Federal investigators probe Katherine Kealoha’s role in costly rail project delay

HONOLULU, Hawaii (HawaiiNewsNow) - Katherine Kealoha ― who’s now behind bars awaiting sentencing in one of the biggest public corruption cases in Hawaii history ― played a role in one of the first, major and costly delays of the Honolulu rail project, sources tell Hawaii News Now.

The question: How her actions ― or in this case inaction ― affected the state’s largest public works project ever and why a key environmental review was stalled.

In investigating the former deputy city prosecutor, federal authorities have gone deep into Kealoha’s background, including back to 2008 ― when she was the director of the state Office of Environmental Quality Control.

Specifically of interest: When the final Environmental Impact Statement for the rail project was supposed to be delivered to then-Gov. Linda Lingle.

It was a critical, five-month period when Kealoha was in the driver’s seat, in charge of reviewing the final environmental impact statement of the rail project.

Hawaii News Now has learned that absolutely no work was done on the EIS during that time.

Then-Mayor Mufi Hannemann was demanding fast approval so work could commence.

Federal investigators have looked into this crucial timeline:

• April 2008: Lingle appoints Kealoha director of OEQC.
• November 2008: The draft EIS for rail is released. In an article in Ka Wai Ola, the Office of Hawaiian Affairs magazine, Kealoha pledged diligence in working on it, saying she would cross every "t" and dot every "i" in case of any future litigation.
• November 2008: Voters approved the project days after the EIS is released.
• May 2009: Kealoha is selected to be a Pacific Century Fellow, a leadership program led by Hannemann. It was a time of interest to the FBI because it’s where Kealoha met former firefighter Jesse Ebersole, who is now part of the public corruption scandal.
• October 2009: Hannemann issued the first contract for design and construction to Kiewit Pacific, even though the EIS still had not been approved.
• November 2009: Kealoha’s husband, then-Capt. Louis Kealoha, is selected as chief of police by the Honolulu Police Commission, a pro-union selection endorsed by Hannemann.
• June 2010: The final EIS for rail is complete, and sent to Katherine Kealoha’s desk at OEQC. Hannemann held a celebratory news conference. All that remained: Lingle’s approval.

But Lingle apparently never got the chance.

Sources in the former Lingle administration and inside the OEQC say during those five months that Kealoha had the final EIS, she did not take any required action.

Randall Roth, a longtime rail critic, thinks Kealoha was “was sabotaging what would otherwise have been Governor Lingle’s rejection of the final environmental impact statement.”

Roth, who was an adviser to Lingle in the early months of her term, cites an email that Kealoha sent to city officials during that time. The email, labelled “confidential” offered strategic help, including using her state office to host public hearings on the EIS.

Kealoha did not follow through, though. Not one hearing happened.

Roth says Kealoha’s offer and her subsequent failure to review the EIS would later cost taxpayers millions and delay the project.

“In my opinion, if it isn’t criminal, it should be and I hope the FBI is looking into it right now," he said.

While Roth believes Lingle would have killed the project if Kealoha had done her job, another rail critic, former state Sen. Sam Slom isn’t so sure about that.

Slom says Lingle was conflicted on the project.

“She was pro mass transit, not specifically for that particular project,” he said, adding that her biggest concern about that particular project was its estimated cost.

Lingle commissioned an independent study that projected the price tag for rail would double to $9.3 billion, which is actually pretty close to today’s estimate.

Still, Slom says Lingle probably would not have killed it so late in her term.

“I don’t think there was any urgency. She didn’t want to do it and I think she felt in her heart of hearts, it wasn’t to her advantage.”

Slom adds that if Lingle really wanted the EIS from Kealoha, she could have demanded it or forced action from OEQC.

Kealoha left OEQC in October 2010, returning to the city prosecuting attorney’s office. The EIS was still sitting in her office.

Lingle’s term ended a month later.

One of Neil Abercrombie’s first acts as her successor was calling for the EIS from OEQC. It was processed and approved in just 10 days.

But a legal challenge came quickly.

Attorney David Frankel sued and won a federal court injunction because a complete, archaeological survey of historic, Native Hawaiian burial sites along the route was not done.

“We let them know that they were not following the historic preservation review process properly," Frankel said, adding that Kealoha should have caught that in the months that she held on to the EIS.

“A strong OEQC director could have and actually would have done that," he said.

It was a costly mistake, and one of the first major delays for the troubled project.

Federal investigators are reviewing tens of thousands of pages of documents pertaining to rail, and Kealoha’s role is included, sources say. Among the questions: Did someone ask Kealoha to delay the EIS, or did she let it sit on her own?

Her attorneys did not return our texts or emails requesting comment. Lingle also did not respond to a request for comment for this story, while Hannemann declined an interview.

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