Hawaii Superferry will cease operations and its future in the Islands is in doubt after the state Supreme Court ruled that a state law that saved the project two years ago is unconstitutional.

Hours after the ruling yesterday, Superferry contacted passengers who have booked travel between O'ahu and Maui to notify them of the situation. The Alakai will make one additional roundtrip between the two Islands on Thursday to return passengers and vehicles.

The court ruled that the law that allowed Superferry to operate during an environmental review is improper because it is a special law created just for Superferry.

In a statement last night, the company said it was "hugely disappointed."

"We have operated on a regular, reliable and responsible basis for the past 11 months. During this time over 250,000 people have booked travel on Alakai and it has provided new economic opportunities for Hawai'i's businesses. While the appeal is not yet final because a judgment on appeal has not been entered, we want to proceed prudently and have decided to cease operations for the present."

Irene Bowie, the executive director of Maui Tomorrow, which brought the legal challenge with the Sierra Club and the Kahului Harbor Coalition, said Superferry "did the reasonable thing this time."

She said the environmental groups probably would have asked Maui Circuit Court for an injunction if Superferry planned to continue operations.

"It's unfortunate this all had to take place," Bowie said. "I wish that the state and Superferry had taken the correct course of action in the very beginning and followed the law because we do feel for the people who will be unemployed because of this. But we do think the onus is on the state."

ENVIRONMENTAL REVIEW

The environmental review, which is at the center of the controversy, is being prepared by a state contractor and is almost finished.

But Maui Tomorrow will insist that the review start over because it was conducted under a law that has now been ruled unconstitutional, Bowie said. Her group wants the review to follow the more rigorous guidelines of the state's primary environmental review law.

"I'm not sure what they could salvage out of this EIS (environmental impact statement). It really is inadequate. They really need to start the process over again and put forth real mitigation measures," she said.

Gov. Linda Lingle said she wanted to talk to the state Attorney General's office and state lawmakers about the state's options, including whether to ask the court to reconsider its ruling. She said it would be "devastating" if Superferry were to end operations.

"We want people to know we're going to work hard to make certain that the taxpayers are protected and that the Superferry is allowed to operate," Lingle said.

Superferry's choices, however, are difficult. A suspension of service will place new financial strain on the company and its employees during a recession. Superferry executives, citing the economic downturn, already announced last year they would delay the launch of a second ferry to the Big Island.

If the courts determine that the environmental review has to be redone, it could take several months to a year to complete. Such a delay could also mean Superferry would not be able to make payments to the state for $40 million in state harbor improvements, a debt that could eventually shift to other harbor users.

Superferry executives have said several times that they may be forced to leave the Islands unless they receive some assurances about the project's future.

'CLASS OF ONE'

The Supreme Court, in a 113-page opinion written by Associate Justice James Duffy, concluded unanimously that the law passed in special session by the state Legislature and signed by Lingle in November 2007 is unconstitutional because it was tailored solely for Superferry.

The court said the state Constitution prevents the Legislature from enacting special laws designed to favor specific interests. The court determined that the law was conceived, drafted and enacted to allow Superferry alone to operate without satisfying the state's rigorous environmental review law, known as Chapter 343.

"That our Constitution prohibits laws which provide disparate treatment intended to favor a specific individual, class, or entity or to discriminate against a specific individual, class, or entity is a fundamental principle of the democratic nature of our government: equal rights and treatment for all persons under the law," Duffy wrote.

The Superferry law, the justices found, creates an illusory "class of one" because it is unlikely it would ever apply to another ferry company.

State lawmakers had argued that they had the authority to pass the law, and the ruling is a check on their power that could set precedent for how they approach similar situations in the future.

State Senate President Colleen Hanabusa, D-21st (Nanakuli, Makaha), said the ruling could influence how the Legislature drafts laws that are meant to respond to specific places or events.

"I'm concerned that we are not going to be able to craft laws maybe as deliberately as we have in the past. I think that's an issue," she said.

Hanabusa also wondered about whether the ruling exposes the state to a lawsuit from Superferry. The law included a provision that prevented Superferry from suing the state for past decisions involving an environmental review.

Lingle called lawmakers into special session after the Supreme Court ruled in August 2007 that the state was wrong to exempt the Superferry project from an environmental review. Environmentalists had gone to court on Maui and protesters had jumped into Nawiliwili Harbor on Kaua'i to block the ferry.

State House and Senate leaders said they were trying to preserve an alternative form of transportation between the Islands when they voted overwhelmingly to allow the Superferry to resume operations.

'FOLLOW THE LAW'

Few observers predicted the legal challenge to the law would succeed until the Supreme Court agreed to hear the case on appeal last year. After oral arguments in December, it was apparent that several justices took interest in the arguments from environmentalists that the law was special legislation.

State Sen. J. Kalani English, D-6th (E. Maui, Moloka'i, Lana'i), one of five senators who voted against the law, said he warned at the time it was unconstitutional.

The law referred obliquely to a "large capacity ferry vessel," but it was obvious that it was written for Superferry. "We simply masked the idea of what the Superferry is by calling it by this generic name," he said.

English said the Superferry could have avoided the situation if it had agreed to an environmental review at the planning stages. Superferry executives, however, aggressively resisted an environmental review and warned the state that financing for the project would disappear if a review was required.

"It goes back to what we said from the beginning. We told the Superferry, 'Simply follow the law,' " he said. "If they did that, none of this would have happened."

State Senate Majority Leader Gary Hooser, D-7th (Kaua'i, Ni'ihau), who also voted against the law, said he blames the Lingle administration for exempting the project from an environmental review. Staff at the state Department of Transportation's harbors division had recommended a review but were overruled by others in the administration.

"It's unfortunate that we are still involved in this controversy," Hooser said. "It's unfortunate the Lingle administration mishandled it in the beginning, which I believe led us down this path."

Hooser said the experience is "clearly bad for business. It's bad for Hawai'i's image. But I lay the full responsibility on the Lingle administration and the decisions they made in allowing Superferry to bypass (the environmental review law) in the first place."

Maui Mayor Charmaine Tavares, in a statement, also said an environmental review should have been done first.

"Early compliance would have benefited both the environment and today's small businesses that utilize the Superferry," she said. "Having a variety of transportation options is important. It is equally important to follow laws meant to safeguard our communities."

Lingle, however, defended her administration's decision.

"I'm sure there are all sorts of political opinions out there," she told reporters. "But we know from the beginning we were correct and accurate, did the right thing, and we've been able to provide a great service for the people of Maui and O'ahu, one that they've come to appreciate and in some cases to depend upon, especially in the case of small businesses."

FUTURE FOR KAUA'I

On Kaua'i, where opposition to the ferry was the most intense, the Kaua'i Chamber of Commerce still expects Superferry to host its first-quarter membership banquet on Thursday night, but is not sure Superferry President Thomas Fargo will still be the keynote speaker.

"With this ruling, we know everything's up in the air," Chamber President Randy Francisco said.

Before the court's ruling, the chamber had expected Fargo to give some indication of when the Superferry might try to return to Kaua'i for the first time since the protests.

People for the Preservation of Kaua'i plans a press conference tomorrow morning "to stress the Superferry is unwelcome at Nawiliwili Harbor until they get an EIS," chairman Rich Hoeppner said. "Whether because of the Supreme Court decision or in spite of it, we're still here and no still means no until an environmental impact statement is done."

Brad Parsons, a Superferry critic who splits his time between Maui and Kaua'i, said the ruling gives him "a sense of great relief and inspiration, that the Supreme Court justices did the right thing, with good reason and well-thought-out logic. ... It's like a big weight off my shoulders that there is somebody at the state that did the right thing, finally."

John and Patty Gesser of Hawai'i Kai took the ferry to Maui yesterday with their vehicle and have reservations to return to Honolulu on the last voyage on Thursday.

"It was a beautiful trip. We were very pleased," John Gesser said.

Gesser said he was disappointed the ferry was ceasing operations. "It's too bad when something nice happens to Hawai'i that it doesn't work out for the little guys who enjoy it," he said.