NAWILIWILI, Kauai » The state might have wasted at least $10 million—and perhaps more than $40 million—in taxpayer funds to accommodate the Superferry's arrival in the islands last year, says an audit report released yesterday.

The report, by legislative Auditor Marion Higa, says the state caved in to pressure from the Superferry, changing its long-standing policy to accommodate the company and, later, to avoid an environmental review.

The Lingle administration could have avoided all problems had the state forced the Hawaii Superferry to build its own ramps, rather than building them at taxpayer expense, the auditor continues.

The two-lane barges and ramps allow the Superferry to off- and on-load in about 15 minutes. The barges, ramps and other harbor improvements were built at a cost of $38 million, without a full environmental impact statement, to accommodate deadlines for the Superferry.

Mike Formby, director of the state Harbors Division, said the state had “;no choice”; but to build the ramps at Nawiliwili, Kahului, Kawaihae and Honolulu harbors, and barges at all but Nawiliwili Harbor.

Hawaii Superferry made it clear: Build the ramps or the ferries are not coming to Hawaii, Formby added. In 2004, state officials were told—prior to the construction of the Alakai—that a ferry with a built-in ramp would not work with the design of the boat.

However, the second vessel, which has yet to be named, will contain a ramp when it is delivered in March, company spokeswoman Lori Abe said yesterday.

The new ship, with its ramp, and the Alakai, if it is retrofitted with a ramp, would basically render the harbor improvements obsolete, the report states.

The state had a policy of not providing ramps or similar equipment to any other harbor users, the report continues.

But the Superferry and Lingle administration officials forced state harbors personnel to accept the system when Hawaii Superferry told the state it would not be coming to Hawaii if forced to build on-board ramps, the report says.

Furthermore, when permanent harbor improvements, including building a new pier at Kahului Harbor, were suggested, they were shot down to meet deadlines imposed by Hawaii Superferry.

According to the report, the administration felt it could not “;secure all the necessary environmental assessments for the permanent harbor improvements in time to meet Hawaii Superferry Inc.'s deadline.”;

So the state built the barge and ramp structures instead.

The report also agrees with the basic assumption of the Supreme Court case scheduled to be heard today: that a law that allows the Superferry to sail as it completes an environmental impact statement “;compromised the state's environmental laws and set a worrisome precedent for future government accommodation”; and is clearly designed to benefit only one company.

Lingle administration officials have argued that the law did not provide special benefits to anyone because the law applies to all large-capacity ferry vessels.

However, the report states, “;Because Hawaii Superferry Inc. is the only ferry vessel company able to take advantage of the small window of time created by Act 2, it appears that the legislation was designed to benefit a single operator.”;

Besides the $38 million in taxpayer funds for harbor improvements, $3 million more is being spent to fix the barge at Kahului Harbor. The state and the Superferry are arguing over who pays for the dry-docking fees to fix the Kahului barge.

Since the barges were built in China, federal law bars their use to transport goods or people between U.S. ports. And the ramps built at all four harbors were specifically designed for the Superferry.

However, Formby and Abe contend the Superferry will still use the barges and ramps when the new ship arrives.

The state's ramps are “;significantly bigger and better”; than the ramp on the second vessel, Formby said.

The single-lane ramp fitted onto the second ship has a much greater angle and would cause off- and on-loading times of at least an hour, Formby added.

Still, he admitted, it looks like at least $10.4 million spent on the barge at Kawaihae on the Big Island will not be recouped.

The pier to which the barge was attached was damaged in the 2006 earthquake, Formby said, and the state is “;exploring options”; on the barge's use.

The audit's report was conducted as part of Act 2, which required a performance audit as part of the bill's passage. This is the second phase of the audit.

The first, which was issued in April, found that the state was forced to exempt the Superferry from environmental review to meet deadlines imposed by the company.