Virgin Galactic Could Pull Out of New Mexico Without Liability Protection Expansion

Richard Branson and then New Mexico Gov. Bill Richardson at Spaceport America during happier times back in 2010.

On Dec. 13, 2005, Richard Branson and New Mexico Economic Development Secretary Rick Homans appeared at a press conference at The Science Museum’s Alien Exhibition hall in London to announce they had ironed out a 20-year lease agreement to bring Virgin Galactic to Spaceport America. The first suborbital tourism flights were then set for late 2008 or early 2009.

Exactly seven years later, the whole venture is in trouble. The Virgin Galactic Gateway to Space, the company’s fancy name for the terminal hangar, is still incomplete and running years behind schedule. With the facility unfinished, the state has not seen a penny of the $1 million in annual rent Virgin Galactic is set to pay.

Meanwhile, over in California’s Mojave Desert,the development of SpaceShipTwo continues to move ahead slowly as costs mount. The eight-person space plane has yet to make a powered flight after eight years of development. Commercial flights could begin 2014, some five years behind schedule. Providing, of course, that they have a full-scale engine to test. And it’s not entirely clear that they do.

Now, yet another problem has arisen. Virgin Galactic is strongly hinting that it will pull out of New Mexico completely unless the Legislature gives the company broader immunity from lawsuits if they injure or kill any of their well-heeled passengers. If the company does pull out, New Mexico’s taxpayers will be left with an empty facility that has cost $209 million of their money.

Virgin Galactic has immunity from lawsuits as a spaceflight operator except in cases of gross negligence or intentional harm. The company — which is building SpaceShipTwo and its WhiteKnightTwo carrier aircraft — wants that immunity protection extended to spacecraft builders like itself and its parts suppliers.  Several previous attempts at extending this protection have failed due to opposition from trial lawyers.

It appears that, given the state of the spaceport’s construction and the terms of the lease, there is little to stop Virgin Galactic from pulling up stakes if it doesn’t get what it wants.

Due to delays in both the construction of Spaceport America and development of Virgin’s spacecraft, the company has yet to begin paying rent on the facility, which is located in remote southern New Mexico, about 45 miles from Las Cruces and 200 miles from Albuquerque.

An unsigned, undated copy of the lease agreement provided by the state calls for Virgin Galactic to be penalized $2 million if it breaks it lease with New Mexico and then begins flying elsewhere within two years. But state officials said Wednesday the company won’t post that deposit until it activates the lease.

In addition to protecting Virgin Galactic, state officials see the liability protection as essential to attracting other commercial space operators to the desert facility. The additional tenants would make the spaceport self-sufficient and attract related businesses to the remote location north of Las Cruces, delivering on economic development promises that former Gov. Bill Richardson made while getting the project through the Legislature.

It also appears that Virgin Galactic and state officials have found a way to skirt public disclosure about the state of the space company’s business.

When asked for copies of the quarterly business plans Virgin Galactic is supposed to submit to the state, officials with the state economic development said those updates were given orally to Anderson.

There are only a couple of reasons why you don’t put things in writing. And none of them are especially conducive to the requirements of public disclosure on taxpayer-funded projects.

My guess is that the Legislature will pass the measure next year, if for no other reason than to not have a $209 million taxpayer-funded government boondoggle fading away out there the hot New Mexico sun miles from nowhere and with no discernible purpose save for launching  a handful of sounding rockets each year. Selecting between that outcome and disappointing trail lawyers should be an easy decision.

As for the rights of the passengers who are rich enough to spend $200,000 to risk their lives on a first-generation commercial spaceship for a few minutes of weightlessness and an awesome view of Earth. Well…. the Legislature has already signed away a good many of their rights already. Why not go all-in?

  • This makes my stomach sink and not from the effects of a parabolic flight.

  • Carolynne

    Well – less than the truth, concealment, not playing by the rules… seem like the standard Modus Operandi for Virgin. Now it’s a power-play to twist the arm of the New Mexico Legislature to give everybody a free hand to screw up.
    We still haven’t had the full story on how come ‘Stable and Benign’ Nitrous Oxide managed to kill three people.
    ‘Informed consent’ implies that the passengers are given the full information. Like – just how dangerous a self-pressurising Nitrous Hybrid really is??
    Let’s face it, if a passenger dies, he’s not likely to sue. That would be his family then. I doubt anyone can sign away their right to sue. Anyway -what will constitute ‘Gross Negligence’. Plenty for some very expensive lawyers to argue about there.
    When you do business with Virgin, it’s best to count your fingers after the handshake.
    How on earth did the New Mexico taxpayer get landed with this lot?

  • CheapGuy

    Actually the legislation would protect against heirs and the such filing a lawsuit. Wording such as below would be/has been included:

    “ participant, participant’s representative, including the heirs, administrators, executors, assignees, next of kin and estate of the participant … may bring or maintain an action against or recover from a space flight entity for a participant injury that resulted from the risks of space flight activities.”

    I do hope that there is a very strong statement about how dangerous this is. I don’t care about the wealthy dying – their families/heirs will be fine financially without any lawsuit. My concern is prize winners and others who somehow get free or heavily discounted trips. They may feel pressured into doing something they wouldn’t otherwise do if they really understood the risks.

  • Carolynne

    That’s some wording! I doubt that it would stand in law. I know of no precedent for signing away the rights of others. There are so many holes in this idea of limiting liability, one wonders what’s really going on.
    The lawyers aren’t all stupid, they must know that all an act like this will do is vastly inflate the costs of legal action (challenging the legislation, arguing about ‘Gross Negligence’ and so on).
    The wealthy families will certainly be able to afford to sustain such legal actions. It’s all so full of holes – the Swiss may have a new brand of cheese!
    Let’s face it, Spaceship Two may never fly with passengers. (I hope it doesn’t).
    Is this all posturing for a convenient way out for Virgin?