THE REAL VICTIMS IN THE HAWAI‘I SUPERFERRY DEBACLE

by
Representative Hermina Morita
District 14: Hanalei, Anahola, Kealia, Kapa‘a, Waipouli

Note: The Center asked Representative Hermina Morita to author a piece on the Superferry for this issue of Ka He‘e. The following is the author's opinion and analysis.

If one were to make lemonade out of lemons, the Hawai‘i Superferry provides an excellent opportunity for a civics lesson to closely examine the roles and balance of power between the three branches of government. Unfortunately, the victim in this debacle is not the Superferry, but the Hawai‘i Environmental Policy Act, Hawai‘i Revised Statutes ch. 343 (HEPA). Disputes over the Superferry’s failure to complete an Environmental Impact Statement (EIS) to consider potential impacts of establishing and operating ferry service between O‘ahu, Kaua‘i and Maui on natural and cultural resources, were eventually spun out of control. HEPA was wrongly fingered as a barrier to business, trashed by Hawai‘i’s executive branch, considered suspiciously by many members of the legislature, and is now threatened with being gutted in the next legislative session.

Enacted over thirty years ago, when Hawai‘i was considered a very progressive state and in the era of initiatives in the national environmental arena, including the Clean Air Act and major revisions to the Clean Water Act, the Hawai‘i State Legislature’s fundamental purpose in passing Chapter 343 was “to establish a system of environmental review which will ensure that environmental concerns are given appropriate consideration in decision making along with economic and technical considerations.” “[T]he process of reviewing environmental effects is desirable because environmental consciousness is enhanced, cooperation and coordination are encouraged, and public participation during the review process benefits all parties involved and society as a whole.” Simply put, HEPA establishes a structure to disclose the environmental, social, cultural, and economic effects of future actions to the public and decision-makers before projects are approved.

On its face, the requirement of an environmental review for the Hawaii Superferry, Inc. (HSF) seemed straightforward. HSF’s private business proposal to begin ferry service required discretionary approvals from two State agencies: the Public Utilities Commission (PUC) and State of Hawai‘i Department of Transportation (DOT). This new operation also required the use of public lands and was seeking public funding, both “triggers” for environmental review. So, what went wrong with the Hawai‘i Superferry and the environmental review process? One can only surmise that political zeal to push forward a desired outcome overran the process that the legislature had structured to “benefit all parties involved and society as a whole.”

Approximately three years ago on December 30, 2004, the PUC recognized that “issues were raised by some at the public hearings about the impact of the proposed ferry system on the environment.” PUC Decision and Order No. 21524. Although the PUC believed the environmental issues raised by the public were “important issues that should be addressed”, it deferred review of these issues, stating:

...they need not be addressed in this particular decision and order, since the determination of whether the proposed ferry service and its effect on the harbors and surrounding areas require an environmental assessment is currently being reviewed and addressed by the DOT (Department of Transportation).

The PUC’s decision and order further warned that:

We find it necessary, however, to condition our authorization in this docket upon Applicant’s showing, to the satisfaction of the commission, that Applicant has complied with all applicable federal and state laws, rules and regulations, including, without limitation, matters relating to the Environmental Impact Statement Law (“EIS”), under Chapter 343, HRS, to the extent applicable to ensure that all such requirements are appropriately addressed.

Interestingly, in a statement filed with the PUC on December 9, 2004, HSF’s attorneys conceded that the:

Applicant has requested that DOT issue a declaration of exemption for the harbor use because this action falls within several defined categories of actions that are exempt from the Hawaii EIS Law under Hawaii Administrative Rules (“HAR”) 11-200-8 . . . The question of whether the proposed harbor use would fall within the scope of the environmental review process prescribed in Hawaii EIS Law was discussed with high-level representatives of the DOT, the Attorney General and the State of Hawaii Office of Environmental Quality Control (“OEQC”) during meetings held in November 2004. The indication conveyed to Applicant was that the harbor use is encompassed by one or more of the exemptions described above and in the DOT’s Comprehensive Exemption List.

Reply Statement of Position (filed Dec. 9, 2004).

Meanwhile, with regard to the HSF’s June 4, 2004 application to the U.S. Department of Transportation, Maritime Administration’s (MARAD) Office of Environmental Activities, it was determined that the HSF’s proposed action was considered a “major federal action” pursuant to 40 CFR 1508.18 (a) because 78.5% of the project would be funded by Title XI loan guarantees totaling $143.6 million:

Based on the information available at that time, there appeared to have been very little, if any, [National Environmental Policy Act (“NEPA”)] or state environmental work performed related to the proposed ferry service that would be adequate for MARAD’s responsibilities under NEPA.

This determination also triggered preparation of an environmental review document. On February 23, 2005, the DOT erroneously determined that the expenditure of $40,000,000 in State funds for harbor improvements for the HSF, and the HSF’s proposed operation at Honolulu Harbor, Kahului Harbor, Nawiliwili Harbor, and Kawaihae Harbor met the conditions that “permit exemption from environmental review at such location(s) based on the method of operation planned.”

On or about March 28, 2005, notwithstanding its initial determination that the HSF was a “major federal action”, MARAD determined that HSF would be categorically excluded from the requirements of the National Environmental Protection Act based on the DOT’ erroneous exemption determination. In making its determination, MARAD concluded:

...the State of Hawaii Department of Transportation completed a review of the proposed action pursuant to Chapter 343, Hawaii Revised Statutes, and Chapter 11-200, Hawaii Administrative Rules, and determined that the proposed action is exempt from further review... Based on our review of information conveyed to us and in our possession (or attached) concerning the proposed action as stated above, the NEPA Program Manager, has determined that the proposed action is categorically excluded from further NEPA review.

On March 21, 2005, the Sierra Club, Maui Tomorrow, Inc., and the Kahului Harbor Coalition filed a lawsuit against the DOT and HSF on the grounds that the DOT erred in its determination that the improvements to Kahului Harbor for the HSF project were exempt from HEPA, thus avoiding an environmental review.

On September 7, 2005 the DOT and HSF entered into a Harbors Operating Agreement which explicitly contemplated compliance with state environmental laws:

In the event a governmental authority or a court of law determines that an environmental assessment or environmental impact statement is required regarding HSF’s operations, HSF will comply with all applicable environmental laws, statutes, rules, regulations, ordinances, orders, directives, and guidelines, including, the National Environmental Policy Act (“NEPA”) and HRS Chapter 343 (“HEPA”). No part of this Agreement shall be construed as (a) an agreement or acknowledgment by HSF or the STATE that an environmental review under NEPA or HEPA is required or (b) a waiver of HSF’s right to challenge or appeal any finding of a governmental authority or a court of law that an environmental assessment or environmental impact statement is required regarding HSF’s operations.

On August 23, 2007, the Hawai‘i Supreme Court issued an order reversing a July 12, 2005 second circuit court judgment in which DOT had prevailed. In a unanimous decision, the Court ruled “...that the DOT’s determination that the improvements to the Kahului Harbor are exempt from the requirements of HRS chapter 343 was erroneous as a matter of law.” The Supreme Court instructed the circuit court to enter a summary judgment in favor of the Appellants on their claim to request an environmental assessment and maintained concurrent jurisdiction to issue an opinion.

When the Supreme Court issued its written order on August 31, 2007, that opinion raised more questions than it answered. The DOT filed separate exemption notices for each State harbor. As a result, only the Kahului Harbor exemption was timely challenged. Therefore, it was not clear whether the court enjoined all HSF operations statewide or just HSF’s use of Kahului Harbor. However, on September 4, 2007, the DOT publicly announced that it would prepare a statewide environmental assessment.

The law is clear that HRS 353-5(c) unequivocally mandates the preparation of a draft and final EIS. HRS 343-5(c) provides in part that “[a]cceptance of a required final statement shall be a condition precedent to approval of the request and commencement of the proposed action.”

Therefore, until the draft and final environmental impact statement is completed, HSF should not be allowed to operate as a water carrier of passengers and property, including the use of the harbor improvements at any of the four harbors at issue.

Some have questioned whether HSF would be able to skate by with an Environmental Assessment, which is an environmental review document that is less comprehensive than an EIS. This seems highly unlikely, especially when HSF CEO John L. Garibaldi himself conceded significant environmental impacts:

...Harbor Divisions will require that the operational plans cover operations at each harbor, including topics bearing on the environment such as schedules, procedures for security screening and agricultural inspections... hazardous material handling... and traffic control, as well as pier and dock usage policies and procedures in general, relating to Hawaii Superferry and other harbor users and harbor employees. In addition to the requirements of Harbors Division, the operational plans will cover other environmental topics of utmost importance to Hawaii Superferry such as alien pest species, whale avoidance and traffic impacts, among others.

Letter from John L. Garibaldi, HSF CEO to Chair of Senate Committee on Transportation and Government Operations.

On October 24, 2007, Governor Linda Lingle called the Legislature back into a special session to consider bills to exempt large capacity ferry vessels – none other than HSF – from HEPA while an environmental impact statement was being prepared. After many, many hours of testimony, the seemingly preordained outcome of this special session was achieved and Act 2 was signed into law on November 2, 2007.

The Legislature is empowered to enact laws consistent with the United States and Hawai‘i constitutions. The Legislature generally makes laws to protect the health, safety and welfare of Hawai‘i’s people and its environment. Unfortunately, in my opinion, Act 2 is a law to correct a political fix gone bad. It neither creates a new policy nor protects the public interest, but instead establishes a process to circumvent existing laws to facilitate permitting for a special interest.

Such action flies in the face of Hawai‘i’s State Constitution, which mandates that:

Each person has the right to a clean and healthful environment, as defined by laws relating to environmental quality, including control of pollution and conservation, protection and enhancement of natural resources. Any person may enforce this right against any party, public or private, through appropriate legal proceedings, subject to reasonable limitations and regulation as provided by law.

Article XI, Section 9

In his October 9, 2007 decision considering whether HSF could operate after the Hawai‘i Supreme Court’s decision that environmental review document (EA or EIS) was required, Judge Joseph Cardoza concluded “that the balance of irreparable damage favors the issuance of a permanent injunction in this case as Plaintiffs have demonstrated the possibility of irreparable injury with respect to the environmental impacts of Hawai‘i Superferry operations on natural resources, protected species, increased introduction of invasive species and causing social and cultural impacts.” The Court also found that “the public interest in implementing the environmental review process supports the granting of a permanent injunction in this case.”

There is no dispute that the legislative intent of Chapter 343, specifically HRS 343-5(b), requires that the “acceptance of the requested final statement shall be a condition precedent to the implementation of the proposed action.” Simply put, Act 2 abrogates the constitutional rights of the plaintiffs in the Superferry remand and all of Hawai‘i’s people.

Act 2 makes no effort to “strike a balance between the issues of public interest and concerns for the environment” as Judge Cardozo required. Instead it simply cleared the way for the Hawai‘i Superferry to operate. The public interest is best served when the rule of law is followed, not by changing the law to serve the interests of one company, especially after a judicial ruling and injunction against that company. Even the Legislature's own committee report concedes that “that State officials should have been more vigilant in the interests of protecting the environment while seeking to enhance the economy of the State and that more due diligence is required when making decisions that may have significant environmental impacts for future generations.”

On November 14, 2007, Judge Cardoza lifted the permanent injunction citing the legislative intent of Act 2. There is no doubt that the actions of the Legislature and the constitutionality of this issue will be appealed by the plaintiffs. For now, in the Hawai‘i Superferry’s wake, we are left with beleaguered Hawai‘i Environmental Policy Act and a community whose confidence in government has been diminished. Left without a legal venue to protect their rights and concerns, many community members are now taking direct action. Only time will tell what happens when the Superferry sets sail.