Hawaii’s Green Fee Stalled: Cruise Tax Hit with Court Delays

Hawaii’s proposed "Green Fee," aimed at taxing hotels, short-term rentals, and cruise tourism to address environmental costs, faced a legal challenge just hours before its implementation. This tax, unprecedented in its scope, was temporarily halted by the U.S. Court of Appeals for the Ninth Circuit, following an injunction sought by Cruise Lines International Association (CLIA), which is contesting the tax’s legality.

Initially approved by Hawaii’s legislature in May 2025, the law intended to impose an 11% tax on cruise passenger fares starting January 1st, aiming to park money for environmental initiatives, including measures against rising sea levels and natural disaster preparedness. Although the appellate court allowed other segments of the law—like higher fees for hotels and rental units—to take effect, the enforcement of the cruise tax was suspended pending the court’s further review of the case.

CLIA argues that the tax infringes upon constitutional limits regarding interstate commerce and navigable waters, asserting only Congress has the authority to levy such charges. The cruise industry warned that these additional expenses could lead to increased cruise fares, potentially limiting access for vacationers. While the lower courts acknowledged the complexity of the constitutional implications, they concluded that CLIA had not presented enough evidence to warrant an immediate suspension of the tax.

Hawaii’s initiative is part of a broader trend among various destinations to manage the environmental impact of cruise tourism. Cities like Juneau, Alaska, Bar Harbor, Maine, and Key West, Florida are also implementing measures to regulate cruise activity in response to environmental concerns. The cruise industry contends that it has made significant investments in environmental improvements and that larger commercial shipping operations contribute more significantly to pollution issues than passenger cruises do.

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