Billionaire entrepreneur Elon Musk’s tunneling company has dropped its plans to dig beneath Sepulveda Boulevard on the Westside, months after a lawsuit alleged that the city of Los Angeles violated state law when it sought to exempt the tunnel from environmental review.

In a joint statement Tuesday, Musk’s firm — Boring Co. — and the group of Westside advocates that sued over the project in May said they had “amicably settled” the lawsuit. An attorney for the groups said the settlement agreement was confidential.

Instead of pursuing plans to dig beneath Sepulveda on the Westside, Musk’s tunneling company will focus on an underground link between Dodger Stadium and a Metro station about 3½ miles away, the statement said.

The lawsuit and the settlement agreement mark the first major setback for Musk’s ambitious goals for tunneling in California.

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