NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

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(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB458, HB551

SOURCES OF INFORMATION

LFC Files

Economic Development Department (EDD)

SUMMARY

Synopsis of Bill

The bill would appropriate $1,810.0 general fund in FY99 through FY2001 to EDD for environmental impact statements, water resource studies and proposal development to establish Dona Ana county as the first United States commercial spaceport. The appropriation is contingent upon the EDD being notified by the prime federal contractor that Dona Ana county is a finalist in the national site competition. Unexpended balances remaining at the end of FY2001 would revert to the general fund. The bill contains an emergency clause.

Significant Issues

In January 1998, Lockheed Martin initiated a process to choose one or more spaceport sites for launching and landing the VentureStar reusable launch vehicle (RLV), the next generation of space vehicles after the space shuttle. As many as 14 states, including New Mexico, are in competition to become the spaceport site.

In preparing New Mexico's response to the request for proposals (RFP) from Lockheed Martin, the Office of Space Commercialization (OSC) in the Economic Development Department has identified two alternative New Mexico sites-Upham (about 35 miles north of Las Cruces) and Orogrande (at the southeast corner of White Sands Missile Range)-which could be submitted to Lockheed Martin. Depending on which site Lockheed Martin prefers, the OSC would require as much as $1.81 million to purchase water rights and to prepare an environmental impact statement. If the Orogrande site were selected as a finalist, the OSC would need to complete a new environmental impact statement at a cost of about $1,015.0. If the Upham site were selected as a finalist, the OSC would need about $500.0 to update an existing environmental impact statement. For either site, the OSC would need about $400.0 to purchase water rights. Additionally, the OSC has requested $260.0 in contractual services for project management and technical support in preparation of New Mexico's response to the Lockheed Martin RFP. This bill provides full funding for the EDD request under the worst case scenario.

According to EDD, there are two significant technical problems in this bill. First, the bill specifies that the spaceport be located in Dona Ana county. The Upham site is 95 percent in Sierra County and the Orogrande site is in Otero county. EDD is concerned that the bill may not support either site. Second, the bill requires that a federal contractor select a finalist for the spaceport. Although Lockheed Martin is a federal contractor on developing the prototype X-33, the VentureStar site selection is not a "federal contractor" process, according to EDD. The VentureStar site selection process is a pure commercial endeavor-that of reducing the cost of access to space through commercial means.

FISCAL IMPLICATIONS

The appropriation in the bill reflects the EDD request for this purpose.

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

This bill relates to SB458 and HB551. SB458 provides funds for the environmental impact statement and purchase of water rights under the worst case scenario ($1,550.0), but includes only $50.0 for RFP preparation. HB551 which fully funds the OSC request without the Dona Ana county language.

TECHNICAL ISSUES

EDD recommended that page 1, line 22 and page 2, line 1 be amended to remove the reference to Dona Ana county and insert "southern New Mexico as the site".

EDD recommended that page 1, line 25 be amended to replace "the prime federal contractor" with "Lockheed Martin"

DH/njw