The Auditor State of Hawai‘i
Report No. 08-11 December 2008
Marion M. Higa Offi ce of the Auditor
State Auditor 465 South King Street, Room 500
State of Hawai‘i Honolulu, Hawai‘i 96813
(808) 587-0800
FAX (808) 587-0830
Performance Audit on the State Administration's Actions
Exempting Certain Harbor Improvments to Facilitate
Large Capacity Ferry Vessels from the Requirements of the
Hawaiÿi Environmental Impact Statements Law: Phase II
Report No. 08-11, December 2008
We conducted the second phase of this performance audit in response to Act 2,
Second Special Session Laws of Hawaiÿi 2007. The audit examines the state
administration’s actions against the requirements of the Hawaiÿi Environmental
Impact Statements (EIS) law, Chapter 343, Hawaiÿi Revised Statutes. The audit
reviewed the State’s actions in not considering potential secondary environmental
impacts of the harbor improvements prior to granting the exemption from these
requirements. The Phase I report, Report No. 08-09, was issued in April 2008.
We found that with the impending arrival of Hawaiÿi Superferry, Inc., the Department
of Transportation (DOT) in 2004 and 2005 reversed a long-standing policy of not
providing additional pier-side equipment for harbor users. State officials ignored
the recommendations of their technical staff, setting off a chain of events that
culminated in the selection of inadequate harbor improvement systems. Moreover,
the DOT’s passive approach to the issue of addressing secondary or cumulative
effects was made possible by a combination of flawed or unclear EIS laws and rules.
Saddled with a deadline imposed by Hawaiÿi Superferry and supported by
administration officials, DOT technical staff implemented the only harbor
improvement system that could meet their time horizon, a combination of barges
and ramps, which was not their preferred choice. The state-funded $38.5 million
harbor improvement system has proved to be problematic, best exemplified by
Kahului Harbor’s barge, which is continually battered by high winds and waves.
Not only have the barge and pier incurred more than $3 million in damages (the
liability of which has yet to be determined), the barge also requires the services of
a tug boat to secure it to the pier during ferry operations. Like the barge and pier
damage, responsibility for this significant extra expense has yet to be determined.
But the State has a larger and more expensive challenge over the horizon. Last
summer, Hawaiÿi Superferry officials announced that they will be outfitting their
second ship with an onboard ramp, a feature that eliminates the need for the $10
million barge-and-ramp system at Kawaihae Harbor and the $2.5 million ramp at
Näwiliwili Harbor, both built to accommodate Hawaiÿi Superferry and no other
users. If company officials choose to retrofit their first ship, the Alakai, with
a loading ramp, the State’s entire $38.5 million barge-and-ramp system would
quickly become unnecessary. Because the barges were designed specifically for
Hawaiÿi Superferry use, they cannot be repurposed in their present configuration
by other harbor users. In addition, since they were built in China and are therefore
prohibited from transporting cargo within U.S. waters, the barges may have little
use for potential buyers. This situation would have been avoided if state officials
had required Hawaiÿi Superferry to carry an onboard ramp in the first place.
We also found that the legislation on behalf of Hawaiÿi Superferry compromised
the State’s environmental laws and set a worrisome precedent for future
government accommodation that puts the interests of a single business
before the State’s environmental, fiduciary, and public safety responsibilities.
Our recommendations are designed to address the flawed or unclear
EIS law and rules. The Office of Environmental Quality Control in the
Department of Health should establish guidelines, including a checklist
for agencies to ensure that all of the steps required by the rules have been
properly addressed and documented before according an exemption.
The Environmental Council should establish a process to provide guidance to
agencies in determining whether an action is projected to have a significant
environmental impact which would make an exemption inapplicable;
amend the EIS rules to ensure the OEQC provides training to state and
county agencies; clarify the agency consultation process regarding proposed
exempted actions; and establish clear definitions of cumulative and secondary
impacts in regards to water carrier operations and the scope of their coverage.
Finally, we recommend the DOT Harbors Division investigate options
for a new barge mooring and fender system for the Kahului pier,
determine responsibility for barge maintenance, and resolve financial
liability issues over damage and unplanned expenses such as tug services.
The DOT response sidesteps many of the issues and challenges some wording.
But most of the language came from documents from the department.
The department disagreed that on-board loading ramps would render the State’s
$38.5 million barge-and-ramp system unnecessary. Yet, the ferries’ shipbuilder
as well as ferry officials have declared that on-board ramps would avoid the use
of the problematic barges.
After a careful review and consideration of the department’s comments, we
made minor changes and clarifications to our report, none of which affected our
findings and conclusions.