Tesla uses new state law to shed Austin’s oversight of its factory
Petition to remove city’s environmental jurisdiction comes amid concerns over river
Tesla is leaving the city of Austin’s “extraterritorial jurisdiction,” a move that is expected to strip the city’s environmental oversight of at least part of its massive manufacturing facility.
The maker of electric autos, headquartered east of Austin along the Colorado River, used a new state law to petition for the removal. The property released will still be subject to state and county regulations, which are generally less strict than what a city can impose.
It wasn’t immediately clear if Tesla was removing its entire manufacturing facility or just a portion, but the city confirmed that its petitions “for land associated with Tesla’s operations” met the statutory requirements to be released.
“Releasing properties from the ETJ does impact the city and future city residents,” Austin said in a statement. “The city of Austin’s environmental regulations are more protective of water resources than unincorporated Travis County.”
Austin’s extraterritorial jurisdiction, also known as an ETJ, is a buffer zone of unincorporated land that extends five miles beyond its city limits.
Cities cannot levy property taxes in those buffer zones and have little say over land development. But they do have some rights to help keep the area congruous with properties inside its borders. Austin, in particular, is known for extending robust environmental regulations into their ETJs – mostly around water quality and
flooding.
Tesla did not respond to a request for comment. When its CEO, Elon Musk, announced the facility during an earnings call in 2020, he said it would “basically be an ecological paradise — birds in the trees, butterflies, fish in the stream.” But environmental advocates have been vocal about wanting a say in how Tesla and other companies in the area will impact the river.
Alexia Leclercq, policy director for east Austin environmental and social justice organization PODER (People Organized in Defense of Earth and her Resources), was not surprised to learn Tesla is leaving the ETJ. She said it continues a pattern seen throughout the company’s gigafactory construction.
“They have this pattern of trying to have as few regulations apply to them as possible,” she said, adding that Musk’s promise of a paradise is “nowhere to be found.”
The company says its gigafactory spans 2,500 acres and has more than 10 million square feet of factory floor to manufacture the Model Y midsize SUV and Cybertruck. It received tax incentives from Travis County and Del Valle ISD that shouldn’t be affected by leaving Austin’s ETJ.
“I don’t see anything changing on its incentives,” said Nathan Jensen, a professor at the University of Texas at Austin who specializes in government incentives. “It really is about regulations.”
Extraterritorial jurisdictions were created in Texas in 1963. They’ve largely been a tool for cities looking to expand — and add to their tax base — through forced annexation.
“An ETJ was basically like the on-deck circle in baseball,” said Chris Johns, an attorney at Cobb and Johns in Austin. “They’re the next people that are about to get annexed.”
After laws passed in 2017 and 2019 abolished forced annexation, cities used their ETJs to control development outside their borders, said lawyers representing landowners and developers.
Within an ETJ, cities should largely be limited to subdivision regulations that determine how a property is divided, said Misty Ventura, a lawyer with Shupe Ventura.
But some of her clients had cities pushing tree preservation regulations into their ETJs. Johns’ clients have similarly faced utility agreements.
“They expand the subdivision regulation authority by dumping stuff in there that I don’t think the Legislature ever intended,” Ventura said.
So Johns and his law partner helped draft legislation that would allow Texans to remove themselves from an ETJ, he said. Senate Bill 2038 was sponsored by Sen. Paul Bettencourt, R-Houston, and passed by the Texas Legislature last year.
Multiple cities are challenging the new legislation in court.
The bill’s proponents argue that cities shouldn’t force regulations on people inside ETJs because those individuals can’t vote in city elections. James Quintero, policy director for the right-leaning Texas Public Policy Foundation, would like to see ETJs abolished completely.
But the Texas Conference of Urban Counties opposed the bill for fear it would strain counties that aren’t equipped to provide city services, especially if housing developments leave an ETJ.
Adam Haynes, policy director for the organization, said emergency responses get complicated when one property is just inside an ETJ and another is just outside of it.
Haynes is less worried about large manufacturing facilities — from a services standpoint —because they often handle their own wastewater discharge, onsite trauma capabilities and security guards.
Travis County can implement some environmental regulations, but it’s limited by state law. Austin’s ETJ regulations include water quality treatment standards, the protection of wetlands and springs, and restrictions on human-made surfaces that don’t absorb rainfall.
Tesla cited those regulations as a reason it wouldn’t agree to sign a community benefits agreement after the project was announced that would have called for enhanced protections for local neighborhoods and the environment, said UT environmental law student Paul DiFiore, who worked on the efforts with PODER.
“It’s certainly a defense that they would throw out,” he said. “‘Why do we need enhanced environmental protections in a deal when we were part of the ETJ of Austin?’”
DiFiore would like to see environmental protections built into future incentive packages to prevent companies from finding ways around the regulations.