time they would need something, that might change my mind,” McSorley said. “Every time we turn around, there’s something else, and something else, and something else.”
Ready for departures
Advocates of the expanded liability protections, including Gov. Susana Martinez, suggest that passing the bill this year is more urgent than before, warning that inaction in the Legislature could force the spaceport to shut its doors.
“It is at risk of losing the investment of over $200 million if we don’t get smart,” Martinez said.
Supporters of the expanded liability protections point to two commercial spaceflight companies — Rocket Crafters Inc. and XCOR Aerospace — that skipped over New Mexico when relocating their companies in 2012.
Rocket Crafters has announced plans to launch spaceflights out of a Colorado spaceport near Denver. XCOR said it would launch from Florida.
Officials from the New Mexico Spaceport Authority and Virgin Galactic say the companies, both looking to start operating spaceflights of their own, passed over New Mexico in part because of the lack of manufacturer legal protections.
“This particular thing is proving to be an impediment to getting businesses in state,” Virgin Galactic CEO George Whitesides told the Journal.
An NBC News report on XCOR’s decision in August to relocate to Florida said the company chose Florida over other U.S. spaceports because the state offered it a $4 million incentive package.
An XCOR Aerospace spokesman did not return calls for comment.
Steve Vierck, president of New Mexico Partnership — a nonprofit organization created to recruit new companies to the state — said New Mexico has struggled to keep up with other states that have set aside millions of dollars in incentives to recruit aerospace companies.
“I know that we’ve had conversations with the (aerospace) companies,” Vierck said. “… Those companies have requested closing funds, essentially dollars to help reduce their startup costs, their operations (costs). That’s frankly where we’re very noncompetitive with Texas and Florida.”
Vierck noted New Mexico offers other economic incentives, such as payments for on-the-job training programs, and tax credits for hiring high-wage employees and operations at the spaceport. But he said the market to recruit aerospace companies demands more.
Some New Mexico lawmakers question whether the state will be able to keep up.
“It’s just hard to keep going down this slippery slope,” McSorley said.
“While we’re being told it’s not going to cost anything more, and this (liability legislation) is the last thing, people still have questions because it’s not altogether clear, yet I think we’re all wanting to find a solution,” the Albuquerque senator said.
Virgin Galactic’s future
The push to expand spacecraft manufacturers’ legal protections as an incentive to attract new aerospace companies is also necessary to keep Virgin Galactic’s headquarters at New Mexico’s spaceport.
Some of the fear of losing Virgin Galactic stems from remarks the company CEO made in November, warning that the company will “look at our future following this next legislative session.”
Although Virgin Galactic is expected to make its first lease payment to the spaceport today, the company’s contract with Spaceport America — negotiated during the Richardson administration — allows it to back out of its deal with the state without major penalties.
But Whitesides said Virgin Galactic is not threatening to leave New Mexico for another state if the expanded liability bill is not passed.
Rather, he said, the company is concerned it will be asked to foot all utility and other operational expenses — as required under the contract — if the state is unable to attract new commercial spacecraft companies to set up shop at the spaceport and chip in.
“In our opinion, this is a very important issue, (but) I would not phrase it ‘make-or-break’ in the sense of Virgin Galactic definitely leaves without this bill,” Whitesides said.
But Virgin says it likely can’t afford to bear the entire spaceport’s utility and operational expenses to sustain long-term operations in New Mexico.
“We want Spaceport America to be successful both in the short term and the long term. Our primary concern is if nobody else comes, in the sense of relocating their operation, then that becomes a spaceport that is centered around essentially one tenant, which wasn’t really the thing we were signing up for,” Whitesides said.
“I think the long-term future for the spaceport is in doubt if no one else moves to the spaceport,” he said.
A third try
The expanded liability protection for spacecraft manufacturers fell short in the 2012 legislative session after both a Senate and House draft died in committee.
The Senate Judiciary Committee tabled the bill after an hourslong hearing during which the New Mexico Trial Lawyers Association actively lobbied against the legislation. David Stout, then-president of the group, told lawmakers the bill amounted to “essential immunity” for a single industry.
Supporters, including Virgin and the New Mexico Spaceport Authority, argued the protection is necessary to ensure that the fledging commercial spaceflight industry isn’t wiped out by a single lawsuit from a passenger who consented to the risks before flight.
In cases of gross negligence, however, passengers or their families retain the right to sue, under the proposed New Mexico law.
Peter Mallery, executive director of the New Mexico Trial Lawyers Association, declined to comment on the advocacy group’s concerns with the spaceport liability bill. “We’re not going to talk about it right now,” he said.
The trial lawyers’ group is among the state’s most influential third-party interests. The group’s political action committee, the Committee on Individual Responsibility, contributed at least $178,500 to state legislative candidates in 2012, more than any other political organization that year, according to secretary of state campaign finance records.
The trial lawyers’ efforts to kill the legislation during last year’s legislative session rallied a new wave of support in advance of this year’s effort, including the creation of a “Save Our Spaceport Coalition” comprising tourism and community economic development groups.
The governor, a former Las Cruces prosecutor, has also joined the criticism of the trial lawyers’ efforts to derail the spaceport liability bill.
“There isn’t going to be anyone to sue anyway, because we’re not going to have the spaceport, so what’s the point?” Martinez said.
Papen, the Senate sponsor of the bill, said increased awareness of the spaceport issue and some new faces on the Senate and House committees where the legislation previously stalled could mean a different outcome in 2013.
“I think we have a wonderful opportunity,” Papen said, “And I hate to see us give it up because we’re not willing to be competitive.”
— This article appeared on page A1 of the Albuquerque Journal