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A US federal judge on Monday blocked President Donald Trump from imposing a $100,000 fee on employers filing H-1B visa applications for highly skilled foreign workers.
The policy violated both the federal Administrative Procedure Act and the US Constitution, Judge Leo Sorokin ruled in a decision issued by the US District Court in Massachusetts.
District Judge Sorokin ruled in a lawsuit filed by 20 Democratic-led states that the measure usurped Congress' taxation powers and that the fee imposed on H-1B visas constituted an unlawful tax.
"The substance and application of the $100,000 payment reveal that it is a tax, regardless of what the payment is called," Sorokin wrote in his 42-page ruling.
"The President had no power or delegated authority to impose a tax on H-1B petitions," he added.
Last September, Trump signed a proclamation requiring companies to pay $100,000 per year for H-1B work visas.
"We need workers. We need great workers. And this pretty much ensures that that's what's going to happen," Trump said in the Oval Office while signing the proclamation.
The overhaul was intended to curb what the administration described as widespread abuse of the visa system, particularly by companies using it to replace US technology workers with lower-cost foreign labor.
Trump said at the time that the H-1B system was being abused to replace American workers with people willing to work for less money.
A different federal judge upheld the $100,000 fee in December in a separate case. That ruling is currently under appeal.
The lawsuit was brought by the US Chamber of Commerce and the Association of American Universities, which represents 69 US-based research institutions.
The United States issues 85,000 H-1B visas annually through a lottery system, with Indian nationals accounting for around three-quarters of recipients.
Before the policy change, H-1B visa fees cost employers up to $5,000.
Technology entrepreneurs, including Trump's former ally Elon Musk, had warned against targeting the H-1B program, arguing that the United States does not have enough domestic talent to fill key vacancies in the technology sector.
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