Supreme Court to hear Arizona immigration law challenge

Demonstrators protest against Arizona's controversial immigration law outside the State Capitol in Phoenix May 29, 2010.

WASHINGTON (Reuters) - The U.S. Supreme Court said on Monday it would hear a legal challenge by business, civil rights and immigration groups to an Arizona law that punishes employers who knowingly hire illegal immigrants.

The nation's highest court agreed to decide whether the 2007 state law infringed on federal immigration powers and should be struck down.

The law at issue in the case is different from the strict new Arizona immigration law passed earlier this year and criticized by President Barack Obama that requires the police to determine the immigration status of any person suspected of being in the country illegally.

But the Supreme Court's eventual decision in the case, depending on how the justices rule, could end up affecting the pending legal challenges to the new law as well.

The Obama administration last month urged the Supreme Court to rule that the 2007 law was preempted by federal immigration rules and would disrupt the careful legal balance that the U.S. Congress struck nearly 25 years ago.

The Arizona law suspends or revokes licenses to do business in the state in order to penalize employers who knowingly hire illegal immigrants. It also requires employers to use an electronic verification system to check the work-authorization status of employees through federal records.

The Legal Arizona Workers Act was adopted after a federal immigration overhaul law died in Congress in 2007.

The new Arizona law has rejuvenated efforts by the Obama administration and Congress to come up with comprehensive immigration measures.

But it seems doubtful that Congress will act so soon before November congressional elections and with lawmakers' attention now largely focused on the Gulf of Mexico oil spill.

About 10.8 million illegal immigrants are believed to be in the United States. Immigration has become a major issue in states such as Arizona on the border with Mexico.

The Arizona employer sanctions law had been challenged by the Chamber of Commerce business group, the American Civil Liberties Union, immigration groups and others. A federal judge and then a U.S. appeals court upheld the law.

Arizona defended its law and told the Supreme Court that states have a significant interest in addressing illegal immigration and may serve as a testing ground for new ideas that inform the national debate on immigration policy.

But opponents urged the Supreme Court to make clear that the federal government sets national immigration policy and to reject the patchwork of state and local immigration laws, including the one in Arizona.

The Supreme Court is expected to hear arguments and then issue a ruling during its upcoming term that begins in October.

(Editing by Alan Elsner)