One of the most embarrassing moments in recent Navy history in Hawaii has also become among the most expensive.

The Navy has agreed to pay its largest settlement ever for reef damage: $8.5 million to the state stemming from the 2009 grounding of the guided-missile cruiser USS Port Royal off Oahu’s South Shore.

The damage has already resulted in the Navy’s largest and most expensive ($6.5 million) reef restoration project.

"This settlement agreement recognizes the state of Hawaii’s loss of a natural resource and takes into account the U.S. Navy’s unprecedented efforts to restore the reef where USS Port Royal ran aground," said Rear Adm. Timothy Giardina, U.S. Pacific Fleet deputy commander.

Interim state Land Director William Aila Jr. said the Navy has done the "right thing" by acknowledging its responsibility and working cooperatively to restore the reef.

Robert Harris, director of Sierra Club Hawaii, said marine biologists say the area was pristine reef and will take hundreds of years, if ever, to recover.

Harris said he was happy about the size of the fine and hoped it would ensure such an incident does not happen again.

But he said he was disappointed the state did not file a lawsuit against the Navy, enabling the public to participate in the enforcement process and to assess the extent of the damage.

"This was effectively a behind-doors, closed process," Harris said.

The incident was an embarrassment to the Navy, whose cruiser was grounded for several days in plain sight of air travelers.

The Port Royal required more than $40 million in repairs.

The Port Royal ran aground about a half-mile off the Honolulu Airport Reef Runway on Feb. 5, 2009, and remained stuck for several days before being freed on Feb. 9.

In its reef restoration effort, the Navy reattached nearly 5,400 coral colonies.

The Navy also removed 250 cubic yards of rubble before high surf ended the effort.

Port Royal Capt. John Carroll was relieved of duty and received nonjudicial punishment for dereliction of duty and "improper hazarding of a vessel."

Carroll retired from the Navy. Three other Port Royal officers and an enlisted man were disciplined for similar reasons.

Citing privacy concerns, the Navy has declined to reveal details of the disciplinary action.

The 567-foot ship was on its first day of sea trials after undergoing $18 million in repairs at Pearl Harbor Naval Shipyard when it ran aground at about 8 p.m.

The Navy’s Safety Investigation Board found several factors contributed to the grounding, including an apparent failure to recalibrate navigation equipment within a period of 72 hours.

The board said those in command could have also relied on visual aids, such as the position of the airport control tower, to determine the ship’s location.