It was intended as a bit of a Band-Aid for the wounded environment, a bill that sought about $10 million a year from cruise passengers for harbor upgrades in case the industry wins its lawsuit to be exempted from the state’s new green fee.

Yet it quietly died last month.

That leaves the state in an all-or-nothing court battle to secure the approximately $26 million in annual cruise ship payments included in the original green fee law.

The fee put Hawaiʻi at the forefront of states seeking to address the islands’ daunting overtourism, natural disaster and environmental woes by adding a relatively small 0.75 percentage point increase on the tax Hawaiʻi visitors pay on their hotel and short-term stays.

In a last-minute compromise, cruise ships were added and for the first time asked to pay the full 14% tax charged by the state and counties combined.

The ships’ share of the state tax would go fully to the green fee, representing nearly a quarter of the more than $100 million the state expects to bring in annually.

Adding cruise ships, however, triggered a lawsuit in federal court just three months after the bill’s signing, and all cruise ship collections were later put on hold. Now, the fate of the cruise ship portion of the fee rests with a panel of Ninth Circuit Court of Appeals judges, who listened to oral arguments on the matter last month in San Francisco.

Concerned the provisions won’t hold up, legislators proposed, under Senate Bill 2698, that cruise passengers instead pay a different fee limited to something more directly related to their use of the islands: the harbor upgrades.

Although it would generate less than half the estimated fees, they figured getting something would be better than counting on the courts and potentially getting nothing. 

The bill passed both House and Senate but stalled during conference, which is where the two chambers try to work out differences on measures. The Senate never assigned its group of negotiators despite a request from Hawaiʻi island Sen. Lorraine Inouye to Senate President Ron Kouchi. Kouchi did not respond to a request last week to discuss why no Senate conferees were released.

“We just threw away $10 million,” Inouye said last week.

Some cruise company lobbyists pushed heavily against SB 2698, Inouye said, in the run-up to conference, which Inouye said she believed helped scuttle the bill.

She and other legislators are especially worried about the case’s outcome because the President Donald Trump-led Department of Justice, which has been hostile to states’ climate initiatives, joined the cruise industry’s suit after it was filed and called Hawaiʻi’s green fee an extortion scheme.

“I’m just disappointed,” Nānākuli-based state Rep. Darius Kila said of the bill’s death, “because with the impending federal lawsuit and the Department of Justice taking this strong position of wanting to invalidate the green fee, I foresee us losing in court.” 

Cruise Lines Not Moving Together

Inouye’s bill, which Kila worked on in the House, looked to charge the 300,000 or so cruise passengers that visit Hawaiʻi each year a $10 fee for each separate island port they visit. 

Part of what scuttled the proposal, Kila said, was turmoil within the cruise industry over the measure. “Some folks are on board,” he said, “and some are not.”

State records show Carnival Company, which runs cruises between Hawaiʻi and the U.S. mainland, hired Alex Heatherington of the new local firm The Wayfinder Group to lobby this year. Carnival did not respond to requests to discuss its position, and Heatherington said he could not comment on their behalf.

Norwegian Cruise Line Holding, whose Pride of America is the only cruise ship that operates in Hawaiʻi year-round, supported Inouye’s $10 million alternative to including the ships in the green fee during the Legislative session.

Norwegian Vice President for Government Relations Sandra Weir told state senators that spending that money directly on harbor upgrades “extends to improving the experience of guests and the ship itself.” 

Norwegian was the only cruise company to submit testimony on Inouye’s bill.

“For them to carry the most passengers (in Hawaiʻi) and want to still move something forward, that means a lot,” Kila said. “They would be most impacted, and they were willing to be a part of our process.”

Several local harbor users, plus companies that provision the ships and small businesses that depend on their passengers in port, also supported it.

The Cruise Line Industry Association did not testify during session and declined a Civil Beat request to comment.

Also mum on the matter was Gov. Josh Green, whose representatives declined last week to say whether anyone in his office had met with cruise industry representatives amid the Legislative session or whether he’s still confident the state will prevail in the lawsuit.

Oral arguments in the case took place before a panel of Ninth Circuit judges on April 13 in San Francisco. A key debate is whether Hawaiʻi’s new requirement that docked cruise passengers pay the transient accommodations tax violates the federal Tonnage Clause, which aims to keep states from interfering in interstate and foreign commerce.

Charting The Course Ahead

There’s still hope, however, for the state leaders and conservationists who’d like to see the several hundred thousand cruise passengers who visit Hawaiʻi each year help better steward the islands’ environment.

The state attorney general under Green, Anne Lopez, continues to oversee the state’s case to keep cruise ship passengers contributing to the green fee. 

“The administration is obviously confident that they’re going to prevail in the lawsuit,” said Jeff Mikulina, who chairs Gov. Green’s volunteer Green Fee Advisory Council. “I feel like they have good grounds to prevail also.”

As appellate judges consider the fee’s future, Mikulina said he hopes lawmakers in the years ahead will fund more of the projects his council recommends, instead of replacing nearly 40% of them with their own preferred projects, many barely connected to the green fee’s stated purpose.

At the same time, Department of Transportation leaders under Green support the idea of removing cruise ships from the green fee and collecting the alternate fee for harbor upgrades instead.

That approach, Deputy Transportation Director for Harbors Dreana Kalili told lawmakers in her testimony on the Inouye bill earlier this year, could fund “shore power,” where the ships could turn off their engines and plug in to the cleaner electrical grid while in port.

Such an upgrade would cost around $100 million at Honolulu Harbor’s Pier 2 alone, department officials said.

Kila and Inouye, meanwhile, said they’d push for the alternative passenger fee proposal to pass next year if the cruise industry prevails in its lawsuit.

“I would just hope that … if we are asking our partners to be stewards of our natural environments,” Kila said, “that they would be willing to work with us on something so that everybody can win.”

Civil Beat’s coverage of climate change and the environment is supported by The Healy Foundation, the Marisla Fund of the Hawai‘i Community Foundation and the Frost Family Foundation.