New Mexico tax authorities denied an application this spring by Rust Movie Productions for incentives worth as much as $1.6 million, according to documents obtained by The Associated Press. A late July deadline for producers to appeal the decision is approaching.

Meanwhile, Baldwin is scheduled to go on trial starting next week on an involuntary manslaughter charge in Halyna Hutchins’ death. The lead actor and co-producer of “Rust” was pointing a gun at Hutchins when it went off, killing her and wounding director Joel Souza.

Melina Spadone, an attorney representing the production company, said the film production tax incentive was going to be used to finance a legal settlement between producers and Hutchins’ widower and son.

“The denial of the tax credit has disrupted those financial arrangements,” said Spadone, a New York- and Los Angeles-based senior counsel at Pillsbury Winthrop Shaw Pittman. She helped broker the 2022 settlement that rebooted the stalled production of “Rust” in Montana with some of the original cast and crew, including Baldwin and Souza. Filming wrapped up last year.

Terms of the settlement are confidential, but producers say finishing the film was meant to honor Hutchins’ artistic vision and generate money for her young son.

Court documents indicate that settlement payments are up to a year late, as attorneys for Hutchins’ widower determine “next steps” that include whether to resume wrongful death litigation or initiate new claims. Legal representatives for Matthew Hutchins did not respond to telephone and email messages seeking comment.

The prosecution of Baldwin and the film’s tax incentive application both have financial implications for New Mexico taxpayers. The Santa Fe district attorney’s office says it spent $625,000 on “Rust”-related prosecution through the end of April.

The state’s film incentives program is among the most generous in the nation, offering a direct rebate of between 25% and 40% on an array of expenditures to entice movie projects, employment and infrastructure investments. As a percentage of the state budget, only Georgia pays out more in incentives.

It includes a one-time option to assign the payment to a financial institution. That lets producers use the rebate to underwrite production ahead of time, often layering rights to the rebate and future movie income into production loans.

Among the beneficiaries of the rebate program are the 2011 movie “Cowboys and Aliens” and the TV series “Better Call Saul,” a spinoff of “Breaking Bad.” As for current productions, New Mexico is the backdrop for a new film starring Matthew McConaughey and America Ferrera about the rescue of students in a 2018 wildfire in the town of Paradise — the most destructive in California’s history.

Charlie Moore, a spokesperson for the New Mexico Taxation and Revenue Department, declined to comment specifically on the “Rust” application, citing concerns about confidential taxpayer information. Applications are reviewed for a long list of accounting and claim requirements.

During a recent 12-month period, 56 film incentive applications were approved and 43 were partially or fully denied, Moore said.

Documents obtained by AP show the New Mexico Film Office issued a memo in January to “Rust” that approved eligibility to apply for the tax incentive, in a process that involves accounting ledgers, vetting against outstanding debts and an on-screen closing credit to New Mexico as a filming location. Taxation officials have final say on whether expenses are eligible.

Spadone, the attorney for “Rust,” said the denial of the application is “surprising” and could disrupt confidence in the tax program with a chilling effect on rebate-backed loans that propel the local film industry.

Alton Walpole, a production manager at Santa Fe-based Mountainair Films who was not involved in “Rust,” said he faults the movie’s creators for seemingly cutting corners on safety but officials have an obligation to review its tax credit application based on legal and accounting principles only — or risk losing major projects to other states. Movies are inherently dangerous even without firearms on set, he noted.

“They’re going to say, ‘Wait, are we going to New Mexico? They could deny the rebate,’” Walpole said. “They’re watching every penny.”

“Popular opinion? I’d say don’t give them the rebate. But legally, I think they qualified for it all,” he said.

At least 18 states have enacted measures to implement or expand film tax incentives since 2021, while some have gone in the opposite direction and sought to limit the transferability and refundability of credit.

Under Democratic Gov. Michelle Lujan Grisham, New Mexico has raised annual spending caps and expanded the film tax credit amid a multibillion-dollar surplus linked to record oil and natural gas production. Film rebate payouts were $100 million in the fiscal year ending in June 2023 and are expected to rise to nearly $272 million by 2027, according to tax agency records and the Legislature’s budget and accountability office.

Democratic state Sen. George Muñoz has criticized the incentive program and asked whether taxpayers should be responsible for unforeseen expenses.

“If we’re going to do tax credits and there’s a problem on the film or the set, do they really qualify or do they disqualify themselves?” said Muñoz, chairman of the lead Senate budget writing committee.

“Rust” does not yet have a U.S. distributor as producers shop the newly completed movie at film festivals.

WEST TEXAS, Texas (KOSA) – A controversial nuclear waste storage proposal is facing significant opposition in the Permian Basin, particularly in New Mexico.

Background and Legal Battle:

The federal government is prohibited by law from engaging in temporary storage of nuclear waste without a permanent disposal plan. However, private companies like Holtec International have found a loophole that allows them to take on this responsibility. Holtec and the NRC have appealed to the U.S. Supreme Court to reinstate their storage license despite regional opposition.

Holtec’s Chief Communications Officer stated:

“The Fifth Circuit’s ruling that the NRC was not authorized to license and regulate nuclear fuel storage is like saying OSHA is unqualified for worker safety, the FAA for aviation safety, and the EPA for environmental safety. We urge the Supreme Court to overturn the Fifth Circuit’s legally unsound position.”

Local Opposition:

This move has sparked outrage and concern among residents and stakeholders in the Permian Basin, who argue that their voices and way of life are being ignored. Monica Perales, counsel for the Permian Basin Coalition, said, “This federal agency, the Nuclear Regulatory Commission, is acting like a rogue agency. They’re interpreting the law and deciding it’s within their power to issue a license to allow private companies to consolidate all of America’s spent nuclear fuel and store it in the Permian Basin.”

Environmental and Health Risks:

The Permian Basin Coalition, made up of ranchers, oil and gas operators, and local landowners, has taken their fight to the Supreme Court in hopes of stopping Holtec’s plan. They argue that allowing private companies to store nuclear waste indefinitely without a permanent disposal solution is illegal and poses significant environmental and health risks.

The coalition has raised over 100 contentions against the site, citing seismic risks, constant oil and gas activity in the region, corrosive dust and salt that can lead to corrosion at cracks in the stainless steel canisters, and the potential for dangerous releases of radioactive material. Monica Perales noted, “As these canisters travel on the rail line across the country, all destined for the Permian Basin, they are going ‘bumpity bump’ and developing cracks. Cracks that can’t be fixed, cracks that will corrode, and cracks that will eventually lead to release. Maybe not in my lifetime, maybe not in my son’s lifetime, but eventually, because this remains deadly for hundreds of thousands of years.”

The NRC has acknowledged that it has not solved the problem of chloride-induced stress corrosion cracking in the canisters but has still pushed forward with the licensing process. Holtec and the NRC argue that the storage is temporary, but opponents point out that there is no defined end date for the storage and no permanent disposal site available.

Future Implications:

The Supreme Court’s decision could have far-reaching implications for nuclear waste storage policies and the safety of communities across the country. CBS7 will continue to follow this story closely and bring you updates as they become available.

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