What's really going wrong: [1]
It's not the boring process. It's the use of concrete curing accelerants producing toxic sludge.
Often, the accelerants would spill into groundwater and mix with concrete and other debris, creating a toxic mix of sludge, sometimes about two-feet deep, that workers would often have to trudge through. The OSHA report cited workers with permanently scarred arms and legs, and one instance in which a worker was hit in the face and seared with the chemical mix. Temperatures would regularly rise to 100 degrees as workers often toiled for 12 hour days, sometimes for six or seven days a week, at a worksite nicknamed “the plantation” by some workers, who spoke to the Nevada safety agency for its report. Workers also claimed having to ask for permission to use the bathroom.
That's the OSHA complaint. The environmental complaint comes from disposing of that sludge.
Sludge removal and treatment is a standard problem in tunneling. Usually, it's pumped out with "trash pumps" that can tolerate rocks and sand. Then it goes through some basic processing - screen out the big rocks, separate water from wet sludge, run the water through a mini sewerage treatment plant on site, squeeze more water out of the sludge, add bentonite as an absorbent to lock up toxics, and truck away the dry sludge.[2]
What it seems The Boring Company has been doing is dumping the wet sludge on a vacant lot in Las Vegas [3] and waiting for the water to run off or evaporate. The vacant lot isn't even out in the desert outside the city; it's in town, and the nearby mall is annoyed.
Reports of water two feet deep in the tunnels means they skimped on pumps and water processing. They're using a TBM, which makes a concrete tube as it digs. Most tunneling operations keep the completed tube dry.
[1] https://www.inc.com/sam-blum/elon-musks-boring-company-subje...
[2] https://www.blackrhinosep.com/application/tunneling-slurry-s...
[3] https://lasvegas.citycast.fm/explainers/boring-company-drill...