A landmark climate change tax targeting tourists arriving in Hawaii by cruise ship has been blocked by a US federal court just hours before it was due to take effect.
Last-Minute Injunction Halts Pioneering Levy
In a ruling delivered on New Year's Eve, a panel of judges from the 9th U.S. Circuit Court of Appeals granted an emergency injunction, preventing Hawaii from enforcing its new climate tax on cruise ship passengers. The levy, signed into law by Governor Josh Green in May, was scheduled to begin on 1 January 2026.
This represented the first such tax in the United States specifically designed to generate revenue to combat the effects of a warming planet. Officials estimated it would raise close to $100 million each year to address pressing issues like coastal erosion, wildfires, and other climate-related challenges.
Legal Challenge and Cruise Industry Opposition
The tax was challenged in a lawsuit filed by the Cruise Lines International Association (CLIA). The industry body argued that the law was unconstitutional because it imposed a tax on vessels for the act of entering Hawaiian ports. They also contended it would inevitably lead to higher costs for cruise passengers.
The contested legislation increased rates for hotel and vacation rental stays. Crucially for the cruise industry, it introduced a new 11% tax on the gross fares paid by cruise passengers, calculated based on the number of days the ship was docked in Hawaii. The law further permitted individual counties to add a 3% surcharge, potentially bringing the total levy on prorated cruise fares to 14%.
While a U.S. District Judge, Jill A. Otake, had upheld the law the previous week, the plaintiffs swiftly appealed to the higher court. The U.S. government also intervened in the case, appealing Judge Otake's decision.
Uncertain Future for Climate Funding
The appeals court order temporarily suspends enforcement of the tax specifically for cruise ships while the legal appeals process unfolds. It is important to note that the lawsuit challenged only the cruise-related provisions of the wider law.
Toni Schwartz, a spokesperson for the Hawaii attorney general's office, expressed continued confidence in the legislation. "We remain confident that Act 96 is lawful and will be vindicated when the appeal is heard on the merits," Schwartz stated in an email.
Jim McCarthy, a spokesperson for CLIA, indicated that immediate comment from the plaintiffs might be difficult due to the timing of the ruling just before a holiday. The case now proceeds to a full appeal, leaving the future of this innovative climate funding mechanism hanging in the balance.
