Honolulu’s controversial rail project has been derailed in federal court. This after Ninth Circuit Court Judge Wallace Tashima ruled today in HonoluluTraffic.com v. Federal Transit Administration et al that the city violated federal law on major three counts.

On December 12, the plaintiffs will return to court to ask the judge to grant a permanent injunction against the city, which could halt the rail project for good.

The eight plaintiffs who brought the challenge against the city and FTA last Spring include former Gov. Benjamin Cayetano, University of Hawaii Law professor Randall Roth, Retired Judge Walter Heen, retired businessman and transportation expert Cliff Slater, Dr. Michael Uechi, Hawaii’s Thousand Friends, Outdoor Circle and Sen. Sam Slom’s Small Business Hawaii Entrepreneurial Education Foundation.

They oppose the city’s $5.2 billion elevated steel on steel rail project, because they believe the project will bankrupt the city and destroy important cultural sites and the environment.

In their lawsuit, they maintained the city’s actions were “arbitrary” and “capricious” when:

The city did not adequately consider viable transportation alternatives in its 2006 Alternatives Analysis before selecting heavy elevated steel on steel rail as the city’s mass transit system; The city did not vet alternatives in the Environmental Impact Statement, which may negatively impact Oahu’s historical sites and violated the National Environmental Policy Act; The city decided to conduct the archeological inventory in four phases, rather than surveying the entire 20-mile route before starting the project.

Tashima, who is overseeing the case after all 7 of Hawaii’s U.S. District judges were recused, agreed the city failed to consider the traditional cultural properties, the impact of the rail on Mother Waldron Park and whether the Beretania Tunnel is an option to alleviate traffic.

Cayetano, who in addition to being a plaintiff in the federal lawsuit is a candidate for Honolulu mayor, said the city will have to redo its Final Environmental Impact Statement and issue another Record of Decision. That could delay the project at least one to two years.

Roth, a law professor, said the ruling proves the city rushed the whole project and failed to satisfy the environmental law requirements “that are there for a reason.”

“In December, we will find out if this is great enough to stop project permanently,” Roth said.

Another lawyer who has followed this case closely, said: “Whenever a judge finds that the government acted ‘arbitrarily and capriciously’ those are code words to lawyers: the government went way ‘off the rails,’ so to speak. It takes quite a bit of convincing to get a judge to reach that conclusion, so the arguments the plaintiffs put on must’ve really convinced Judge Tashima.”

But the city administration is declaring a victory.

Honolulu Authority for Rapid Transportation CEO Dan Grabauskas said the city is pleased with the ruling because the city and FTA won on 20 of 23 counts.

Despite the plaintiffs’ assertion that the project will have to be stopped – at least until the city redoes its FEIS and ROD – Grabauskas maintains the project is still “on course.”

“On all the major issues, we have successfully shown that the project properly conducted the required analyses and environmental studies. The ruling underscores the fact that the majority of alternatives were given proper consideration, including bus rapid transit (BRT), at-grade light rail and managed lanes. We will be carefully examining the ruling to determine what further course of action is needed,” he said.

Honolulu Mayor Peter Carlisle, also one of the rail project’s primary advocates, said this ruling will not stop the rail project:“This ruling does not stop the rail project that is so critical to our island’s future. In fact, the court dismissed the bulk of the plaintiffs’ accusations and upheld the project’s Environmental Impact Statement. We are confident that a reasonable remedy can address the remaining issues in a timely manner. Today’s ruling will require further analysis, but the bottom line is that the project can and should continue moving forward.”

University of Hawaii Engineering Professor Panos Prevedouros said Carlisle, the former city prosecutor, is forgetting what it is like to be an attorney. “You can be accused of many things, and if even one sticks, that is all you need. The plaintiffs were successful on three counts.”

Prevedouros, one of the state’s leading transportation experts and well known critic of the rail project, said redoing the paperwork will cost taxpayers at least $10 million and could take up to 2 years.

Construction on the rail project is already on hold for as much as a year after the city lost another lawsuit, this one in state court.

The Hawaii Supreme Court ruled in a unanimous 82-page opinion in Kaleikini v. Yoshioka, that the City did not comply with the State’s historic preservation and burial protection laws when it failed to complete an archeological inventory survey for the 20-mile route before starting construction.

The lawsuit was brought by Paulette Kalekini, a native Hawaiian whose ancestors’ iwi or bones may be displaced by the rail. Her case, which was argued by the Native Hawaiian Legal Corporation on her behalf, brought the rail project to a halt on August 27.

The delays are costing the city $7.1 million a month.

The November 6 election could be strike three for the pricey rail project, which was narrowly approved by the voters in 2008, but has since lost popularity.

Cayetano, who has promised to kill the project if he is elected mayor, has a slight edge in the polls over his pro-rail opponent Kirk Caldwell.

Proponents of the rail project have spent nearly $3 million in negative ads and push polls attacking Cayetano leading up to the Primary and General elections, in hopes of stopping him from becoming mayor.

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