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* Justice Kennedy questions social, economic disruption

* Liberals concerned about practical impact of strict law

* Ruling expected by end of June, to play role in election

By James Vicini and Joan Biskupic

WASHINGTON, April 25 (Reuters) – Conservative justices who

hold a majority on the U.S. Supreme Court appeared to endorse

Arizona’s immigration crackdown on Wednesday, rejecting the

Obama administration stance that the federal government has sole

power over those who illegally enter the United States.

During 80 minutes of oral arguments, the justices suggested

by their questions and comments that states have significant

latitude to adopt laws that discourage illegal immigrants from

moving to and staying in the country.

Justice Anthony Kennedy, who often casts the deciding vote,

referred to the “social and economic disruption” that states

endure as a result of a flood of illegal immigrants and

suggested that states such as Arizona have authority to act.

Arizona two years ago became the first of half a dozen U.S.

states to pass laws aimed at driving illegal immigrants out,

including requiring police to check the immigration status of

anyone detained and suspected of being in the country illegally.

The battle over the law goes to the heart of a fierce

national debate between Democrats and Republicans over what to

do with the estimated 11.5 million illegal immigrants in the

country, a number that has held steady in recent years.

Critics have said the Arizona law could lead to ethnic and

racial profiling of the fast-growing Hispanic population, now

equal to 16 percent of all Americans.

The four conservatives – Chief Justice John Roberts and

Justices Kennedy, Antonin Scalia, and Samuel Alito – all asked

tough questions of the administration’s lawyer. Fellow

conservative Justice Clarence Thomas did not ask any questions

but is expected to support the Arizona law, based on his past

votes.

The Supreme Court’s immigration ruling is likely to come by

the end of June, as the political campaign season heats up. It

is expected around the same time justices are likely to rule on

President Barack Obama’s 2010 healthcare overhaul law.

The case, heard on the last day of oral arguments for the

annual term, drew more than 100 reporters to the courtroom press

seats and scores of people on the sidewalk outside the building.

The immigration dispute is the second most important case of the

term, following the healthcare dispute heard in March.

Only eight of the nine Supreme Court justices heard the

arguments. Liberal Justice Elena Kagan, the former top Obama

administration lawyer at the court, recused herself because she

had worked on the matter previously.

Her fellow liberal justices appeared to accept that the

conservative majority would vote to uphold at least part of the

Arizona law and focused their questions on how those provisions,

which have been on hold during the litigation, would be applied

on the ground.

OBAMA SETBACK?

A decision for the Arizona law would be a setback for

President Barack Obama, who has criticized it and has vowed to

push for immigration legislation if re-elected on Nov. 6.

Republican presidential candidate Mitt Romney has said the

government should drop its challenge to the law.

Roberts, who also could play a key role in deciding the

case, spurned the administration’s arguments that the Arizona

law conflicted with the federal system and deemed it “an effort

to help you enforce federal law.”

Other parts of the Arizona law require immigrants to carry

their papers at all times; ban illegal immigrants from

soliciting work in public places; and allow police to arrest

immigrants without a warrant if an officer believes they have

committed a crime that would make them deportable.

Liberal Justices Stephen Breyer and Sonia Sotomayor asked

how long suspected illegal immigrants could be held by

authorities while their status was checked and whether that

would violate their constitutional rights.

There will be a “significant number of people detained for a

significantly longer period of time,” Breyer said.

The third liberal hearing the case, Ruth Bader Ginsburg,

asked more broadly about whether Arizona’s new law conflicted

with federal policy: “We don’t want competing … schemes.”

RACIAL PROFILING AN ISSUE?

Roberts tried to cut off the argument that the Arizona law

would lead to ethnic and racial profiling of Hispanics by

interrupting the government attorney’s opening statement and

asserting that profiling was not at issue in the case.

The arguments, the last of the court’s 2011-12 term, offered

a rematch of the same attorneys who squared off in last month’s

historic battle over Obama’s healthcare overhaul law.

Paul Clement, a solicitor general during Republican George

W. Bush’s presidency, represented Arizona and its Republican

governor, Jan Brewer.

He argued that Arizona, on the southwest border with Mexico,

bears a disproportionate share of the costs from illegal

immigration. He said that state’s law simply complemented the

federal government’s efforts.

Donald Verrilli, a former White House lawyer and now

solicitor general under Obama, argued Arizona’s law would result

in “mass incarceration” of people unlawfully present in the

United States and posed the risk of “significant foreign

relations problems.”

The conservative Scalia scoffed at that argument, saying

that any problems could be avoided by releasing the people from

jail and deporting them.

The Supreme Court last year upheld a different Arizona law

that penalizes businesses for hiring illegal immigrants, and

Roberts at one point cited that decision as a precedent.

The Supreme Court case is Arizona v. United States, No.

11-182.