The decision is a major legal setback for the Superferry, but Superferry lawyers were not immediately available for comment as to whether the operations will start as scheduled on Tuesday.

In a unanimous decision, the five justices held that the state Department of Transportation erred when it exempted from an environmental review the improvements at Kahului Harbor for the ferry. The state spent $40 million for improvements that would allow the Superferry to load and unload vehicles at Kahului and other island harbors.

The justices heard arguments in the morning on an appeal by three environmental groups of Maui Circuit Judge Joseph Cardoza's 2005 ruling throwing out their lawsuit.

The Sierra Club, Maui Tomorrow Inc. and the Kahului Harbor Coalition contended the state should have required the study for the improvements.

The court said the Maui decision was "erroneous as a matter of law." The high court instructed the Maui court to issue a ruling requiring the environmental study.