Gov. Neil Abercrombie has approved an environmental impact statement for Oahu’s rail transit project, a step that will allow construction of the $5.5 billion project to begin.

U.S. Sen. Daniel Inouye had said the state could lose a promised $1.55 billion in federal funds if construction doesn’t begin soon on the 20-mile, east Kapolei to Ala Moana elevated rail line.

Abercrombie’s predecessor, Gov. Linda Linge, had declined to sign off on the EIS until an independent financial review was performed.

That review was released two weeks ago. It said the project could cost $1.7 billion more than projected and that tax revenues and ridership could fall short of expectations.

But Abercrombie and new Honolulu Mayor Peter Carlisle said they believe the project remains on sound footing. Abercrombie signed off on the EIS and forwarded it to the mayor’s office, Abercrombie spokeswoman Donalyn Dela Cruz said.

Abercrombie issued this statement:

“The role of the state in this step of approving the environmental impact statement for Honolulu’s rail transit system is to ensure that all economic, social and environmental risks have been properly addressed under law. After a thorough review by and consulting with the state Office of Environmental Quality Control, I conclude the City and County of Honolulu has met these obligations.

“I continue to support a transit system in Oahu.  Projects associated with it will be central to Oahu’s future development.

“Now is our opportunity to strengthen our commitment to ensuring that the project is done right, without delay, and with a vision of Oahu’s future clearly in mind. Unresolved issues will need to be addressed with dispatch.

“The City and County has the lead responsibility in the implementation of this project. I pledge continuing open communication at the state level with the city authorities and communities across Oahu and all the islands.”