SpaceX’s Terafab Suit Tests What a Texas Incentive File Keeps Secret

Space Exploration Technologies Corp. has sued Texas Attorney General Ken Paxton, in his official capacity, and Grimes County to keep the county from releasing records about Terafab, the semiconductor plant SpaceX plans to build there. The Texas Lawbook reported the case as Cause No. D-1-GN-26-008509 in Travis County district court, and KBTX reported that the petition asks for a temporary restraining order and an injunction over SpaceX’s complete tax abatement application, its term proposals and negotiating correspondence, project design information, site location and land acquisition records, and cost and financial data. Outlets date the filing between September 8 and September 10. PSV did not obtain the petition, so its contents here are as reported. The rulings it answers are public. In Open Records Letter No. OR2026-032116, dated July 28, 2026, the Attorney General’s office answered Grimes County on four requests from two requestors for information regarding tax abatements. The ruling let the county withhold marked attorney-client communications under Section 552.107 and ordered the rest released, including a public meeting agenda. It declined to consider the county’s trade secret and proprietary information arguments under Sections 552.110 and 552.1101, because those exceptions protect private parties that provide information, not the governmental body. It rejected anticipated litigation under Section 552.103 and the deliberative process privilege under Section 552.111, noting that a governmental body shares no privity of interest with a party it is negotiating a contract with. And it found the county had not shown the remaining records reveal an incentive being offered under Section 552.131(b), a protection it said belongs to governmental bodies and ends once an agreement is made. A second ruling, OR2026-037351, dated August 24, reached the same result on a request the county received June 3 and added that the county had missed its 15 business day deadline to submit the records, which under Section 552.302 makes them presumptively public. Neither ruling names SpaceX or Terafab or records any submission from the company, so tying them to this suit rests on their dates, their subject and the reporting. Bisnow reported that SpaceX argues it was not told of the requests until July 2, which goes to the good faith notice Section 552.305(d) says a governmental body must attempt within 10 business days.

The deal itself is on the public record in two places. At the state level, TeraFab AI, LLC filed eight applications under the Texas Jobs, Energy, Technology and Innovation Act, one per school district for each of four phases: J0035 to J0038 in Anderson-Shiro CISD and J0039 to J0042 in Iola ISD, posted by the Comptroller on June 8, 2026. The application describes a vertically integrated semiconductor manufacturing and advanced computing campus led by a consortium including Tesla, SpaceX and xAI Corp., calls it an investment in “advanced artificial intelligence (AI) infrastructure,” and puts total capital investment for the four phases between $55 billion and $119 billion. On June 15, Deputy Comptroller Lisa Craven signed letters recommending approval of a 50 percent limitation on school district maintenance and operations taxable value for each application, and the executed agreements were posted between August 21 and August 25. The Comptroller’s estimates of gross tax benefit run from $82,255,197 for Phase 1 in Iola ISD to $335,835,404 for each of Phases 2 and 3 in Anderson-Shiro CISD, and the eight sum to $1,660,434,060, which is PSV’s arithmetic on the eight recommendation packets. At the county level, Grimes County posted a fully executed Chapter 312 tax abatement agreement and a Section 381.004 economic development agreement with Space Exploration Technologies Corp., both effective June 3, 2026. The abatement is 100 percent of county ad valorem taxes on the improvements and on new tangible personal property for tax years 2027 through 2036. In exchange SpaceX pays a $10 million nonrefundable upfront payment and annual payments in lieu of taxes of $20 million for each of those ten years, due regardless of the assessed value, and commits to invest at least $5 billion by December 31, 2030 and create 1,800 full-time equivalent jobs by December 31, 2035, with a default only below 90 percent of either. The companion agreement then pays SpaceX an annual grant from 2037 through 2061 equal to the county taxes it pays minus $20 million, not less than zero.

Texas draws the line in a place most development teams do not plan around, and the two rulings apply it plainly. Section 552.131 of the Government Code excepts a business prospect’s trade secrets, and its commercial or financial information when specific factual evidence shows disclosure would cause substantial competitive harm, but information about an incentive being offered is excepted only until an agreement is made; after that, information about an incentive offered by the governmental body is no longer excepted. Grimes County’s agreements with SpaceX took effect June 3, the same day the county received the request decided in August. The company’s own protection has to be claimed by the company. Section 552.305 lets a governmental body holding a third party’s information ask the Attorney General for a decision, requires it to make a good faith attempt to notify that party within 10 business days, and lets the party submit its own reasons. Section 552.1101 says only the vendor or contractor itself may assert the proprietary information exception, and the July ruling set aside the county’s trade secret arguments on exactly that ground. If the company then sues to withhold, Section 552.325 puts the suit against the Attorney General in Travis County district court and entitles the requester to intervene. The same summer shows the timing rule cutting the other way: on August 20, in OR2026-036686, the Attorney General let Grimes County withhold information about an unnamed project under Section 552.131(b) because its negotiations had not produced a final agreement. The state file sits under different rules again. Section 403.621, part of the JETI statute, makes a trade secret an applicant provides under that subchapter to the Comptroller, the Governor or a school district confidential and outside the Public Information Act. It does not name counties, and PSV found no clause on public information requests in either county agreement. The Comptroller’s packet shows how the applicant used the state route: it records that “supporting documentation was provided as confidential information for the competitive site selection,” and lists financial models showing IRR sensitivity to property taxes, third-party site selection consultant reports and executive affidavits among the confidential material.

For an operator, the consequence runs both ways. On the buy side, the executed documents say more than the coverage. Grimes County’s abatement is 100 percent on its face but is priced as a fixed payment: $20 million a year whatever the plant is assessed at, followed by a grant structure that caps the county’s net take at $20 million a year through 2061. If every payment is made in full, the county’s receipts compute to as much as $710 million over 35 years, PSV’s arithmetic, and less in any grant year when county taxes fall below $20 million. Section 10.13 lets SpaceX terminate at any time on 30 days’ written notice, after which it owes payments for years already begun, repays abated taxes for no more than three years net of those payments, and owes no 2027 payment if it leaves before June 1, 2027. Anyone valuing land, housing or industrial space around a megaproject should underwrite against that exit right, not against a $119 billion ceiling. On the development side, the lesson is procedural. Anything a company hands a county during an incentive negotiation should be assumed to become readable once the agreement is made, unless the company has marked it, argued it and, if needed, litigated it. The public JETI application already shows what leaks without that effort: the applicant wrote that the school tax limitation would cut its effective tax burden by about 48 percent. That is a company claim in a public filing, not a PSV finding, and every competing site and future counterparty can now read it.

The useful artifact is a disclosure register kept alongside every incentive negotiation a firm runs, one row per document handed to a public body. Inputs: the draft and executed agreements; every application, supplement and exhibit, with the date and the body that received it, since for a Texas deal the Comptroller, the Governor’s office, each school district and each county are separate holders under separate rules; the correspondence log; and the text of Sections 552.131, 552.305, 552.1101, 552.325 and 403.621. Output: columns that decide something. The holder. The statute the document was provided under. Whether it contains a trade secret, commercial or financial information, or information about an incentive, with the specific factual evidence of competitive harm drafted in advance rather than after a request arrives. Whether the agreement has been made, because that date changes what Section 552.131 protects. Whether the holder has committed in writing to notify the company of a request, with the 10 business day notice window from Section 552.305(d) calculated for each. And a public version of each record, drafted before anyone asks for it. For a counterparty reading someone else’s deal, the same register runs in reverse, built from the Comptroller’s JETI application pages and the county’s posted agreements: payment schedules, investment and job floors, cure thresholds, termination rights and recapture terms, each extracted clause by clause and cited to page.

The reviewer is development counsel, with the deal lead signing each confidentiality designation. The approval gate is concrete: nothing goes to a county, district or agency until its register row exists and a named person has signed what is marked confidential and why. An assistant handles the volume well: reading 200 page recommendation packets, pulling the summary figures across eight applications, transcribing scanned county agreements, and diffing an executed agreement against the way it was reported, which is how the gap between a 100 percent abatement and a fixed $20 million payment surfaced in this brief. It should not decide whether a figure is a trade secret, whether disclosure would cause substantial competitive harm, or whether to sue; those are legal judgments that need a record behind them. PSV ran no model on this record, tested no product, and promises no tax, schedule or litigation outcome. The county agreements are posted as scanned images and PSV read them through machine transcription, so any figure quoted from them should be checked against the signed page before anyone relies on it.