A coalition of 20 U.S. states, led by California, has sued the Trump administration over a significant hike in H-1B visa fees, claiming the move is illegal and imposes a huge financial burden on employers, especially public institutions.

The lawsuit challenges the Department of Homeland Security’s new rule that would increase the cost of filing H-1B visa applications to $100,000. The states say the administration has no authority to set such a high fee without Congress's approval and that it did not follow the required rules in making the decision.

The filing argues that the fee increase does not reflect the actual cost of processing applications and violates federal law, including the Administrative Procedure Act, which requires such big policy changes to first be publicly noticed and discussed. The states say the sudden rise will deter employers from hiring skilled foreign workers and aggravate labour shortages.

California Attorney General Rob Bonta, who is leading the case, says the policy could hurt essential public services. In a statement, Bonta said the fee "creates unnecessary and illegal financial burdens on public employers and other providers of vital services." He noted that states rely on the H-1B program to hire qualified professionals in education, healthcare, and scientific research.

The complaint points out that public universities, hospitals, and school districts-many of which are exempt from the annual H-1B cap, rely heavily on foreign workers. With existing worker shortages in health care and specialised teaching, the states warn that the higher cost could disrupt services and increase operating costs. Other states such as New York, Illinois, Washington State, and Massachusetts joined the case. They argue that this fee hike will hurt innovation and economic growth due to inhibited access to global talent.

The Trump administration has argued that the policy is part of larger efforts to streamline immigration to protect American workers. It says stricter measures are necessary to stop the misuse of the H-1B program. In all, the lawsuit reflects a widening feud between state governments and the federal government over immigration policy, with the states aiming to block the visa fee increase, which they say imperils public services, economic stability, and access to qualified foreign professionals.