The 5th U.S. Circuit Court of Appeals said the Farmers Branch ordinance encroached on authority that belongs to the federal government, and called multiple parts of it unconstitutional. The appeals court relied heavily on the U.S. Supreme Court's decision last year that struck down parts of Arizona's immigration law.
"We conclude that enforcement of the ordinance conflicts with federal law," the opinion said.
The suburb's law would have required all renters to obtain licenses. The city's building inspector would check an immigrant's status and deny licenses to anyone in the country without permission, and landlords who allowed immigrants without permits would have faced fines or revocations of their renters' licenses.
Monday's ruling means that unless the U.S. Supreme Court decides to step in, Farmers Branch won't be allowed to enforce the ordinance. Farmers Branch Mayor Bill Glancy said late Monday that he hadn't yet seen the opinion and couldn't comment.
The ordinance has been tied up in legal proceedings, and as of late last year, the city had spent nearly $6 million on legal bills and expenses related to immigration laws, a city spokesman said.
The full appeals court heard arguments last September after a three-judge panel ruled against Farmers Branch in March 2012. The decision to have a full rehearing of a case, known as an en banc hearing, is rare and created speculation that judges wanted to reverse the panel's decision.
Being in the United States without legal permission isn't a crime on its own, the court said, and immigrants in the process of deportation are often required to give agents a reliable address. Banning them from renting apartments "not only fails to facilitate, but obstructs the goal of bringing potentially removable noncitizens to the attention of the federal authorities," the court said.
Judges also questioned the process in which a renter or a landlord would be told to appeal a decision under the law in Texas state court, which the court said could open "the door to conflicting state and federal rulings on the question" of whether someone could legally live in America.
Kansas Secretary of State Kris Kobach, a well-known advocate for tougher immigration laws who argued the case on Farmers Branch's behalf, did not return a phone message.
William Brewer, the plaintiffs' lead attorney, called the decision "critically important" because the town had "thrust itself into the national debate over immigration."
Nina Perales, vice president of litigation for the Latino civil-rights group MALDEF, said the court's ruling sent a strong message that there were "few legal ways" for states and local governments to get involved in immigration.
"It is our sincere hope that (Farmers Branch) will accept the court's ruling, stop wasting the taxpayers' money, and move on to issues of real public concern," Perales said.
Other towns that have fought to enact similar laws have seen mixed success. A federal appeals court ruled against a renters' ordinance in Hazleton, Pa., but a different appeals court last month allowed law passed in the eastern Nebraska city of Fremont to go into effect.
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