A federal appeals
court has temporarily blocked Hawaii
from enforcing a new
climate change tax on cruise ship passengers that was scheduled to take
effect at the start of 2026.
The ruling, issued
on New Year’s Eve by two judges on the 9th U.S. Circuit Court of Appeals,
prevents the state from enforcing the tax while legal challenges proceed. The lawsuit
was brought by Cruise
Lines International Association (CLIA), which argues that the new fee violates
the U.S. Constitution and would raise cruise prices.
The tax is part of
a climate-focused law signed by Governor Josh Green in May. The legislation
increases taxes on hotel rooms and vacation rentals and also creates a new levy
on cruise passengers.
Under the new
regulation, cruise travelers would be charged an 11 percent tax on their fare,
prorated based on the number of days their ship spends in Hawaii. AP
News reported that the Aloha State’s individual counties are also
authorized to add an additional three percent surcharge, potentially raising
the total to 14 percent of a passenger’s prorated cruise fare.
State officials
estimate the measure would generate nearly $100 million a year to help pay for
shoreline erosion, wildfire response and other climate-related challenges.
CLIA sued to block
the cruise portion of the law, saying the tax amounts to an unconstitutional
charge on ships for entering Hawaii ports. The group also said the new levy
would make Hawaii cruises more expensive, jeopardizing the state's tourism economy.
U.S. District
Judge Jill A. Otake ruled
in the state's favor last week, allowing the tax to move forward. CLIA
appealed that decision to the 9th Circuit Court of Appeals, and the U.S.
government also appealed.
The appeals court
granted an injunction, stopping the cruise tax from being enforced until the pending
legal actions are resolved.
Hawaii officials
said they expect the law to ultimately be upheld. “We remain confident that Act
96 is lawful and will be vindicated when the appeal is heard on the merits,”
Toni Schwartz, a spokesperson for the Hawaii attorney general’s office, said in
an email to AP
News.
Schwartz said the
court’s decision only pauses the law. “The order temporarily halts enforcement
of the law on cruise ships while the appeals process moves forward,” her email
noted.
The lawsuit
applies only to the cruise ship portion of the law. The higher taxes on hotel
and vacation rental stays are not being challenged and remain in effect.
For now, cruise
passengers sailing to Hawaii in 2026 will not be charged the new climate tax
while the legal fight continues.
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