Representatives of Maryland Gov. Larry Hogan said Thursday the state has issued a conditional utility permit to let Musk's tunneling firm, the Boring Co., dig a 10.3-mile tunnel beneath the state-owned portion of the Baltimore-Washington Parkway, between the Baltimore city line and state Highway 175 in Hanover.

It would be the first portion of the underground system that Musk says could eventually ferry passengers from Washington to New York, with stops in Baltimore and Philadelphia, in just 29 minutes. Maryland's approval is the first step of many needed to complete the multibillion-dollar project.

Hogan toured a site in Hanover that aides said could become an entry point for the hyperloop. The state does not plan to contribute to the cost of the project, aides said.