The US Supreme Court is preparing to hear oral arguments in a landmark legal case involving Arizona and immigration enforcement.  But it’s not the legal case you might be thinking of.

Most Americans have heard by now of Arizona’s controversial new law, SB1070.  It’s intended to enhance the ability of Arizona police to inquire about the legal status of state residents suspected of being in the country illegally.

The Obama administration, reeling from criticism that it wasn’t pursuing immigration reform, sued Arizona last spring, charging that its law would discriminate against Latinos and was “pre-empted” by federal law.  A federal district court judge enjoined key portions of SB1070 on July 29.

But the case now before the Supreme Court is not directly related to that law.  It concerns a separate but potentially even more far-reaching enforcement law that Arizona passed in 2007, and that two federal courts, including the 9th Circuit Federal Appeals Court, upheld in 2008.

The earlier law is known as the “Legal Arizona Workers Act,” or LAWA.  It allows the state to suspend, and eventually to revoke, the business licenses of companies that knowingly hire illegal aliens.  It also requires that firms utilize a federal workplace verification system, known as “E-Verify,” to determine whether prospective employees are legally eligible to work.

The same coalition of immigration and Latino civil rights groups that are challenging the constitutionality of SB1070 earlier tried to stop LAWA.  They argued that the Immigration Reform and Control Act (IRCA) passed by Congress in 1986 established an exclusive federal scheme for imposing sanctions on employers that knowingly hired illegal immigrants.  Arizona was usurping federal authority by trying to impose its own state scheme, they argued.

But a federal district court, backed by the 9th Circuit, disagreed, citing a “savings” clause in the 1986 IRCA law that limited the scope of IRCA’s legal sanctions to monetary fines.  The clause expressly notes that matters relating to “business licensing” are not covered by IRCA’s prohibition on state sanction laws.  Therefore, Arizona was well within its rights, legally, to develop a sanctions regime based on licensing penalties, rather than merely fines, the courts ruled.

But perhaps even more far-reaching was the courts’ decision to uphold LAWA’s requirement that Arizona companies use E-Verify to weed out illegal aliens at the workplace.  Here, too, opponents had argued that mandating the use of a voluntary federal program was beyond a state’s constitutional authority.  But again, the courts disagreed, saying that Congress intended for E-Verify to spread nationwide, and to become mandatory.  Arizona was well within its constitutional rights to accelerate a federally-approved process with “complementary” state legislation.

Since those decisions, a veritable “E-Verify” movement at the state level has begun to take hold, even as federal legislation to extend E-Verify remains deadlocked in Congress.  Louisiana, Mississippi, Virginia, and Missouri have all passed laws similar to LAWA.  Other states have decided to make E-Verify mandatory for firms that contract with their government agencies, which is similar to the scope of the current federal law.

When the Obama administration decided to ask the Supreme Court to review the 9thCircuit’s decision last summer, it did so quietly, without even issuing a press release.  Is it any wonder?  The same courts that upheld LAWA are the very ones now deciding the fate of SB1070.  And Obama’s been insisting loudly that SB1070 is “pre-empted” by federal law.  But the adverse ruling by these same courts on LAWA suggests that there is far more space for state action in immigration than the Obama administration wants to acknowledge.

But there’s an important reason for the administration’s silence.  When Arizona first passed LAWA, its governor was Janet Napolitano, currently Obama’s homeland security director.  Not surprisingly, we haven’t heard a peep out of Napolitano about the administration’s challenge to the very state law that she so vociferously defended while in office.

In fact, when Napolitano signed LAWA back in 2007, she even sent a letter to House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid urging them to pass similar legislation at the federal level.  She also recommended that other states pass a similar law, calling it “the most aggressive action in the country against employers who knowingly or intentionally hire undocumented workers.”

There are two good reasons to believe that the US Supreme Court will reject the Obama administration’s appeal of the 9th Circuit’s ruling upholding LAWA.  First, in making its decision, the 9th Circuit relied heavily on an important Supreme Court precedent — the De Canas case of 1976 — which found that states could pass laws in the immigration arena, especially dealing with employment, even if there were no guiding federal law, as long as the state law was consistent with broader federal “intent.”

In the De Canas decision, the Supreme Court upheld California’s state employer sanctions law, even though, at the time, no federal employer sanctions law like IRCA was in place.  What that demonstrates is that state action is often a powerful spur and prelude to federal legislation passed by Congress, which turns the entire “pre-emption” argument on its head.  States aren’t contradicting the feds, or getting in their way, when they pass tough state immigration laws, they are actually serving as role models.

But the other reason for anticipating a rejection of Obama’s appeal is the simple fact that no other circuit court has ruled contrary to the 9th Circuit.  The Supreme Court typically avoids getting involved in major legal disputes unless an issue has become the subject of contradictory rulings at the circuit court level.  So far, that hasn’t happened.  In its brief, the Obama administration argues that the issue is sufficiently important for the Court to issue a ruling anyway — which is why the Court agreed to hear the case.  That doesn’t mean they’re likely to overturn the 9th Circuit’s decision — far from it.

Oral arguments in the case begin on December 8th, and the Supreme Court is expected to rule in the spring.  If it upholds the law, and grants Arizona — and by extension, other states — considerable leeway to fashion state immigration laws, that could have a major impact on the outcome of the legal battle over SB1070, which is now under review by the 9th Circuit Court.  And it could lead to a landmark ruling redefining the proper dividing line between federal and state “authority” in the making and enforcement of our immigration laws.

Stewart J. Lawrence is a Washington, D.C.-based public policy analyst who writes frequently on immigration and Latino affairs. He is also founder and managing director of Puentes & Associates, Inc., a bilingual survey research and communications firm.