A federal judge last week dismissed an environmental lawsuit against Hawai'i Superferry, clearing the way for the company to move forward with plans to begin interisland service by early 2007.

The Legislature has approved $40 million for harbor improvements to accommodate the ferry. For example, at Maui's Kahului Harbor, the state plans to buy a $10 million barge and install fencing, among other improvements.

U.S. District Judge Helen Gillmor dismissed the suit brought by the Sierra Club and other environmental groups seeking to require the Superferry firm to conduct lengthy environmental studies before proceeding with its plans.

Requiring a lengthy assessment of possible environmental impacts would have caused investors to back away, halted construction of the firm's first ferry and jeopardized the entire project, Superferry officials said.

The Sierra Club, Maui Tomorrow, the Kahului Harbor Coalition and Friends of Haleakala National Park argued that the federal Maritime Administration should have required an environmental review of the project before giving its go-ahead for a loan guarantee crucial to the project's success.

Hawai'i Superferry plans to begin daily service between Honolulu and Maui, Kaua'i and Hawai'i counties early in 2007, with one vessel carrying up to 900 passengers and 250 vehicles. It plans to add a second ship in 2008.

The ferries will be able to travel at 35 knots, about 40 mph.