Virgin Galactic, the company that plans to fly customers into outer space from the state-funded Spaceport America in Southern New Mexico, has reached a compromise with trial lawyers concerning an insurance controversy that might have jeopardized Virgin’s plans to stay at the spaceport.
George Whitesides, president and chief executive officer of Virgin Galactic, told The New Mexican on Tuesday that he supports the compromise, which was announced earlier in the day by top Democratic leaders in the Legislature.
“The outlines of the proposal seem to help maintain New Mexico’s leadership in commercial space,” Whitesides said. “I think if passed this would bring New Mexico closer to other states’ legal environment.”
New Mexico already has spent $209 million on creating the facility near Truth or Consequences. The issue hanging up the process was passage of legislation to prevent passengers who sign “informed consent” waivers from suing parts suppliers and manufacturers involved in building Virgin’s spacecraft.
Virgin Galactic has maintained that the liability law is necessary to lure other aerospace companies to also use the spaceport, providing additional revenue to support the operation. The New Mexico Trial Lawyers Association has argued that such a waiver would amount to a loss of legal protections for Virgin’s customers.
Such legislation has failed to pass the Legislature for several years. As a result, current state law protects Virgin Galactic from being sued by passengers, but doesn’t protect the suppliers and manufacturers.
Senate Majority Leader Michael Sanchez, Senate President Pro Tem Mary Kay Papen, House Speaker Kenny Martinez and other leaders held a news conference to announce the compromise. The new proposal would set a cap on liability for the suppliers and manufacturers. It also would extend the contract between the spaceport and Virgin to 2021. Currently, the contract expires in 2018.
The bill has yet to be drafted, legislators said. They expected the measure would be ready to introduce by Wednesday, Jan. 23.
A spokesman for Gov. Susana Martinez issued a statement Tuesday that “protecting the $209 million taxpayer investment in the Spaceport by passing a bill preventing lawsuit abuse is one of Gov. Martinez’s top priorities for this session. The governor met with leaders from Virgin Galactic today and is hopeful that the final legislation that passes will lead to the company’s commitment to stay in New Mexico, and that it will lead to making New Mexico capable of attracting other space industry business.”
Whitesides said Martinez “has played a key role in keeping this issue elevated throughout the past months.”
Both Papen and Rep. James White, R-Albuquerque, have introduced bills in the current session that are similar to the bills that failed in past sessions.
Sen. John Arthur Smith, D-Deming, said Sanchez deserves much of the credit for pushing both sides to negotiate. The talks began last summer.
Legislators said the compromise bill would mirror laws in Florida and Colorado, other states that are competing for commercial space flights.
Whitesides said the other states don’t have the same insurance requirement that is in the compromise negotiated with the trial lawyers. “But my understanding is that in other respects it would be similar to Colorado and Florida,” Whitesides said.
“What we have been saying for a long time is that the natural attributes of New Mexico make it a perfect leader for commercial space,” Whitesides said. “That includes everything from, obviously, the spaceport facility itself to the weather, to the altitude, the airspace, to the [proximity to] federal facilities. What is necessary is continued efforts by the New Mexico Spaceport Authority to recruit additional businesses and, frankly, I think another big part of it is for us to get through the end of our development program and start operating.”
Whitesides said commercial space flights by Virgin Galactic using the spaceport could begin as soon as the end of the year — assuming the company’s test-flight program, currently taking place in Mojave, Calif., is successful.
The company has a 20-year lease to base flight operations at the spaceport. According to lease terms, breaking the lease would cost Virgin Galactic $500,000 or $2 million, depending on the circumstances. The company announced earlier this month that it will begin paying rent to the spaceport — nearly $86,000 a month.
A fiscal impact report by the Legislative Finance Committee on the current Papen and White bills says losing Virgin Galactic would be devastating for Spaceport America. “Without an anchor tenant, the $209 million publicly-financed Spaceport America and the New Mexico Spaceport Authority may not be economically self sustaining in the near- or long-term,” the report says.
“Beyond affecting Virgin Galactic, the [Space Authority] believes the same concerns will negatively impact our ability to attract other space flight entities, tenants, and users at Spaceport America. Three separate potential tenants at Spaceport America, XCOR Aerospace, Sierra Nevada Corporation and Rocket Crafters Inc., have all recently indicated an unwillingness to move to New Mexico and operate from Spaceport America absent this legislation.”
Contact Steve Terrell at firstname.lastname@example.org. Read his political blog at roundhouseroundup.com.