The Dallas Incident was an event which devastated the Texas system in approximately 500 AS. At the time, the Texas system was both the location of Liberty's testing ground for experimental and possibly incredibly dangerous high tech doodads. After the incident, Texas became Liberty's preferred destination for "economic undesireables" after processing by Liberty's Prison-Industrial complex. The Planet Houston, on the eastern side of the system, away from Planet Dallas, was not apparently affected greatly by the blast. Liberty has declined to publish all the details of the incident; what is known is pieced together from news clippings and rumors.
The Dallas Research Station was apparently conducting an experiment involving using a Jump Gate to bypass large clouds of dark matter. Apparently the backlash from the failed experiment was enough to utterly destroy the station and lay waste to much of the Texas system, which has never fully recovered since.
A DEBT IS OWED TO TEXAS: HOUSTON -- Before the Dallas Incident, Liberty invested heavily in Texas. Houston residents were led to believe that the system would be the research center of the entire House. Virtually overnight the government moved out, leaving nothing but destruction and decay in its wake. Many citizens feel that the government had no right to leave Texas so abruptly because of a terrible government error. "There wouldn't be no crime here if they gave folks an option," says Fertilizer plant worker and Houston native Frank Stalls. Perhaps there is a better alternative to solving crime than building new prisons.
"There has been one most unfortunate occurrence in Ageira's past: the Dallas Incident in 500 AS, a Jump Gate research project in the Texas system that went horribly wrong. Thousands of dedicated Ageira employeers were lost in one dreadful moment. To this day the Texas system remains mostly off-limits due to the radiation and debris hazards." - Dr. Belinda Carson, Pueblo Station
"In 521, the supply ship Ft. Worth was approaching the Dallas Research Station from Houston when it was caught in the tremendous system-wide explosion that occurred during the failed Jump Gate experiment. The ship was far enough away from the initial blast that some people think it may still be floating out there in the Grande Negra Cloud. The Ft. Worth was carrying a full load of Jump Gate Parts.
One of my ancestors was on guard duty aboard the Dallas on that fateful day. He and everyone else onboard was killed instantly. The ironic part was that the naval commander had recommended the ship be moved to a safe distance from the experimental Jump Gate, so the test didn't begin until they had repositioned the Dallas to twice the normal distance.
Did you know that there weren't any Jump Holes in Texas before the Dallas incident? The criminals in all of Sirius were helped more than they could possibly know. Texas is the crossroads of the criminal universe. If it weren't for the Jump Holes, we would have crime locked down to nothing." - Captain Carol Weathers, Liberty Navy, Battleship Mississippi, Texas system
"After the Dallas Incident this system went to hell. I guess it was a bad idea in the long run to make one system the depository for all criminals within a House and a government test area." - Mississippi Bartender Brad Walker
"Once the government pulled out of the system, half the people in Texas lost their jobs. All the money here was government money, and overnight it was gone. Crime exploded three hundred percent within the first ten years." - Captain Bradley Madden, Liberty Navy, Battleship Mississippi
"The Ames Independent Research Station was established in 550 to study the Kuryo Anomaly in preparation for the construction of Trade Lanes by Deep Space Engineering. Jump Gates couldn't bypass this system because of the danger in traversing the dark matter clouds of the Anomaly -- a lesson painfully learned in the Texas Incident." - Ames Bartender Alex Bellamy
It appears that following the destruction of the Dallas Research Station in the experimental Jump Gate explosion, the Texas economy totally collapsed. The system was already the chosen dumping ground for criminals, and the power vacuum seems to have drawn in all sorts of players. The Jump Hole mentioned in the rumors leads to California, and exits near Alcatraz Depot. The other Jump Holes in the system lead to Hudson and New York. It is very likely that the Dallas Incident and the following spike in crime led directly to the privatization of the LPI and the current status quo. It is entirely possible that the takeover of the LPI was engineered by a few well-placed opportunists with enough leverage to corral a government agency into a private profit center.