The state auditor says the Hawaii Department of Transportation compromised environmental standards in favor of the Hawaii Superferry.

In the first of 2 reports, state auditor Marion Higa blasted the transportation department for exempting Hawaii Ssuperferry from environmental review.

Here's what happened according to transportation director Mike Formby: “The Superferry came forward and said if we're going to build this we have to have a contract in place by June 2005."
But to do that, the state needed to exempt barge improvements from environmental oversight.

The auditor said: “The state may have compromised its environmental policy in favor of a private company's internal deadline that drove the entire process."

Both Superferry and the state deny the business strongarmed government.

"It's kind of hard to believe that Hawaii Superferry which at that time was 3 individuals could strongarm the state," said company CEO John Garibaldi.

"They knew they might have to exempt the harbor improvements,” Formby said of transportation management staff. “It wasn't something that was done at the last minute because Superferry came up and put a deadline on our doorstep."

Yet Superferry says the deadline was firm and could have shut down boat construction already underway.

"June 30th was a date that was real,” Garibaldi said. “It was in commitments from the shipbuilder who wanted to get paid for their construction. Yhat date was based on successfully getting through the state legislature for their approval of the funding for doing the state harbors."

As for the state, they say they didn't think the exemptions were out of the ordinary at the time.

"We did it the way we had always done it,” Formby said. “And we didn't know that three years later they were going to tell us it was incorrect."

Incorrect because the Hawaii Supreme Court later said the state should have considered secondary and cumulative impacts and required a full-blown environmental impact statement.

"If they come to us for harbor improvement in the future, we now have a different analysis," Formby said.

The state auditor ponders broader implications, saying: "It remains to be seen whether these decisions will cost the state more than its environmental policy," adding that will be delved into more in phase 2 of the audit.