Supreme Court to Rule on Arizona Immigration Law

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WATCH Immigration Debate Extends Beyond Arizona

The Supreme Court took up the controversial issue of immigration reform on Wednesday hearing arguments in a case regarding a strict Arizona law that sanctions employers for knowingly hiring illegal immigrants.

An unusual coalition of the U.S. Chamber of Commerce and immigrants' rights groups filed suit against the law, arguing that it unconstitutionally conflicts with existing federal law.

In Court today, Carter G. Phillips, a lawyer for the coalition said that Congress had worked carefully in passing the Immigration Reform and Control Act (IRCA) of 1986 to calibrate a balance between combating the employment of unauthorized workers and protecting employees from potential discrimination based on race.

But Phillips said the state law -- passed in 2007 -- jeopardizes the balance because it creates an "entire alternative shadow enforcement mechanism" to sanction employers.

Phillips said the state law is confusing for employers and employees because it is substantially different from the federal law.

The state law, for instance, mandates that employers check the immigration status of potential employees through a federal database program called E-Verify, but the use of the program is only voluntary under federal law.

A skeptical Justice Antonin Scalia pointed out that states are passing such legislation out of frustration that the federal government is not doing enough to enforce immigration.

"Arizona and other states are in serious trouble," he said. "Expectations change when the federal government has simply not enforced the immigration restrictions."

The Solicitor General of Arizona, Mary R. O'Grady, told the Justices that Congress had recognized that unauthorized employment was of "significant local consequence" and thus had left the state space to target the issue.

"This is an area that has traditionally been within the mainstream of state police power," O'Grady argued. "We acknowledge that Congress does have the authority to preempt us, but they left important discretion in terms of our ability to impose sanctions through licensing and similar laws, and we are doing so by establishing this scheme that provides for the suspension and revocation of State licenses."

Scalia, Chief Justice John Roberts and Justice Samuel Alito seemed receptive to Arizona's argument.

Justice Stephen Breyer was the most vocal skeptic of the law. He said that the federal statute gives the employer "just as much incentive to verify" employment as it does to protect against discrimination. But he added "So Arizona comes along and says: 'I'll tell you what, if you discriminate, you know what happens to you, nothing? But if you hire an illegal immigrant, your business is dead.'"

The Obama administration is siding with the coalition against the law and asked the Court to clarify the issue.

Arizona's Governor Jan Brewer flew to Washington to attend the arguments and held a press conference to criticize the federal government's ability to control immigration. "If the government is not going to do the job, then Arizona is," she said.

The case is being watched carefully as a potential precursor for another Arizona law, signed by Brewer , that requires police to ask for papers from anyone they think might be in the country illegally.

Justice Elena Kagan did not participate in Wednesday's case, having dealt with the issue in her previous role as Solicitor General of the United States.

ABC's Russell Goldman contributed to this report.