State senators released the framework of a compromise on Hawaii Superferry yesterday, with new operating conditions to protect whales and deter the spread of invasive species while softening liability protections for the state that Superferry executives said were unacceptable.

A joint Senate panel agreed to send the bill to the full Senate for a vote. House leaders, who have been firm against amending the Superferry bill that was introduced when the special session opened on Wednesday, said last night they would consider the Senate's version when it crosses over early next week.

Superferry executives and the Lingle administration also appeared ready to accept the Senate's version and, privately, people familiar with the negotiations spoke confidently that an agreement was possible barring the unexpected.

The senators said the new bill reflects what they have heard in hours of public testimony on the Neighbor Islands and at the state Capitol and reaches a reasonable balance that allows Superferry to resume operations while protecting the environment as the state conducts an environmental impact statement of the project.

"These amendments are an attempt to strike a fair and reasonable balance, taking into account the concerns of O'ahu and Neighbor Island residents, and, in this regard, I believe are a major improvement over the current draft of the bill," said state Sen. Ron Menor, D-17th (Mililani, Waipi'o), the chairman of the Senate Energy and Environment Committee.

FEDERAL PERMIT

Under the new bill, Superferry would have to agree to apply for an incidental-take permit from the National Oceanic and Atmospheric Administration, which could require operating conditions while giving Superferry liability protection in the event the ferry strikes whales. Senators chose not to press Superferry to significantly lower travel speeds in the humpback whale sanctuary, which Superferry executives had resisted.

The new bill also asks Superferry to request NOAA's marine fisheries service to place observers on ferry voyages through the humpback whale sanctuary.

Environmentalists with the Sierra Club's Hawai'i chapter and Maui Tomorrow praised the new conditions as positive steps to protect whales, although they had wanted to restrict travel speeds until Superferry obtained the incidental-take permit.

The new bill would require Superferry to post signs notifying passengers of bans on commercial fishing nets and unpermitted rocks, soil, dirt or sand, with the exception of soil used in potted plants cleared by agricultural inspectors. Passengers would also have to declare all plants, fruits and seeds. All vehicles would be inspected, including searches inside and under vehicles to intercept possible invasive species.

Senators explained that the new conditions were based on what Superferry has either already agreed to do or what Superferry executives have said they were willing to consider during testimony over the past few days.

The new bill would still leave it to the Lingle administration to impose other operating conditions to protect whales, prevent the spread of invasive species and protect cultural and natural resources. An oversight task force would monitor ferry service and give monthly reports to the Legislature so lawmakers can determine whether to add operating conditions next session.

The senators dropped a suggestion by Menor to remove a Superferry executive from the task force and add federal environmental officials and local environmental leaders. But they replaced the director of the state Department of Business, Economic Development and Tourism on the task force with the director of the state Department of Agriculture.

The bill would also require the state auditor to investigate how the Lingle administration determined, among other things, that the Superferry project was exempt from an environmental review. The state Supreme Court ruled in August that the exemption was in error, and a Maui court ruled this month that Superferry could not use Kahului Harbor until an environmental review was completed.

Among the difficulties in private talks, according to legislative, administration and Superferry sources, was the language in the bill to protect the state from liability from lawsuits by Superferry for delays in ferry service. Superferry lobbyists bluntly told lawmakers over the past few days that the language was a dealbreaker.

The new bill would require Superferry to waive any legal claims against the state for past actions related to the need for an environmental review or any court decision. But Superferry would have the right to bring future claims.

Tig Krekel, the vice chairman of J.F. Lehman & Co., the Superferry's main investor, said the new bill was a positive development and that senators had done an excellent job.

"Of course, the devil is in the details, we'll see the exact drafting and reserve final judgment then, but everything we heard there was very positive," Krekel said after the committee vote.

Superferry executives have said they could resume service within 10 days of legislators passing a bill.

Asked how Superferry would approach potential resistance on the Neighbor Islands, particularly Kaua'i, Krekel said: "Do not confuse a very loud minority with speaking for all the people of Kaua'i. We have received countless communications from Kaua'i residents about how embarrassed they are and that the loud minority of activists, not environmentalists — but activists — do not speak for them.

"So we're hopeful that that situation will calm down."

FOUR VOTE 'NO'

Four Neighbor Island senators who wanted an environmental review of Superferry before it launched voted against the new bill in committee but thanked their colleagues for listening to the Neighbor Islands.

State Sen. Russell Kokubun, D-2nd (S. Hilo, Puna, Ka'u), said his objections were not over operating conditions or even the Superferry project. He said he was very disappointed that lawmakers have been put in the position of coming into special session to overrule the courts and help Superferry after Superferry executives and the Lingle administration refused a Senate compromise last session.

Kokubun said he supports the audit of the Lingle administration. "This thing has been bungled from the very beginning," he said.

Jeff Mikulina, the director of the Sierra Club's Hawai'i Chapter, said the new bill does not go far enough to protect the environment or ensure that Superferry accepts the conclusions of the environmental impact statement.

"We're putting the cart before the horse, and if we're going to do that, we ought to be extra cautious to make sure we're covering all our bases," he said.

Judith Michaels, acting president of Maui Tomorrow Foundation, said the new bill looked better than the original draft but fell well short of the 29 operating conditions suggested by Maui environmentalists. "The original draft was horrible," she said. "At least we're moving in the right direction."

NO AMENDMENTS

House leaders said last night they still plan to move the original bill over to the Senate unamended.

State House Speaker Calvin Say, D-20th (St. Louis Heights, Palolo Valley, Wilhelmina Rise), said House leaders would look at the Senate's conditions but still prefer no amendments. He spoke with certainty, however, that lawmakers would pass a bill that puts the Superferry back in service between the Islands.

"One way or the other there will be a bill that will allow the Superferry to operate," Say said.

In the state Capitol auditorium yesterday, House lawmakers held a daylong public hearing on the Superferry that was similar in content to a Senate hearing on Wednesday. While more than 200 people signed up to speak, by the time lengthy testimony by the first six speakers finished, the audience had thinned out considerably and remained sparse for much of the day.

Like the Senate the day before, the House questioned Barry Fukunaga, the director of the state Department of Transportation, about why the Superferry project was exempted from an environmental assessment. Fukunaga again refused to waive attorney-client privilege on several questions from lawmakers about the circumstances that led to the decision.

After watching Fukunaga get grilled for almost two hours, Ted Liu, the director of the state Department of Business, Economic Development and Tourism, brought some levity to his testimony when he quipped at the end: "I'd be very pleased to take any 'yes' and 'no' questions."

LEGAL PRECEDENTS

State Attorney General Mark Bennett told lawmakers that the Superferry bill is constitutional and that lawmakers have a legal right to change the law in light of the court rulings. He also said that it is not unprecedented for the Legislature to exempt specific projects from the environmental review process.

Bennett said lawmakers exempted the purchase of the Waiahole water system from the environmental review law in 1998, and did the same with the reconstruction or use of any Hawaiian fishponds in 1995. He also said Congress, through the work of U.S. Sen. Daniel K. Inouye, D-Hawai'i, exempted the construction of the H-3 Freeway from federal environmental review law.

"The facts are clear that it's not even close to unprecedented," Bennett said. "In fact it is the norm in many ways and not the exception."

After hearing all of the testimony, the joint House panel reviewing the bill voted last night to send it to the full House without amendments.

With signs of progress on an agreement, some lawmakers are asking whether people who opposed a special session to help Superferry will accept the outcome. Environmental groups have suggested they may go to court to challenge what the Legislature passes.

State Senate Minority Leader Fred Hemmings, R-25th (Kailua, Waimanalo, Hawai'i Kai), said the debate has become less about the impact of the Superferry and more about "growth, anti-development and anti-big business."

"They could take the Superferry out of the water and wash it every day and it could go three knots, and they still would oppose it," Hemmings said.

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.