The 2025 legislative session in Hawaii enacted the "Green Fee" bill, which not only increased taxes on land-based transient accommodations but also extended the tax to include sleeping quarters on cruise ships. This move, as anticipated, sparked backlash from the cruise industry. The Cruise Lines International Association (CLIA), along with several Hawaii businesses, filed a lawsuit in U.S. District Court, seeking an injunction against the "Green Fee," scheduled to take effect on January 1, 2026. The core of their argument hinges on the assertion that this new fee is unconstitutional and violates federal regulations.
CLIA's primary contention, according to The Maritime Executive, is that the "Green Fee" directly contradicts the U.S. Constitution, federal Rivers and Harbors regulations, and principles of free speech. Specifically, they argue that the federal government maintains control over navigable waters, and states cannot impose fees for their use without explicit Congressional approval. The lawsuit further highlights the Rivers and Harbors Appropriation Act of 1884 and the "tonnage clause" within the U.S. Constitution as support for its claims. CLIA asserts the tax is unfair, as it lacks exemptions available to hotel and short-term rental guests and levies a disproportionate charge on cruise passengers compared to other state tourism entities.
The U.S. Department of Justice (DOJ) has also intervened, siding with the cruise industry. The DOJ's involvement elevates the stakes, arguing, as reported in TravelPulse, that the fee violates the Tonnage Clause and the Rivers and Harbors Appropriation Act of 1884. This legal battle threatens the state's initiative to generate revenue for climate action and environmental stewardship, potentially jeopardizing a projected $100 million annually. The DOJ framed the fee as a scheme to "extort American citizens and businesses solely to benefit Hawaii," as detailed in a Hawaii Free Press article.
The ramifications of this lawsuit reach beyond immediate financial impacts. The cruise industry has a history of leveraging its size to influence destinations imposing new taxes, as highlighted by The Maritime Executive. If the courts side with CLIA, the state could not only lose a significant revenue stream but also face challenges to similar initiatives. Conversely, a victory for Hawaii could set a precedent for other states seeking to fund environmental projects through tourism-related taxes, a topic that is gaining traction across the globe. Therefore, Hawaii's entrepreneurs, investors, and tourism sector professionals should closely monitor the case's progress and potential implications on pricing, itineraries, and the overall business environment.
