Constitutional Law | Climate Change Policies | Environment

Introduction: Cruising to New Green Fees

When Climate Funding Mechanisms Collide with Federal Navigability Protections

In a groundbreaking move to bolster climate resilience, Hawaii enacted a “green fee” in May 2025—a sweeping tourism surcharge designed to fund adaptation projects such as shoreline restoration, wildfire prevention, and infrastructure hardening. The state expects to generate nearly $100 million annually by adding an 11% levy on cruise ship fares (pro-rated by days in port) and hiking hotel taxes to rates approaching 19% overall.(AP News, The Guardian)

Now, the Cruise Lines International Association (CLIA), supported by supply providers and tour operators, has filed a federal lawsuit in Honolulu. It challenges the cruise tax on constitutional grounds, arguing that navigable U.S. waters are a shared national resource—not a revenue vehicle for individual states. A crucial hearing is scheduled for October 31, 2025, as plaintiffs seek a preliminary injunction to halt enforcement.(AP News, WSLS)

Background: The Green Fee and Its Scope

Hawaii’s legislation, championed by Governor Josh Green, marks the first U.S. climate-linked tourism tax. Starting in 2026, the state will levy:

• A 0.75% increase on the existing 10.25% transient accommodations tax—raising lodging rates to 11%, plus combined state and county taxes making total rates nearly 19%(The Guardian, AP News)
• An 11% surcharge on cruise passengers’ gross fares—prorated based on port stay—with counties granted authority to add up to 3% more, bringing cruise tax burdens potentially to 14%(AP News, The Guardian)

Proceeds are earmarked—though funneled through the general fund—to support tangible resilience projects like beach replenishment, wildfire mitigation, and roof fortification.(AP News)

Legal Showdown: Constitutional and Economic Flashpoints

1. Navigable Waters as a National Commons
CLIA asserts that imposing a state-level tax on cruise activity violates a foundational constitutional principle: navigable waters are part of the national domain, not subject to disparate and cutting-edge state taxation. Such fees could set a precedent for parochial exploitation of shared maritime access.(AP News, WSLS, Travel And Tour World)

2. Economic Fallout and Tourism Disruption
The cruise industry argues the added tax will deter nearly 300,000 cruise visitors annually, jeopardizing $600 million in economic impact and thousands of jobs tied to port activity—from provisioning to local excursions. The motion warns that advance planning cycles mean even impending tax expectations may skew consumer choices.(AP News, WSLS, Travel And Tour World)

3. Urgency and the Injunction Hunt
Plaintiffs have filed for a preliminary injunction, urging swift action—contending that the looming surcharge already impacts booking behavior. A ruling could pause enforcement pending litigation outcome.(AP News, WSLS)

Legal Stakes: Precedents and Policy Tension

This litigation places courts at the intersection of state-level climate innovation and federal maritime governance:

• A ruling favoring CLIA might curtail state autonomy in crafting climate finance mechanisms—even when they target tourism for resilience funding.
• A ruling upholding Hawaii’s law may embolden states to introduce similarly novel green taxes across transit and travel sectors.
• The case highlights a growing dilemma: who pays for climate adaptation—governments or visitors?—and whether tourism-linked taxes become standard levers for resilience.

Conclusion: Aligning Environmental Stewardship

Hawaii’s “green fee” represents a bold attempt to align environmental stewardship with economic utility. Yet, as the cruise industry’s lawsuit shows, the path from policy innovation to judicial acceptance is fraught with constitutional and economic friction.

As the October hearing approaches, the broader question looms: in confronting climate consequences, can—and should—states harness tourism for funding resilience, or must such measures yield to foundational principles of navigability and economic equity? The court’s decision could redefine the terrain of climate-policy tools across the American landscape.