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An Arizona immigration law faces a challenge before the Supreme Court today. It's not the famous law - the one that's attracted much debate this year, the law that is directed at illegal immigrants. Today, the Supreme Court hears arguments on a case testing a 2007 Arizona law that imposes harsh penalties on businesses that hire illegal immigrants. Many other states now have similar laws. Here's NPR legal affairs correspondent Nina Totenberg.

NINA TOTENBERG: Three years ago, Arizona became the first state to try to assume control of a function previously reserved for the federal government -namely punishing businesses, large and small, for hiring illegal immigrants. Congress, in order to establish a single uniform immigration law for employers nationwide, in 1986 made it a federal crime to hire illegals and barred any state or local government from imposing civil or criminal penalties.

The law was aimed at eliminating the patchwork of state immigration laws, but it did provide one caveat - states were allowed to revoke licenses and other similar permits from employers who hired illegal workers. Arizona has defined licenses as including virtually all business permits, from incorporation documents to partnership agreements.

Under the state law, one violation means a fine, and a second can mean you lose the right to do business in the state. The chamber of commerce, calling that the death penalty for business, challenged the law and lost in the lower courts.

Today lawyer Carter Phillips, representing the chamber, will tell the Supreme Court that state improperly detached the term license from its usual meaning and transformed it into the primary immigration enforcement mechanism for employers in Arizona.

Mr. CARTER PHILLIPS (Attorney): Having an entire shadow set of proceedings, created at the state level one, means that you have a whole different enforcement mechanism in place; and two, you're subject to significantly greater sanctions. And indeed, in Arizona, the death penalty for businesses, which is the loss or forfeiture of their license to do business.

TOTENBERG: It cannot be, Phillips argues, that Congress imposes a $500 fine for hiring a single illegal worker. But in Arizona...

Mr. PHILLIPS: You can get kicked out of being able to do business and therefore deprived of literally millions of dollars under those circumstances.

TOTENBERG: Arizona Solicitor General Mary O'Grady acknowledges that the state's law may be severe.

Solicitor General MARY O'GRADY (Arizona): But that's the nature of a licensing sanction. Typically it is a serious sanction.

TOTENBERG: She acknowledges too, that just about any business could be shut down under the state law, regardless of where the company's home base is. Congress didn't define the term licensing, she notes, so the state defined the term in its broadest way.

Arizona's law also mandates that employers use the federal system, called e-verify, to make sure that employees are legally in the country. Congress set up the program as a voluntary system and has consistently refused to make it mandatory because of problems with its accuracy.

A Department of Homeland Security study a year ago found that foreign born legal residents and naturalized citizens were 20 times more likely to be erroneously rejected by the system than native born U.S. citizens. But Arizona maintains the system is there to be used. As Mary O'Grady puts it...

Solicitor General O'GRADY: Just because congress has not mandated this program nationally doesn't mean that a state can't decide that they want to use it within their jurisdiction. This is a program that the federal government developed. They want it to be used. They're encouraging its use.

TOTENBERG: Carter Phillips counters that Congress specifically rejected making the system mandatory at this stage, because of its inaccuracies and because Congress feared that the system, if exclusively relied on, would lead to discrimination against those not born in the United States.

Today's case presents more than a few strange bedfellows. Joining with the business community in attacking the Arizona law is a broad coalition of civil rights and civil liberties groups. The Federal Government also contends that the state law conflicts with the federal government's exclusive control over immigration enforcement, enforcement that is run by the Justice Department and the Department of Homeland Security.

The irony is that the Secretary of Homeland Security, Janet Napolitano, signed Arizona's employer sanction bill into law when she was governor of the state. She said then that she was signing the bill because Congress had proved itself incapable of stemming the flow of unauthorized workers into the state.

Nina Totenberg, NPR News, Washington.

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