DHS Found a Legal Path to the Same $100,000 H-1B Fee Courts Just Struck Down

On Monday, the U.S. Department of Homeland Security published a proposed rule imposing a new $103,265 fee on every H-1B visa petition selected in the annual lottery. The timing is not incidental. Two months earlier, a federal judge in Boston vacated, on both statutory and constitutional grounds, a nearly identical $100,000 payment that President Trump had imposed by proclamation. DHS's answer was not to abandon the policy but to re-file it — almost dollar for dollar — through the channel the court said the executive had skipped the first time: notice-and-comment rulemaking. The episode is a case study in an administration adapting an immigration agenda that keeps losing in court, and it raises a real question about how much daylight separates a proclamation from a properly dressed-up rule.

What happened, and when

In September 2025, President Trump issued Proclamation 10973, directing that a $100,000 payment accompany H-1B petitions for workers outside the United States, invoking his authority under 8 U.S.C. §§ 1182(f) and 1185(a) — the same statutory hooks used for past travel restrictions. Twenty states, led by California and Massachusetts, sued, and on June 8, 2026, Judge Leo Sorokin of the U.S. District Court for the District of Massachusetts granted summary judgment against the administration, vacating the policy in its entirety on the ground that it was both an unconstitutional tax imposed without a clear congressional delegation and a violation of the Administrative Procedure Act. The government asked the U.S. Court of Appeals for the First Circuit to stay that ruling while it appealed. On July 24, 2026, a three-judge panel — Chief Judge Barron and Judges Gelpí and Rikelman — unanimously refused. USCIS confirmed days later that it would stop collecting the fee.

Exactly one month after that loss, DHS filed the paperwork for its replacement. The notice of proposed rulemaking, published in the Federal Register on August 25 under DHS Docket No. USCIS-2026-0298, proposes a $103,265 fee on all H-1B cap-subject petitions — including those claimed under the 20,000-slot master's degree exemption — payable at filing, on top of every other required fee. DHS says the number is not arbitrary: it divided a claimed $8.78 billion in unrecovered costs across six federal agencies — USCIS, ICE, CBP, the Justice Department's immigration courts, the State Department and the Labor Department — by a projected 85,000 annual cap-subject petitions, arriving at $103,264.57, rounded up. Public comments are due 30 days after publication, roughly September 24.

Same number, different legal theory

The proclamation and the proposed rule reach nearly the same dollar figure through different legal doctrines, and DHS is candid about why. The First Circuit's order turned on a narrow but consequential point: under Skinner v. Mid-America Pipeline Co., an agency claiming authority to impose a tax-like financial burden must point to a clear congressional delegation, and neither §1182(f) nor §1185(a) — provisions about restricting entry — say anything about payments. The panel noted that Congress has repeatedly used explicit fee-imposing language elsewhere in the INA, and that "neither §1182(f) nor §1185(a)...has ever been used to impose a fee or payment of this kind."

"[T]he defendants do not dispute that neither §1182(f) nor §1185(a) has ever been used to impose a fee or payment of this kind." — U.S. Court of Appeals for the First Circuit, State of California v. Mullin, No. 26-1699 (July 24, 2026)

The new rule sidesteps that problem by invoking a statute that does explicitly authorize fees: INA §286(m), which lets DHS charge "fees for providing adjudication and naturalization services...at a level that will ensure recovery of the full costs of providing all such services." That authority has existed since 1988 and has never been seriously contested. DHS's preamble acknowledges the maneuver directly, noting the new fee "would be an additional fee separate from the $100,000 payment required by Proclamation 10973 and is based on different authority" — meaning if the proclamation litigation ever goes DHS's way, employers could owe both amounts at once.

What is actually new here

The more striking element of the rule is not the number but the accounting behind it. Historically, USCIS fees have recovered only USCIS's own costs. This proposal recovers costs for five other agencies that have never separately invoked §286(m) fee authority: $1,050 million for ICE, $76.2 million for CBP, $2,957 million for the Justice Department's immigration courts (funding 8,400 new positions), $484 million for State Department consular vetting, and $1,210 million for Labor Department wage enforcement — on top of $3,000 million for USCIS itself. DHS's preamble concedes the break from past practice: "DHS has never set a fee for a specific immigration sub-population...to fund general USCIS operating costs, costs that are currently borne by other DHS components, [or] costs that are borne by other executive branch departments." The closest precedent it cites, the $600 Asylum Program Fee created in 2024, is a far smaller cross-subsidy than folding $2.96 billion of Justice Department court funding into one visa category's bill.

DHS's own analysis projects $8.8 billion in annual costs to petitioners and a "significant economic impact" on 11,051 small employers — 76 percent of the small entities that filed H-1B petitions in FY2025. The rule does not exempt small businesses or nonprofits from the fee, reasoning that doing so "creates a sizable perverse incentive for employers to avoid the fee." It does exempt cap-exempt petitioners such as universities and nonprofit research institutions — the opposite of the vacated proclamation, whose nationwide vacatur had freed those same institutions of the $100,000 payment.

The case for skepticism

DHS's ability-to-pay logic is not frivolous: the agency cites USCIS data showing median H-1B compensation of $133,000 annually, arguing that a $103,265 one-time fee is modest against roughly $798,000 in wages over a typical six-year admission period. It also cites a 2026 NBER working paper by economist George Borjas estimating that H-1B workers are paid roughly 16 percent below comparably qualified native workers, evidence DHS says supports employer willingness to pay without registrations falling below the statutory cap. If USCIS is genuinely underfunded — its own fee review found a $1.9 billion annual shortfall before this rule — a durable funding mechanism has real appeal over relying on proclamations that keep losing in court.

But the interagency cost-shifting deserves more scrutiny than a 30-day comment window will likely produce. Funding immigration judges, consular fraud units, and Labor Department wage enforcement entirely out of one class of employer-sponsored visas is a structural choice about who pays for the immigration system's machinery — a choice Congress has historically made through appropriations, not one agency's fee schedule. Section 286(m) authorizes DHS to recover its own adjudication costs; whether it stretches far enough to fund another department's judges and diplomats is a live legal question the preamble does not fully resolve beyond noting the statute does not explicitly forbid it. DHS is presumably counting on the fact that a properly promulgated fee gets real deference under the APA's arbitrary-and-capricious standard, unlike the clear-statement rule that sank the $100,000 proclamation payment.

What comes next

The proclamation litigation is not over — the First Circuit's July order only denied a stay pending appeal, with the merits appeal still briefing. The new rule now enters a comment period that will almost certainly draw opposition from the same 20 states, employer groups, and universities before any final rule takes effect; DHS has not yet set an effective date. If DHS finalizes the fee substantially as proposed, a challenge under the APA's arbitrary-and-capricious standard looks close to inevitable, testing whether an agency can use one visa category's petitioners as a funding backstop for five other agencies' unrelated missions.

What the past two months illustrate is an administration adapting its immigration strategy to litigation risk: when a proclamation-based restriction was found to lack the clear congressional authorization it needed, the response was procedural rather than substantive — swap the legal basis, keep the number, restart the clock through formal rulemaking. That is, in one sense, exactly how the administrative state is supposed to work: an agency loses in court and tries again using authority Congress actually gave it. Whether this attempt survives review will turn less on the $103,265 figure itself than on whether recovering one department's costs by taxing a different agency's applicant pool is the "full cost recovery" §286(m) was written to allow — or a workaround dressed in the right statutory clothes.