Staff at the state Department of Transportation told Hawaii Superferry in October 2004 that a statewide environmental assessment would be required for the new interisland ferry service. But Superferry executives resisted and, within two days, scaled back the project in a calculated attempt to get an exemption from the state's environmental review law, state records show.

Some in the department not only thought Superferry should be responsible for doing an environmental assessment — one described it as the "right thing to do" — but also seriously considered doing an environmental review of the state's $40 million in harbor improvements for Superferry.

"SF has to do one that addresses their operation to include traffic impacts and the like," Barry Fukunaga, who was deputy director of harbors at the time, wrote in an October 2004 e-mail to Rod Haraga, who was the department's director.

The documents, obtained by The Advertiser through the state's open-records law, show that the internal debate over an environmental review for Superferry was far more extensive than has been publicly disclosed by the Lingle administration and Superferry executives.

Some of the department's staff, records show, also were frustrated that Superferry had not provided detailed operational plans during a critical period in the fall of 2004 when the state was being asked to sign off on the project.

The state ultimately chose not to require that Superferry do an environmental assessment. Fukunaga, who later became the department's director and is now Gov. Linda Lingle's chief of staff, also decided in February 2005 that state harbor improvements for Superferry were minor and exempt from environmental review.

FUROR ERUPTS

Environmentalists challenged Fukunaga's decision and the state Supreme Court ruled unanimously in August that it was an error. The court's ruling prompted new legal challenges and public protests that halted ferry service and led to a statewide debate over the project's future. State lawmakers finally decided in an extraordinary special session to allow the ferry to operate under conditions to protect the environment while the state conducts a full environmental impact statement.

The Lingle administration has released hundreds of documents related to Superferry in response to The Advertiser's request under the open-records law. The documents are being released in increments because of the large amount involved. The administration is also still in the process of reviewing some of the documents for attorney-client privilege and executive privilege.

The Lingle administration, citing attorney-client privilege, has denied a separate request by The Advertiser for records from state Attorney General Mark Bennett and his deputies to other administration officials regarding Fukunaga's decision to exempt state harbor improvements for Superferry from environmental review. The Advertiser has appealed to the state's Office of Information Practices.

Many of the documents released to The Advertiser have also been given to state Auditor Marion Higa, who is investigating the administration's decision-making on the Superferry at the request of state lawmakers. Higa told state senators last week that she has encountered roadblocks and questioned the administration's use of attorney-client privilege and executive privilege in withholding documents.

Fukunaga was out of the office last week and not immediately available to comment about the material provided to The Advertiser. Haraga, who no longer works for the Lingle administration, has declined several requests to discuss Superferry.

Staff disagreements over projects as large as Superferry are not uncommon in government and, since hundreds of documents have yet to be released and others have been withheld, it is difficult to build a complete narrative.

The documents released so far, however, provide new insight into discussions between the department's staff and Superferry during the hectic final months of 2004.

At the time, the department and its consultants were conducting financial and operational reviews of Superferry. The department's harbors staff believed Superferry was considered a "go" project by the administration and was aware the governor's office was tracking progress.

Superferry executives, meanwhile, were under pressure to obtain a letter of intent for the project from the state to show the federal Maritime Administration as part of a federal loan guarantee for ferry construction. Superferry executives were also awaiting a decision from the state's Public Utilities Commission on an operating certificate.

'NO OPERATIONAL PLAN'

Several e-mails between the department's staff complained about a lack of technical detail from Superferry. "In today's meeting with HSF, it became apparent that there really is no operational plan that is documented anywhere," one harbors staffer wrote in late September 2004.

A department document from late October 2004 was more prickly. "It should be noted that many of the problems we are encountering can be attributed to the lack of infrastructure and operational planning. SF focused on their vessel and business plans (market, financing, business activities), but seem to have done little to look at the infrastructure and pierside requirements.

"Many critical issues have been overlooked or are not adequately addressed."

Superferry executives eventually gave the department their infrastructure plans for Honolulu, Kahului, Nawiliwili and Kawaihae harbors in late October 2004.

Over the next few days, several e-mails from harbors staff — including the one from Fukunaga to Haraga — discussed the need for an environmental assessment.

One e-mail, sent by a harbors staffer to a consultant, said it appeared the department would "require HSF to prepare and process an EA that ties each site together into a single statewide system." Another e-mail, sent by a harbors planning engineer to a Superferry executive, notes that "we are looking at the creation of a statewide document to cover the impact of the ferry and especially the onshore-offshore cumulative impacts."

Superferry, in a powerpoint prepared for a status meeting with Lingle in early November 2004, gave this timeline:

"Oct. 26 — HSF provides drawings of port infrastructure requirements for each of the four ports to HDOT.

"Oct. 27 — HDOT advises HSF of need for environmental review of HSF plans.

"Oct. 29 — HSF submits revised port drawings to stay within permitted exemptions to HRS 343 (the state's environmental review law)."

"Nov. 4 — State of Hawai'i comments on LOI (letter of intent) to HSF. Resolution of environmental review issue."

Other state records released so far do not pinpoint exactly how or when the issue was resolved.

But an undated department document suggested a strategy for how to expedite the environmental disclosure process for Superferry: limit any harbor improvements needed to launch Superferry in 2007 to exempt projects only and wait until later to construct permanent facilities that would require environmental review. The document also noted that major construction could require Army Corps of Engineers' permits. The permit process could trigger consultation with other federal agencies, such as the National Marine Fisheries Service, which had raised concerns that ferry speed and routes could threaten endangered humpback whales and monk seals.

An e-mail between harbors staff in mid-November 2004 indicated that Superferry was still waiting to hear from the state about the harbor improvements. A harbors staffer wrote that it was "quite evident" that the harbors division was "being perceived as the 'slow' one — we're going to take major gas on this."

SUPERFERRY RESPONDS

John Garibaldi, the president and chief executive officer of Superferry, said in an interview last week that Superferry worked collaboratively with the department throughout the fall and winter of 2004 on infrastructure and operations questions.

Garibaldi said Superferry did not want to trigger an environmental review because it could take several months to a year or more to complete and could jeopardize the project's federal loan guarantee and private investments. Superferry instead chose to do its own environmental planning on traffic, invasive species and whale protection.

"If there was a 'legal requirement' that Hawaii Superferry had to do an environmental review, then that requirement would have to be fulfilled prior to any funding," he explained.

Garibaldi said one of the significant modifications eventually made to the project was the decision not to demolish a portion of the tip of Pier 2 at Kahului Harbor on Maui and create a notch for the ferry. Instead, the state opted for a floating barge and boarding ramp that Fukunaga and the state deemed minor.

But the notch at Kahului was still part of the project in late November 2004 when Genevieve Salmonson, then the director of the state's Office of Environmental Quality Control, wrote Fukunaga with her opinion that the state harbor improvements for Superferry fell within the scope of exemptions to the environmental review law.

The debate, however, would continue among department staff.

Fukunaga, under questioning from state lawmakers during the special session in October, acknowledged that some on his staff had recommended an environmental review.

Garibaldi, also under questioning from lawmakers, said he had met with Fukunaga and with Bob Awana, Lingle's former chief of staff, in late 2004 to discuss the harbor improvements.

Department e-mail from December 2004 shows that harbors staff was wrestling with both an environmental assessment for state harbor improvements and whether the Superferry should do a statewide environmental review.

"I think where they left off yesterday with their meeting with Awana, it was agreed that HSF would be told to do a statewide ferry EIS," one department staffer wrote. "This may come upfront because although they are claiming there is no trigger, the PUC can require it as a result of the comments from their hearings. If so, and HSF needs to do one right away upfront, (I) am wondering whether it would be beneficial for us to work with them and include the harbor (improvements) in their effort."

A harbors staffer responded that the state's environmental work should be separate from Superferry. "While HSF should be responsible for their own, we should in turn be responsible for our own. I also think that if we tie our EA's properly to the statewide EIS, then the EA's wouldn't be contingent upon the success of the EIS.

"In the end, if this should never get off the ground, at least we would be in a better position to separate ourselves from HSF by saying we did our part."

TELLING DOCUMENT

Among the most forceful arguments for requiring Superferry to perform a statewide environmental assessment came in a department document in late December 2004. The document describes it as the "right thing to do" to avoid legal challenges and address valid public concerns. The document noted that most of the public concerns were related to the ferry operations and system, not the site and harbor improvements.

"A statewide EA should be pursued in response to the concerns raised in the PUC permitting process," according to the document, referring to public comments before the commission related to traffic, invasive species and whale protection.

"Ignoring the concerns may trigger a challenge where we may be subject to the courts' schedule and processes."

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.