Cruise Industry Sues Over Hawaii’s “Green Fee” – September 2, 2025

Introduction
A major legal showdown is unfolding in Honolulu’s federal court as the Cruise Lines International Association (CLIA) and allied businesses challenge Hawaii’s newly enacted “Green Fee” law. The legislation, passed in May 2025, extends the state’s Transient Accommodations Tax (TAT) to cruise ship passengers—sparking industry backlash and raising constitutional questions about state authority over maritime commerce.

Details of the Green Fee Law

Tax Provisions:

• Effective immediately upon passage, the law subjects cruise passengers to an 11% tax on gross fares, prorated by the number of days spent docked in Hawaiian waters.
• Counties may levy an additional 3% surcharge, potentially raising the total burden to 14% for cruise travelers.
• For comparison, land-based accommodations now carry a TAT of 11%, plus county levies and the general excise tax, pushing total visitor tax rates near 19%.

Industry Lawsuit:

• The case, filed as Cruise Lines International Association, Inc. v. Suganuma, seeks a preliminary injunction to block enforcement while the lawsuit proceeds.
• CLIA argues the tax violates the U.S. Constitution’s Tonnage Clause, which prohibits states from charging vessels for the privilege of entering or trading in ports.
• The suit also invokes the Rivers and Harbors Act, claiming that Hawaii’s law unlawfully burdens navigation by imposing local levies on interstate and international shipping.

Economic Stakes:

• CLIA estimates that cruise tourism contributed $639 million to Hawaii’s economy in 2023, including $116 million in tax revenues and sustaining roughly 3,000 jobs with $215 million in wages.
• The association warns that the “Green Fee” may deter families planning 2026 Hawaii cruises, prompting them to choose alternative destinations due to higher costs.

Political and Legal Context:

• State officials, including the Attorney General’s Office and county prosecutors, have declined comment, citing the active litigation.
• The first federal court hearing is scheduled for October 31, 2025.
• Advocacy groups supporting the law argue that cruise tourism must contribute more to offset its environmental footprint and support Hawaii’s natural resources.

Industry Implications:

• The lawsuit highlights growing tension between state governments and the cruise sector over taxation, regulation, and environmental accountability.
• Hawaii’s law is the first of its kind in the U.S., and its outcome could set a precedent for how other states attempt to regulate or tax cruise operations.
• The case also underscores the delicate balance between preserving Hawaii’s fragile ecosystems and maintaining the state’s lucrative tourism industry.