Labor & Employment Law Daily Wrap Up, EXPERT INSIGHTS—First Circuit denies stay of decision finding $100,000 fee an unauthorized tax, (Aug 7, 2026)

By Steven Sholk of FBT Gibbons

Judge Leo T. Sorokin had vacated Presidential Proclamation No. 10973, which imposed a $100,000 fee on H-1B visa petitions.

On July 24, 2026, in State of California v. Mullin, Case No. 26-1699, the First Circuit Court of Appeals denied the government’s emergency motion for a stay pending appeal. The government appealed from the June 8, 2026 order and final judgment of the Honorable Leo T. Sorokin of the District Court for the District of Massachusetts. Judge Sorokin vacated Presidential Proclamation No. 10973, which imposed a $100,000 fee on H-1B visa petitions, and held that the fee was an unauthorized tax in violation of the Administrative Procedure Act, 5 U.S.C. §706(2)(C), and Article I of the Constitution. In denying the motion for the stay, the First Circuit ruled that the government failed to make a strong showing that it was likely to succeed on the merits of its appeal. Under Nken v. Holder, 556 U.S. 418, 426-27 (2009), likelihood of success, in addition to irreparable harm absent a stay, were the two most critical factors under a four-factor test for the extraordinary relief of a stay pending appeal.

Under Skinner v. Mid-American Pipeline Co., 490 U.S. 212, 224 (1989) and Learning Resources, Inc. v. Trump, 607 U.S. 229, 254 (2026), Congress must have spoken clearly in conferring discretionary authority to recover administrative costs not inuring directly to the benefit of regulated parties by imposing additional financial burdens, whether denominated a fee or tax. This clear statement of the grant of authority was not found in 8 U.S.C. §1182(f), which provides that whenever “the President finds that the entry of any aliens or any class of aliens into the United States would be detrimental to the interests of the United States, he may by proclamation, and for such period as he shall deem necessary, suspend the entry of all aliens or any class of aliens as immigrants or nonimmigrants, or impose on the entry of aliens any restrictions he may deem to be appropriate.”

The First Circuit held that the use of the term “restrictions” was not a sufficiently clear statement of the grant of authority to impose the $100,000 fee. In Learning Resources, the Supreme Court held that the broad powers granted to the President under the International Emergency Economics Powers Act to “regulate” transactions involving any property in which a foreign country or national thereof has any interest did not include the power to impose tariffs and taxes. The Supreme Court pointed out that one of the ordinary meanings of to regulate was “to direct by rule or restriction.” 607 U.S. at 249.

The First Circuit went on to find that its interpretation of “restriction” was bolstered by the pattern of usage of the imposition of fees in the Immigration and Nationality Act. The Act explicitly granted the Attorney General the authority to impose a fee on an employer filing a petition under 8 U.S.C. §1184(c)(9)(A), the Secretary of Homeland Security or the Secretary of State the authority to impose a visa fee under 8 U.S.C. §1184(c)(11)(A), and the Secretary of Homeland Security the authority to impose a fraud prevention and detection fee under 8 U.S.C. §1184(c)(12)(A). In addition, the Act specified how the funds should be collected and used. 8 U.S.C. §1356(m) (fees for providing adjudication and naturalization services to be imposed at a level to ensure recovery of the full costs of providing those services); 8 U.S.C. §1356(s) (dividing amounts collected under 8 U.S.C. §1184(c)(9) and (11) to be used for demonstration programs and STEM education); 8 U.S.C. §1356(v) (dividing fees collected under 8 U.S.C. §1184(c)(12)-(13) for fraud detection and prevention). Finally, the Act has never been used to impose a fee similar to the $100,000 fee.

The First Circuit then briefly addressed the other three factors in the stay pending appeal test. As to the second factor, the court assumed that government had sufficiently shown irreparable harm absent a stay. However, as to the third factor, the government had not shown that the states challenging the fee would not be substantially harmed by a stay. Finally, as to the fourth factor of the public interest, although the government contended that absent a stay the labor market harms the Proclamation was meant to address of lower wages and replacement of American workers will continue to occur, it failed to explain why a stay would not harm the public from the negative impacts on the states’ ability to staff public colleges and universities, primary and secondary schools, and healthcare systems.

The decisions of the District Court and First Circuit reached the opposite conclusion from that of the Honorable Beryl A. Howell of the District Court for the District of Columbia in Chamber of Commerce v.Department of Homeland Security, 815 F. Supp. 3d 73 (D.D.C. 2025). There the court held that the broad authority granted to the President to regulate immigration under 8 U.S.C. §§1182(f) and 1185(a) included the authority to impose the $100,000 fee. That case was decided before the Supreme Court issued its decision in Learning Resources and is currently before the Court of Appeals for the District of Columbia, which will have to address Learning Resources.

Steven Sholk

FBT Gibbons

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Newark, NJ 07102

Tel.: +1 973.596.4500

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