Tesla found a way to get out of environmental regulations at its Texas gigafactory

• Tesla's gigafactory outside Austin won't have to follow the city's environmental regulations.
• The EV company was granted an exemption thanks to a new state law.

Tesla's massive gigafactory outside Austin, Texas will no longer have to follow local environmental regulations, thanks to a recent state law.

Tesla's 2,500-acre property, which includes its 10-million-square-foot electric vehicle gigafactory, is in unincorporated land on the outskirts of Austin.

Despite not being directly in the city, most of that land was still part of Austin's "extraterritorial jurisdiction" (ETJ), which allowed the city to regulate developments outside its limits.

In February, Tesla applied for an exemption from Austin's ETJ, which the city's Planning Department approved in March.

The exemption was first reported by the Austin Business Journal this week.

The exemption was possible thanks to a new state law that went into effect in September and allows landowners to request to be removed from jurisdictions so that they can develop land with fewer regulations.

Several cities in the state have already sued to block the law, including Grand Prairie, which argued in a filing that the law will hurt the city's ability to protect the health, safety, and welfare of those who live in and around its borders.

But under the law, cities don't have much leeway to deny a landowner's request, Austin's director of planning previously said, according to the Austin Business Journal.

Tesla's ETJ exemption will enable the electric vehicle company to further develop its land without having to follow the city's environmental restrictions, which an Austin city spokesperson acknowledged could harm locals.

"Releasing properties from the ETJ impacts the City because development in the ETJ is subject to limited subdivision regulation as well as regulation of water quality and flooding issues," Shelley Parks, an Austin city spokesperson, said in a statement to Business Insider. "All affect people in both the ETJ and the City itself."

Tesla did not respond to a request for comment from Business Insider.

When the Texas gigafactory was still under construction before its 2022 opening, Elon Musk promised it would be an "ecological paradise" with walking trails for the public along the neighboring Colorado River.

Musk's companies have had issues with environmental regulations in the past, however. In February, Tesla settled a lawsuit accusing them of mishandling hazardous waste in California. Meanwhile, the Boring Company has been accused of letting untreated wastewater drain into the Colorado River.