SpaceX sues to block release of tax-break records for its Texas Terafab project

Americans say they want transparency from AI companies.

SpaceX filed a lawsuit in Texas this week to block the release of records related to tax breaks it received for Terafab, the 100-million-square-foot semiconductor factory it is building near Houston.

The records, which Texas Attorney General Ken Paxton’s office said in July should be released, include SpaceX’s tax-abatement application and negotiations between SpaceX and Grimes County officials related to it.

The lawsuit comes as hyperscale data centers and other large AI projects face nationwide backlash from Americans, many of whom are demanding greater transparency from the tech companies building the centers in their communities.

Public Citizen, a progressive think tank, published a report in July detailing what it described as extensive use of non-disclosure agreements between local officials and data center developers. “These secrecy agreements are shutting the public out of decisions that could shape their rates for decades,” the report said.

In a recent interview with ABC News, Texas Gov.

Greg Abbott said data center developers aren’t gaining local residents’ support before pursuing projects.

Other leading tech companies, like OpenAI, Google, Anthropic, Microsoft, and Meta, are trumpeting transparency as they race to build the centers they require to power AI growth.

In a March blog post, Microsoft pledged to stop using nondisclosure agreements with local governments “as the next step in our work to deliver that transparency.” SpaceX seems to be taking a different approach.

The company said in the suit that the records related to tax breaks contain “confidential information,” and that releasing them “would reveal SpaceX’s negotiating strategy, concessions, and limits to every jurisdiction, competitor, and counterparty with which SpaceX negotiates in the future.” The Terafab project is a joint venture with Tesla and Intel.

Musk has said that, once online, it could vastly increase the global supply of semiconductor chips, which are crucial for both SpaceX’s plans for AI data centers and Tesla’s rollout of autonomous robotaxis and humanoid robots.

The records were originally requested by Marie Egyed and Vanessa Burzynski, two residents of Grimes County.

Paxton’s office said in July that records concerning Terafab’s tax break and certain email chains did not qualify for exemptions that would block their release.

SpaceX agreed to pay the county $20 million every year, or about 78% of what it would have paid in property taxes, SpaceX attorney Bucky Brannen told residents at a county meeting in August.

Egyed is a member of the Grimes County Citizens for Responsible Development, a group that has opposed Terafab’s development.

In a text message, she said SpaceX’s suit to block the tax abatement records “certainly makes you want to know what’s in them.” SpaceX did not immediately respond to a request for comment Thursday morning.

Though SpaceX is a private company, records sought by Egyed are in possession of Grimes County, thereby making them subject to the Texas Public Information Act.

A judge has not yet ruled on the matter.