Tesla Skirts Austin's Environmental Rules Using New State Law

A law that took effect last year allows property owners near large cities to seek exemption from those cities' jurisdiction over land use.


Tesla has maneuvered out of Austin's environmental control by invoking a Texas state law enacted last September.

Senate Bill 2038, effective Sept. 1, 2023, allows property owners near large Texan cities to seek exemption from the cities’ extraterritorial jurisdiction, facilitating easier land development with fewer restrictions.

This legislative change permits landowners, like Tesla, whose Giga Texas facility encompasses 2,100 acres east of Austin, to develop their properties under reduced regulatory oversight. Tesla filed its petition Feb. 8, and by March 8, the property was cleared to operate outside Austin’s environmental rules, as reported by the Austin Business Journal.

The implications of this exemption are broad and controversial. According to the legislation, the area must have fewer than 200 residents to qualify for release. Critics argue the law strips municipalities of their ability to oversee land use effectively, which may jeopardize both environmental health and public safety. Some municipalities have filed lawsuits challenging the law. Austin is not among them, but according to the Austin Business Journal, city officials are aware of the risks for current residents and those who may move to Austin.

Shelley Parks, a spokesperson for the city of Austin, said removing an area from jurisdiction could impact water quality and might cause future flooding issues.

Tesla’s Giga Texas had about 15,000 employees as reported at the end of 2022. It recently announced it would lay off about 2,700 employees there.

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