Last week, the public comment period closed on President Trump’s revamped $100,000 H-1B fee, except instead of the executive order signed last September, it is a proposed regulation produced by the Department of Homeland Security titled “Fee for Certain H-1B Petitions.” The Institute for Sound Public Policy submitted our comment, which expressed support for a substantial additional fee on H-1B petitions. But we also cautioned that the final rule must be written to survive judicial challenges. A coalition of 22 attorneys general has now filed a comment opposing the proposed $103,265 fee, so it is all but certain the final rule will be met with a lawsuit.
The attorneys general have shown their hand. Their letter argues that the rule would hurt states’ ability to fill shortages in schools and healthcare, exceeds USCIS’s authority under the Immigration and Nationality Act, is really a tax that only Congress can impose, and violates the Administrative Procedure Act by failing to justify its burdens or consider less harmful alternatives. That is the outline of the lawsuit to come.
We believe the final rule can be made as resistant to legal challenge as possible by weighing the following considerations:
1. Stand on the statute Congress actually wrote
The AGs’ central claim is that this is a tax, not a fee, and that only Congress can impose one. They have reason to feel confident. California led the multi-state suit against the proclamation’s $100,000 payment and in June won a ruling striking it down as unconstitutional.
The Fee for Certain H-1B Petitions rule stands in stark contrast to proclamation that was halted in California v. Mullin this July. The proclamation failed for a specific reason. It rested on INA §§ 212(f) and 215(a), and neither provision authorizes a fee. However, Congress did expressly authorize immigration fees and full-cost recovery in the statute cited in the new regulation.
That is the ground DHS must stand on. Section 286(m) allows fees that recover the full costs of adjudication and naturalization services. It also lets fee-paying applicants help cover services provided free to others. Section 286(n) allows reimbursement of qualifying appropriations. That language answers the “tax, not fee” argument. It lets DHS rely on Skinner v. Mid-America Pipeline (1989) rather than lose under National Cable Television (1974). After Loper Bright and Learning Resources, no court will defer to the agency. DHS has to win on the text, and it shouldn’t claim more authority than the text gives it.
2. Every dollar in the cost pool has to earn its place
The AGs also argue the rule exceeds USCIS’s authority under the INA. The weakest point for DHS isn’t the statute itself. It’s whether everything in the cost pool fits within it.
The $103,265 figure comes from dividing an $8.78 billion annual cost pool by 85,000 petitions. That pool reaches across USCIS, ICE, CBP, EOIR, State, and Labor. DHS concedes it has never asked a single immigration subpopulation to fund government-wide costs on this scale. That isn’t unlawful on its face, but each category needs a clear link to “adjudication and naturalization services.”
Some links are easy to show. The Department of Labor has a real statutory role in H-1B through Labor Condition Applications, prevailing wage determinations, and enforcement like Project Firewall. Congress mandated that the Department of Labor enforce immigration law embedded in the 1990 Immigration Act. However, for decades, the Labor Department has been a bare bones operation.
The H-1B and prevailing-wage lines fit comfortably. The $350 million assigned to the Wage and Hour Division does not, at least not yet. DOL’s own budget shows total WHD budget authority of $320 million in FY2025, with $60 million of it for H-1B work. The $350 million for the Solicitor’s office and the $1.18 billion shifted over from premium-processing funds raise the same question. Any category DHS can’t tie to adjudication is a thread a judge can pull.
3. Build a record that can take a punch
Finally, the AGs argue the rule violates the APA because it fails to justify its burdens and ignores less harmful alternatives. That is a State Farm argument, and DHS can win it only by showing its work.
Right now, several pieces of the record are thin. The 85,000 denominator is simply the current H-1B cap, not a forecast of how many petitions will actually pay. Corrected receipt data put the five-year average closer to 97,000, and recent years near 109,000. At 100,000 paid petitions, the fee would bring in roughly $1.55 billion more than the stated cost pool. A full-cost rule needs a way to reconcile that.
The AGs’ press release calls the rule an attempt to impose a $100,000 tax, a preview of their argument that $103,265 was reverse-engineered from the proclamation figure. DHS needs to demonstrate the chronology of how the number was built. It should keep cost recovery and not deterrence, as the legal basis for the amount. It should take its own small-business findings seriously: by DHS’s estimate, 76 percent of small-entity petitioners would take a hit above one percent of revenue. It should give the alternatives, like tiers, discounts, and phased implementation, a real quantified comparison. And it should write fallback fee calculations into the rule. That way, if a court throws out one cost category, the choice isn’t between $103,265 and zero.
The bottom line
This rule stands on much firmer legal ground than the proclamation did, because Congress expressly gave DHS fee-setting authority in § 286(m) and (n). Firmer isn’t bulletproof, and the AGs have shown their hand. Our message to DHS: preserve the highest fee the statute and the record can support, even if that means trimming some cost categories to get there.
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