Cruise Industry Sues Over Hawaii’s “Green Fee” – 27 August 2025

On 27 August 2025, the Cruise Lines International Association (CLIA) and allied businesses filed a federal lawsuit in Honolulu challenging Hawaii's newly enacted "Green Fee" law, which extends the state's Transient Accommodations Tax (TAT) to cruise ship passengers. The legislation, passed in May 2025, imposes an 11% tax on gross cruise fares prorated by days docked in Hawaiian waters, with counties able to levy an additional 3% surcharge, potentially raising the total burden to 14%.

The plaintiffs' complaint requested preliminary and permanent injunctions against enforcement of the cruise-ship provisions and alleged breaches of the Tonnage Clause and the federal Rivers and Harbors Act.

CLIA contends that Hawaii's "Green Fee" law unlawfully burdens interstate and international maritime commerce by imposing local levies on vessels entering Hawaiian ports. The association argues the tax violates the Tonnage Clause, which prohibits states from charging vessels for the privilege of entering or trading in ports. The lawsuit seeks to block enforcement while constitutional and statutory questions are resolved in federal court.

Tax structure

• 11% tax on gross cruise fares, prorated by number of days docked in Hawaiian waters
• Counties may levy an additional 3% surcharge, raising total to 14%
• Cruise-fare TAT was scheduled to begin on 1 January 2026, as explained in Hawaii Tax Announcement 2025-03.

Economic context

• Cruise tourism contributed $639 million to Hawaii's economy in 2023
• Generated $116 million in tax revenues and sustained approximately 3,000 jobs with $215 million in wages
• CLIA warns the "Green Fee" may deter families planning 2026 Hawaii cruises, prompting alternative destination choices

Hawaii's "Green Fee" law is the first of its kind in the United States, and its outcome could set a precedent for how other states attempt to regulate or tax cruise operations. The lawsuit highlights growing tension between state governments and the cruise sector over taxation, regulation, and environmental accountability. Advocacy groups supporting the law argue that cruise tourism must contribute more to offset its environmental footprint and support Hawaii's natural resources.

In its 2 January 2026 announcement, Hawaii's Department of Taxation said the Ninth Circuit had blocked enforcement of Act 96's cruise-ship provisions in an order issued on 31 December 2025 and clarified on 2 January 2026. The department said it would pause cruise-fare TAT enforcement until further notice. Other Act 96 provisions, including the increase in the general TAT rate to 11%, took effect on 1 January 2026.