Elon Musk: Tunneling His Way Through Legal Ambiguity

By Sydney Shufelt

With his first tunnel set to open to the public on December 10, 2018, Elon Musk’s[1] plans to thwart the notoriously congested Los Angeles traffic has left many people wondering, is he allowed to do this?  In recent years, Musk has developed a bit of a reputation for skirting around the edge of certain legal regulations.[2]  Last December, Musk introduced promotional hats he sold to the public on Twitter in order to raise money for his vision of drilling tunnels under urban areas to alleviate the heavy traffic patterns plaguing major cities.[3]  He promised his followers that should The Boring Company (“Boring Co.”) sell 50,000 hats, he would sell a limited supply of “The Boring Co. Flamethrower.”[4]  The goal was met, and Musk sold a stock of 20,000 devices for $500 in just four days.[5]

When news of the sale of this product broke, Musk faced serious backlash from various representatives including Assemblyman Miguel Santiago of Los Angeles.[6]  Santiago quickly introduced AB1949, a bill proposed in order to limit the sale of flamethrowers in California and set forth a rigorous permitting system that would cost the state “between $100,000 and $200,000 for at least one staff person to handle workload related permits for Tier II flamethrowing devices.”[7]  Santiago eventually narrowed the scope of his bill from requiring the originally proposed permitting system to simply requiring them to carry a safety label.[8]  However, even this narrow form of the bill stalled last May and was held in the Assembly Appropriations Committee.  Musk also managed to evade certain international shipping laws.[9]  He was very transparent in his approach tweeting, “[a]pparently, some customs agencies are saying they won’t allow shipment of anything called a “Flamethrower.” To solve this, we are renaming it “Not a Flamethrower.”[10]

With regard to the work the hats were meant to fund, i.e. building a high-speed test tunnel in L.A., the general policy seems to be in favor of innovation and rapid advancement rather than administrative legislation and red tape that could stand in the way of the project’s completion.  Most notably, the city of Los Angeles exempted the project from environmental review.[11]  The Brentwood Residents Coalition and the Sunset Coalition filed suit against the City of Los Angeles, claiming the city violated state law when it sought to waive environmental review for the tunnel.[12]  The Coalitions’ main argument was that the state’s environmental law cannot be evaded by giving piecemeal approval to one component of a larger construction project.[13]  The California courts have found improper piecemealing “when the purpose of the reviewed project is to be the first step toward future development” or “when the reviewed project legally compels or practically presumes completion of another action.”[14]  Furthermore, “environmental considerations do not become submerged by chopping a large project into many little ones – each with minimal potential impact on the environment – which cumulatively may have disastrous consequences.”[15]

Culver City Mayor, Jeffrey Cooper, wrote a formal letter to the Public Works and Gang Reduction Committee arguing that Musk’s project did not satisfy the relevant standards set by the California Environment Quality Act (“the Act”), nor the Act’s categorical exemption, because certain aspects of the project were not sufficiently defined such as the purpose for the public’s use of the tunnels, and the legal basis upon which Boring Co. is entitled to use the tunnels.[16]  Nevertheless, while these lawsuits remain pending, the construction of the test tunnel has continued uninterrupted.

Currently, twenty-four states and Puerto Rico have legislation or regulations authorizing the use of public-private partnerships in highway construction and operation.[17]  Looking to the future, this shift in the market leading to the privatization of predominately public platforms (in this case highways) will surely spark questions regarding the satisfaction of certain legislative requirements if private companies prove they have a comparative advantage over government agencies.

[1] Elon Musk is a business magnate and investor. He is the founder, CEO, and Lead Designer of SpaceX; co-founder, CEO, and Product Architect of Tesla, Inc.; co-founder and CEO of Nerualink; and co-founder of PayPal. As of October 2018, Musk’s net worth totals $21.7 billion and is the 46th-richest person in the world according to Forbes. Louisa Kroll & Kerry Dolan, Forbes 400: The Definitive Ranking of the Wealthiest Americans, Forbes (Oct. 3, 2018, 7:00 AM), https://www.forbes.com/profile/elon-musk/?list=forbes-400#66e667f67999.

[2] See Liz Moyer, Securities Lawyers Shocked by Elon Musk’s Tweet, Point to Potential Legal Minefield, CNBC (Aug. 7, 2018, 4:02 PM; Steve Goldstein, Did Elon Musk Break Any Laws with His Going-Private Tweet Today?, Market Watch (Aug. 7, 2018, 9:40 PM), https://www.marketwatch.com/story/did-elon-musk-break-any-laws-with-his-going-private-tweet-today-2018-08-07.

[3] Elon Musk (@elonmusk), Twitter (Oct. 17, 2017, 7:50 PM), https://twitter.com/elonmusk/status/920482298327216128?lang=en.

[4] Elon Musk (@elonmusk), Twitter (Dec. 10, 2017, 7:11 PM), https://twitter.com/elonmusk/status/940056523304181762?lang=en.

[5] Supantha Mukherjee, Tesla’s Musk Sells $10 Million in Flamethrowers in Four Days, Thomson Reuters (Feb. 1, 2018, 7:30 AM), https://www.reuters.com/article/us-musk-flamethrower/teslas-musk-sells-10-million-in-flamethrowers-in-four-days-idUSKBN1FL544.

[6] See Andrew Liptak, California’s Bill to Regulate Elon Musk’s Flamethrower is Being Held in Committee, The Verge (June 2, 2018, 5:42 AM), https://www.theverge.com/2018/6/2/17420982/elon-musk-boring-company-not-a-flamethrower-california-bill-ab-1949.

[7] Andrew Liptak, California’s Bill to Regulate Elon Musk’s Flamethrower is Being Held in Committee, The Verge (June 2, 2018, 5:42 AM), https://www.theverge.com/2018/6/2/17420982/elon-musk-boring-company-not-a-flamethrower-california-bill-ab-1949.

[8] See Id.

[9] See Id.

[10] Elon Musk (@elonmusk), Twitter (Feb. 2, 2018, 2:34 PM), https://twitter.com/elonmusk/status/959555569953660928?lang=en.

[11] Matt Tinoco, L.A. Committee Endorses Fast-Tracking Musk’s Tunneling Plans, Curbed (Apr. 18, 2018, 3:21 PM), https://la.curbed.com/2018/4/17/17247886/elon-musk-tunnels-loop-ceqa-environmental.

[12] Laura Nelson & David Zahniser, Elon Musk Shares a Trip Through his Hawthorne Tunnel. His Project in L.A. is Facing a Bumpier Ride, L.A. Times (May 11, 2018, 5:05 PM), http://www.latimes.com/local/lanow/la-me-musk-tunnel-boring-la-20180511-story.html.

[13] Id.

[14] Banning Ranch Conservancy v. City of Newport Beach, 150 Cal. Rptr. 3d 591, 601 (Ct. App. 2012).

[15] Bozung v. Local Agency Formation Comm’n of Venture Cty et al., 529 P.2d 1017, 1030–1031 (Cal 1975).

[16] See Matt Tinoco, L.A. Committee Endorses Fast-Tracking Musk’s Tunneling Plans, Curbed (Apr. 18, 2018, 3:21 PM), https://la.curbed.com/2018/4/17/17247886/elon-musk-tunnels-loop-ceqa-environmental. E.g. Joe Rogan Experience #1169 – Elon Musk, YouTube (2018), https://www.youtube.com/watch?v=ycPr5-27vSI (last visited Oct 26, 2018) (Explaining that the initial permit Musk got for the project was to simply “dig a hole in the ground.” A far cry from what his actual intentions for the hole were).

[17] Daniel B. Klein, Private Toll Roads in America – The First Time Around, Access Magazine. http://www.accessmagazine.org/spring-1993/private-toll-roads-in-america-the-first-time-around/ (last visited Oct. 24, 2018).

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