POSTED: 8 SEPTMEBER 2007 - 8:00am HST

Lehman joins Superferry in March 2005

image above: John Lehman on NBC's "Meet the Press"

[Editor's Note: The following is an exerpt from an article in Pacific Business Journal that reveals the the truth about the continued denial by the Superferry Corporation that the military has not been a part of the planned use of the Superferry from the point that John Lehman became involved.]

28 March 2005 in Pacific Business Journal

...Lehman's private equity firm J.F. Lehman & Co. will invest $58 million equity capital in the interisland ferry project. His company invests primarily in marine and aerospace defense projects...

With Lehman's expertise, the Superferry plans to operate a Westpac Express, essentially to carry military equipment and ferry vehicles from Oahu to the Big Island on a daily basis.

At present, the military has to make shipment plans six months in advance to put them on a barge, said Tim Dick, president and chairman of Hawaii Superferry.

"The ferry will save the military dollars and take 25 percent of the time," Dick said.

This logistical plan will make it easier for soldiers to train when the Stryker Brigade comes to Hawaii. The brigade will be stationed on Oahu and conduct training exercises on the Big Island, Lehman said. "The Superferry is strong enough to take Stryker vehicles," he said.

Hawaii Superferry provided the Army with a cost analysis and expects to negotiate a long-term contract, Dick said...

For the complete article click below:



POSTED: 3 SEPTMEBER 2007 - 6:30am HST

Maritme Administration Pressure on HDOT

[Editor's Note: Wikipedia says: The United States Maritime Administration or MARAD, is an agency of the United States Department of Transportation that maintains the National Defense Reserve Fleet (NDRF) as a ready source of ships for use during national emergencies and assists in fulfilling its traditional role as the nation's fourth arm of defense in logistically supporting the military when needed. The Maritime Administrator is Sean Connaughton, a Republican lawyer appointed in 2006 after an unsuccessful run in 2005 for Lieutenant Governor of Virginia.]

by Kyle Kajihiro on 2 September 2007

While there is plenty of blame to go around for the Superferry fiasco, the real source of the problem may lie in the mysterious condition of the Title XI loan guarantee set by the Maritime Administration (MARAD) that there be no environmental impact statement. Why would the federal government use such coercion of the purse to prevent the state from following its own laws, especially under a program that the Bush administration does not believe in?

Sean Connaughton, Administrator of MARAD testified before congress (March 15, 2007) that the agency had not requested Title XI loan guarantees since 2001 because it viewed the program as a corporate subsidy. However through Congressional appropriations (i.e. earmarks) MARAD funded a number of loan guarantees, the most recent of which was the Superferry.

So let's follow the money. How were the funds for the Superferry loan guarantee appropriated? And what strings were attached to the money in that legislation? What promises or assurances were made to ease its passage?

Could Connaughton's surprisingly alarmist declaration last week in the Maui court that "the military readiness of the Nation could be diminished if the ALAKAI is precluded from sustaining normal commercial operations" be a clue to the deals made to clinch the Superferry?

[Editir's Note: Here is a link to the deposition of Sean Connaughton in the Superferry case. 0709-29Connaughton.pdf. Below is the bulk of his decalration in support of the Superferry. Sounds like a conspiracy and extortion to me. A Federal agency coerces a State to violate its own environmental regualtions for one-hundred-and-forty million dollars. Wilipedia says: ]



SEAN T. CONNAUGTON hereby declares as follows:

I am the Administrator of the Maritime Administration, U.S. Department of Transportation.

2. The Maritime Administration is charged with furthering the purposes and policy of the Merchant Marine Act, 1936, now codified at 46 U.S.C. § 5010 1.

3. Those purposes include fostering the development and maintenance of a United States-flag merchant marine sufficient to carry the Nation's domestic water-borne commerce and a substantial portion of its water-borne export and import foreign commerce, capable of serving as naval and military auxilliaries in time of war or national emergency, owned and operated by U.S. citizens, composed of the most modem and suitable vessels with trained and efficient citizen personnel, and supplemented by efficient shipbuilding and ship repair facilities.

4. Among the programs administered by the Maritime Administration is a loan guarantee prooram, under 46 U.S.C. § 53701 et seq., whereby the United States Government pledges its full faith and credit to pay a guarantee for both principal and interest of obligations incurred in the construction of vessels in United States shipyards.

5. The construction of the ALAKAI, for Hawaii Superferry, Inc., was financed under the Maritime Administration's loan guarantee program.

6. The United States Government is responsible for paying the debt of approximately $140 million, for the ALAKAI and a sister vessel still under construction, in the event of a default.

7. The preclusion of the intended operation of the ALAKAI in Hawaii greatly increases the likelihood of a default whereby the United States Government would be called upon to make good on its guarantee of the vessel financing.

8. The ALAKAI is a vessel that has considerable military utility, in view of its speed and cargo capacity.

9. The ALAKAI has been approved for inclusion in the Voluntary Intermodal Sealift Agreement program, established under the Defense Production Act to provide access to commercial sealift capacity to the United States military in times of war or national emergency.

10.In a national emergency, the vessel can be called up to serve the United States military at a pre-determined fee arrangement.

11.The military utility of the ALAKAI could be diminished if the vessel is not operated in normal commercial operations.

12. Consequently, the military readiness of the Nation could be diminished if the ALAKAI is precluded from sustaining normal commercial operations.

I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge and belief.




POSTED: 2 SEPTEMBER 2007 - 9:45pm HST

The Superferry May be Stopped

image above:The front facade of the Hawaii Supreme Court

[Note from John Tyler: Confirmation everyone, of what we knew....all the while the Superferry was publicly saying (lying): "there's no military plans for Superferry"]

[Editor's Note: Pertinent statements this article have been made bold and italisized by]

The Superferry Military Plan

Delay could hurt Alakai's military usefulness

by staff writers on 2 September 2007 in The Honolulu Advertiser

Hawaii Superferry's Alakai has considerable military utility that could be diminished if ferry operations are delayed, a federal maritime official has said.

Sean Connaughton, the administrator of the U.S. Department of Transportation's Maritime Administration, said in a declaration in Maui Circuit Court last week that the Alakai could be used by the military because of its speed and cargo capacity.
The federal maritime administration approved $140 million in loan guarantees for the construction of the Alakai and a second ferry.

Connaughton said the Alakai has been approved for inclusion in the Voluntary Intermodal Sealift Agreement program, which provides the military access to commercial sealift capacity in times of war or national emergency.

Matson Navigation Co. and Horizon Lines, which dominate the state's shipping market, have also participated in the program.

But Connaughton said the military utility of the Alakai could be diminished if it is not used in normal commercial operations.

"Consequently, the military readiness of the nation could be diminished if the Alakai is precluded from sustaining normal commercial operations,"
he told the court.

Some Superferry opponents believe the Alakai and a second ferry could be used to transport the Army's Stryker brigade vehicles.

[Editor's Note: Pertinent statements this article have been made bold and italisized by]

Hawaii Superferry fought need for EIS
by Derrick DePledge on 2 September 2007 in The Honolulu Advertiser

Hawaii Superferry executives told the state in early discussions on interisland ferry service that requiring an environmental assessment could jeopardize federal financing and essentially halt the project.

The U.S. Department of Transportation's Maritime Administration approved $140 million in loan guarantees for Superferry in January 2005 on the condition that the state give all governmental and environmental clearances, including confirmation that there was no need for an environmental assessment of port facilities.

The state was aware of this condition when it ruled in February 2005 that $40 million in state harbor improvements for the Superferry project were minor and exempt from an environmental assessment.

"They pointed out that this was the condition that they were faced with," Barry Fukunaga, the director of the state Department of Transportation, said of Superferry executives. "But we didn't use that as the basis for our argument."
Pressure to meet conditions of the federal loan guarantees helps explain why Superferry executives, at crucial moments over the past two years, have insisted that an environmental assessment — and the chance it could lead to a more thorough environmental impact statement — would endanger the project. The federal loan guarantees were for the construction of the Alakai and a second ferry being built and cover most of the $180 million cost.

The state Supreme Court has ruled that an environmental assessment is necessary for Superferry-related harbor improvements at Kahului on Maui. A Maui Circuit Court judge has issued a temporary restraining order stopping the ferry on Maui, while the court considers the state's request to allow Superferry to resume service as an environmental assessment is conducted. Superferry has indefinitely suspended service to Kaua'i because of protests.

John Garibaldi, the Superferry's chief executive officer, told the Maui court last week that the temporary restraining order could mean the ferries might be moved elsewhere by investors, the latest of several warnings by Superferry about the future of the project.

The state's February 2005 exemption for Superferry is at the center of the controversy, and interviews and court documents show that Superferry executives have claimed from the start that an exemption was not only warranted, but critical to the project moving forward.

"If there wasn't an exemption, the project wouldn't have gone forward," Garibaldi said yesterday. "That would have said, 'Jeez, this project isn't doable, it's not going ahead. It would have to have something else.'
"It was very significant that if it wasn't an exemption, what else would it be? And then that would have had to have been analyzed at that time."

After the Sierra Club, Maui Tomorrow and the Kahului Harbor Coalition sued the state over the exemption, Superferry executives, in both a court declaration and in a confidential settlement offer, said an environmental assessment or delays from a lawsuit would threaten the federal loan guarantees as well as private equity investments.

A Superferry attorney offered to settle the lawsuit in July 2005 and agree to a contractual environmental review of the project, but was adamant about not going through a state environmental assessment.

"Our funding is contingent on completion of 'environmental clearances,' " Lisa Munger, the Superferry attorney, wrote Isaac Hall, an attorney representing the environmentalists. "Accordingly it is critical to us that the process remain contractual not regulatory. If DOT participates, we cannot receive funding."

The Superferry's settlement offer, which was rejected by environmentalists, was to have a consultant review the project and address issues such as the spread of invasive species, whale avoidance, traffic congestion, and conflicts between the ferry and other Kahului harbor users. Superferry ultimately took steps on its own to address the environmental concerns, but not to the satisfaction of environmentalists who wanted a state environmental assessment.

Gov. Linda Lingle has defended the state's exemption as proper and said Superferry is being unfairly singled out when airlines, barges and cruise lines did not have to undergo similar environmental review.

Lingle also referred to the conditions of the federal loan guarantees on Wednesday in a letter to state Senate Majority Leader Gary Hooser, D-7th (Kaua'i, Ni'ihau), in which she argued that federal, state and county governments had carefully scrutinized the legal and environmental issues surrounding the ferry.

"It is important to remember that the U.S. Maritime Administration, which provided a loan guarantee for construction of the Alakai, put as a condition that no EIS would be required," Lingle wrote.

Fukunaga, who was the department's deputy director of harbors at the time, said he knew of the conditions of the federal loan guarantees before the department's ruling but did not feel pressure to grant the Superferry exemption.

"We knew about that but it didn't really effect our outcome," Fukunaga said.
The department ruled that the harbor improvements for Superferry in Honolulu, Kahului, Nawiliwili and Kawaihae were minor and mostly involve barges and boarding ramps for passengers and vehicles that are consistent with existing harbor use. The department did not consider secondary or cumulative issues related to ferry operation, a decision that was criticized in February by the state's Environmental Council and in the Supreme Court's full opinion released on Friday.

Superferry executives, beyond the warnings about the risk to its federal loan guarantees, also suggested to some at the state Legislature that the project could be significantly delayed or even scrapped if an environmental assessment was required. Their statements are being recalled now that the state is asking the Maui court to allow Superferry to proceed during the environmental assessment.
"It's a very unfortunate case of 'I told you so,' " said state Sen. Shan Tsutsui, D-4th (Kahului), one of the Neighbor Island senators who wanted an environmental review. "I think, at this point, nobody wins in a situation like this."

Superferry hired some of the state's top lobbyists last session to help stop an attempt by Hooser, Tsutsui and others to force an environmental review of the ferry's effect on state harbors. The state Senate did pass a compromise bill with the intent of allowing the ferry to launch while a review took place, but it failed in the state House after objections from Superferry and the state.

A Superferry public-relations campaign included a poll that asked whether people would support the Senate compromise even if it meant it could delay the launch by three years or cancel plans to ever start ferry service. Asked about the tone of the poll questions, David Wilson, of McNeil Wilson Communications, the Superferry's public-relations firm, told the Advertiser's Capitol Notebook blog in March: "We're saying this: 'If there is an EIS, Superferry is leaving.' "

Garibaldi said yesterday that Superferry objected to specific language in the Senate bill it believed would have made the environmental review a condition of the project moving ahead. "That was a show-stopper for us," he said.

Neighbor Island senators offered to work on the language with the House, but Superferry feared potential delays to its summer launch.

State Rep. Joseph Souki, D-8th (Wailuku, Waihe'e, Waiehu), the chairman of the House Transportation Committee, said last week that one reason he refused to hear the Senate compromise was because Superferry executives warned it would delay the launch. He also thought singling out Superferry for an environmental review was unfair.

"I'm convinced we did the right thing," Souki said, "but I respect the decisions of the courts."

In his declaration in Maui court last week, Garibaldi said the temporary restraining order could mean Superferry will be unable to pay its debt obligations on ferry construction and that could lead to default, which would leave the federal government to pay the cost of building the ferries. A separate declaration from the federal maritime administration also warned of a potential default.

Without revenues from ferry operations, Garibaldi said Superferry would not be paying fees to the state that could be used to service debt on the $40 million in harbor improvements. With no return on investment, he added, Superferry might "lose control of the ferries."

"The investors and lenders will cause the ferries to be deployed where they can generate revenues," Garibaldi said.



POSTED: 2 SEPTEMBER 2007 - 9:45pm HST

Superferry Court Case Details

[Editor's Note: Our conclusion from reading the Conclusions of the case material indicates that if the EA is done it will shutdown all harbors and all Superferry service.]

By Dick Mayer on 2 September 2007

Here are the briefs of the parties in the "Hawaii Superferry EIS" appeal, decided by the Supreme Court of Hawaii last week. These should clear up any questions about what the litigation is about, and what the parties argued.


Brief of Plaintiffs-Appellants [Sierra Club, Maui Tomorrow, Kahului Harbor Coalition] (filed Oct. 21, 2005) (2 mb pdf). Note below is the Conclusion of the Brief:



The scheme of the HDOT Defendants-Appellants attempted herein, that approvals for harbor improvements for the Hawai'i Superferry project and/or that entitlements to use state funds, lands, waters and harbors can be granted first and that the admitted potentially significant adverse impacts of these uses can be studied afterwatds, outside of the process established by Chapter 343, to the great predudice of Plaintiff-Appellants, the public and the envirement. Kepoo v.Kane, 106 Haw. 270, 103 P.3d 939 (2005).

Based upon the foregoing. Plaintiffs-Appellants respectfully request that this
Court grant the following relief:

A. This Court reverse the Trial Court ruling that Plai tit ti ffs-Appellants lack
standing 1)\, ruling that Plaintiffs standing as a, a matter of law fact:

B. This Court reverse t the Trial Court ruling that I HDOT complied with
Chapter 343 in entering it written exemption determination and further rule that
HDOT's written exemption determination in this matter is reversed and voided:

C. This Court rule that Chapter 343 and the regulations promulgated
thereunder require. as a matter of law, at a minimum, the preparation of an
Environmental Assessment for the Hawai'i project, at the earliest
practicable time: Citizens, 979 P.2d at 105.

D. This Court order that no permits, leases or other entitlements may be
Wanted by HDOT to Hawai'i Superferry until compliance with Chapter 343 has been satisfactorily demonstrated and that any permits. leases or other entitlements which have been issued are void. Kepoo v. Kane. 106 Haw. 270. 103 P.3d 939. (2005). Completion of the environmental process, shall be a condition precedent to the implementation of a proposed action. I I RS § 343-5(b). and shall be a condition precedent to the use of sate land (and state harbors). I HAR § 11 -200-23(c).

E. This Court order that HDOT must be prohibited from taking any
further actions to implement the project. pursuant to HRS 343-5(c) and HAR §I I 200-23(c). Blue Ocean Preservation Society v.Watkins. 754 F. Supp. 1450 (D. Haw. 1991).

Dated: Wailuku, Maui, Hawai'i on 10/21/05

Isaac Hall
Attorney for Plaintiff-Appellants
The Sierra Club, Maui Tomorrow Inc., and
the Kahalui Harbor Coalition



Answering Brief Defendants-Appellees Hawaii Superferry, Inc. and the State of Hawaii's (filed Dec 27, 2005) (1.2 mb pdf). ote below is the Conclusion of the Answering Brief:



Based on the foregoing, Appellees respectfully request that the Circuit Court's Order and Final Judgement be affirmed in its entirety and Appellants' appeal be dismissed.

Dated: Honolulu, Hawaii on 12/27/05

Lisa Woods Munger
Attorney for Defendant-Appellee

Hawaii Superferry Incorporated

William Wynoff
Attorney for Defendant-Appellee
State of Hawaii

Reply Brief of Appellants (filed Jan. 20, 2006) (650 kb pdf). Note below is the Conclusion of the Reply Brief:



When the Appellate Courts are reach, to decide this case, effective and
meaningful relief can still be afforded to Appellants should the Trial Court
decision be reversed. Apellees have proceeded at their own risk in the face of a
timely filed appeal. The first ferry is not scheduled to begin service until 2007
and the second ferry is not scheduled to begin service until 2008. ROA p. 1182.

Most importantly Hawaii Superferry's right to operate in State waters is
conditioned upon compliance with Chapter 343. according to the Certificate of
Public Need Issue by the Public Utilities Commission. Any entitlement to use
State lands or State harbors or the harbor improvements constructed with
State funds is also conditioned upon compliance with Chapter 343.

In short, should the Appellate Courts rule. as requested by Appellants, that the
exemption is void, that Chapter 343 requires, at a minimum, the preparation
of an Environmental Assessment (-EA"), a further order can issued that the
Hawaii Superferry is enjoined from traveling in State waters as granted by the
Public Utilities Commission and from using the State harbors and State harbor
imporvements as granted IA, HDOT until and unless full compliance has been
achieved with Chapter 343.

Dated: Wailuku, Maui, Hawai'i on 1/20/06

Isaac Hall
Attorney for Plaintiff-Appellants
The Sierra Club, Maui Tomorrow Inc., and
the Kahalui Harbor Coalition

Charley Foster at Planet Kauai has posted a succinct summary of the briefs and the legal arguments, and included some thoughts about the future:
The question left wide open – and that will definitely find its way back into the courts – is what will be the scope of an environmental assessment. The state and Superferry will argue that it ought to be limited to the harbor improvements that brought the project within state environmental legislation in the first place. The plaintiff groups will argue that, once the requirements of the law are triggered by the harbor improvements, then everything about the ferry’s operation ought to be examined for its environmental impact. Well worth reading his whole post at:

Supreme Court oral arguments on Superferry
from Dick Mayer on 24 August 2007

The Supreme Court opinion said the exemption on an environmental assessment was "erroneously granted" by HDOT and that the department "considered only the physical improvements to Kahului Harbor in isolation and did not consider the secondary impacts on the environment" that could result from the Superferry.
- Honolulu Star Bulletin 9/1/2007

Supreme Court oral argument at 9:00am, order reversing the lower court at 3:00pm.
If only all appeals reached decision this quickly.

In what must be a record (especially in the Hawaii Supreme Court, which had in the past few years become legendary for the length of time it considered some cases), the Court issued a unanimous order in the "Superferry EIS" case. Bottom line: the State should have required the interisland ferry service to undertake an environmental review.

As for the head-snapping speed of today's order, it's not like the Justices haven't had sufficient time to consider the issues even though the oral hearing was only this morning. The briefing was completed some time ago -- nineteen (19) months to be exact -- thus allowing the Court enough time to understand and research the issues. The slower pace of appellate litigation often permits judges to reach preliminary decisions prior to oral arguments.

SUPREME COURT OPINION (filed Aug. 31, 2007) (650 kb pdf). Note below is the Conclusion of the Opinion:



Based on the foregoing, we reverse the circuit court's July 12, 2005 final judgement. As indicated in our August 23, 2007 order, we have instructed the circuit court to enter summary judgement in favor of the Appellants on their claim as to the request for an environmental assessmet and remand the case for such other and further disposition of any remaining claims as may be appropriate.

Dated: Honolulu, Hawaii on 12/27/05

Briefs of the Supreme can be found in PDF files here:

Listen to mp3 file of oral arguments here:

Tig Krekel, vice chairman of New York-based J.F. Lehman & Co., the majority investor of Hawaii Superferry, said he never expected this level of intensity when the investment firm put in the bulk of the Superferry's $92 million in equity investment.
"It's like putting a sign up that Hawaii is closed for new investment," said Krekel, who spends several months a year at his home on Maui. "It's an unfortunate, chilling message to any prospective investor in the Hawaii economy."

- The Honolulu Star Bulletin 9/2/07

click at right to comment Island Breath Blog

see also:
Island Breath: Support from Oahu's DMZ 8/30/2007
Island Breath: DMZ - Stop the Strykers 7/2/07
Island Breath: Maui Case & Timeline 8/29/07
Island Breath: A Hawaiian's View 8/29/07
Island Breath: We Win Round Three 8/28/07
Island Breath: Plea to Reps and TRO 8/27/07
Island Breath: Rounds One & Two 8/23/07
Island Breath: Boycott the Superferry 8/17/07
Island Breath: Superferry Preparations 8/10/07
Island Breath: Hui-R Superferry Meeting 7/26/2007
Island Breath: Not So Super Ferry 7/24/07
Island Breath: Superferry Invasion 7/22/07
Island Breath: Superferry Noise 7/18/07
Island Breath: Superferry Delayed 5/25/07
Island Breath: Still No Superferry EIS 3/31/07
Island Breath: Superferry EIS Effort 3/25/2007
Island Breath: Superferry EIS Bill hearings 2/26/07
Island Breath: Superferry Promotion 2/24/07
Island Breath: Superferry Launched 1/28/07
Island Breath: Superferry in Trouble
Island Breath: Superferry Reference
Island Breath: Superferry Resistance
Island Breath: Superferry & Military
Island Breath: Superferry History
Island Breath: Stop the Superferry
Island Breath: Superferry Meetings
Island Breath: Superferry Redux
Island Breath: Superferry Problems


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