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District Judge Jane Boyle decided that the ordinance in Farmers Branch was an attempt to enforce U.S. immigration laws, which she said is something only the federal government can do.
The judge also issued a permanent injunction to stop the city north of Dallas from enforcing the rule, The Dallas Morning News reported.
The complex ordinance set up a licensing system, under which the Farmers Branch building inspector would verify a renter's immigration status with federal authorities. If a renter was found to be in the country illegally, the city would revoke the rental license.
Mayor Tim O'Hare said he wants to appeal the judge's ruling, but the city council would have to vote whether to spend the money on legal fees. The council was expected to take up the issue next month.
Farmers Branch is a Dallas suburb with a large Hispanic population. About one-quarter of the 30,000 residents were born outside the United States, according to the Morning News.
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