Federal Court Blocks Hawaii’s 11% ‘Green Fee’ Tax on Cruise Tourists • Kind Joe

The Legal Stalemate Over Hawaii’s Climate Tax

In a significant legal blow to Hawaii’s efforts to fund environmental conservation through tourism, a federal judge has temporarily blocked the state from implementing its controversial 11% "Green Fee" on cruise ship passengers. The ruling, delivered this week, halts a centerpiece of the state’s climate mitigation strategy, which sought to levy a double-digit surcharge on every cruise ticket sold for Hawaiian itineraries. While state officials framed the tax as a necessary tool to combat the environmental degradation caused by heavy tourism, the cruise industry successfully argued that the fee overstepped constitutional boundaries and federal maritime regulations.

The Industry’s Constitutional Challenge

The legal battle began shortly after the Hawaii State Legislature passed the tax, prompting a swift lawsuit from industry representatives and maritime advocacy groups. The plaintiffs argued that the 11% fee was not a localized service charge but an unconstitutional tax on interstate and foreign commerce. Central to the court’s decision was the Tonnage Clause of the U.S. Constitution, which prohibits states from charging fees to vessels for the privilege of entering, staying in, or departing a port without the express consent of Congress.

Furthermore, the court found that the tax likely violated the Rivers and Harbors Appropriation Act. This federal law restricts how states can collect fees from maritime passengers, generally requiring that such funds be used specifically for the enhancement of the physical infrastructure used by those passengers, such as pier maintenance or harbor safety. Hawaii’s plan to divert the 11% fee into a general "Green Fund" for broad environmental projects—ranging from forest restoration to coral reef protection—was deemed too detached from the immediate maritime services provided to the cruise lines.

Economic Concerns and Discriminatory Pricing

Industry leaders hailed the injunction as a victory for travelers and the local economy. They argued that the 11% surcharge was inherently discriminatory, as it specifically targeted cruise passengers while leaving air travelers—who make up the vast majority of Hawaii’s visitors—subject to different, often lower, fee structures. Critics of the tax noted that for a family of four on a week-long cruise, the Green Fee could have added upwards of $800 to the total cost of their vacation, potentially driving tourism away from the islands in favor of more affordable destinations like Mexico or the Caribbean.

Increased costs for middle-class travelers.
Potential reduction in port calls to smaller islands like Kauai and Maui.
Disproportionate impact on the maritime sector compared to the aviation industry.
Concerns over the lack of transparency in how the "Green Fund" would be managed.

The State’s Case for Environmental Mitigation

Despite the court’s ruling, Hawaii state officials remain steadfast in their defense of the fee. Governor Josh Green’s administration has long argued that the state’s unique ecosystem is at a breaking point due to the millions of visitors who arrive annually. The "Green Fee" was envisioned as a way to ensure that the tourism industry pays its "fair share" for the carbon footprint and physical impact it leaves on the islands. State attorneys argued that cruise ships, in particular, place a heavy burden on marine environments through waste management challenges and the physical stress placed on coral reefs near popular ports.

"Hawaii is the most isolated archipelago on Earth, and our natural resources are our greatest asset," one state representative remarked following the ruling. "If we cannot find a way to fund the protection of our reefs and forests, we risk losing the very things that make people want to visit Hawaii in the first place." The state maintains that the fee was a creative and necessary response to the climate crisis and the specific pressures of overtourism.

What Happens Next?

The temporary injunction means the state cannot collect the tax while the full merits of the case are litigated. This provides a reprieve for cruise lines currently selling 2026 and 2027 itineraries, but the long-term future of tourism taxation in Hawaii remains uncertain. Legal experts suggest that the state may need to restructure the fee to more closely align with federal maritime laws, perhaps by narrowing the scope of how the funds are used or by applying a more uniform fee across all modes of transportation.

The outcome of this case is being closely watched by other popular tourist destinations, such as Venice, Barcelona, and the Galapagos Islands, which are also exploring aggressive taxation as a means of controlling visitor numbers and funding conservation. For now, the federal court has sent a clear message: while environmental protection is a valid state interest, it cannot be funded through mechanisms that bypass the constitutional protections governing national and international commerce.