captioning sponsored by macneil/lehrer productions >> brown: a legal challenge to arizona's tough new immigration law made its way to the nation's highest court today. good evening, i'm jeffrey brown. >> ifill: and i'm gwen ifill. on the "newshour" tonight, marcia coyle of the "national law journal" tells us what happened inside the supreme court. >> brown: then, judy woodruff examines allegations that walmart executives in mexico may have violated a u.s. bribery law. >> ifill: in our latest "american graduate" installment, john tulenko reports on an indiana school that's turned to technology to get dropouts back on track. >> in n this classroom at a local college, high school students in danger of dropping out can make up the courses they failed and take new ones on computers. >> brown: we continue our look at the aftermath of the financial meltdown: what's changed and what hasn't on wall street? >> ifill: and from liberia, special correspondent steve sapienza partners with a local journalist to ask why the government hasn't solved the

country's water crisis. >> one recent world bank study found coax-- and indicator of widespread fecal contamination-- in 58% of water sources across monrovia. >> brown: that's all ahead on tonight's "newshour." major funding for the pbs newshour has been provided by: >> and by the bill and melinda gates foundation. dedicated to the idea that all people deserve the chance to live a healthy productive life. and with the ongoing support of these institutions and foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you.

thank you. >> ifill: the u.s. supreme court heard arguments today over arizona's immigration law. the justices appeared skeptical of the administration's claim that the state had overstepped federal law. following the arguments, supporters and critics of the measure made their case outside the court. >> this law is a paradigm of cooperation with the federal government. the law mirrors federal law so we drafted the arizona statute so that it uses the exact terminology, the exact phrasing of federal law. so all it says is that if some behavior is prohibited at the federal level then we're going to make it a state crime as well. that is mirroring and supporting the federal government. when the justice department sued arizona that was an unprecedented thing in american because never before has the justice department sued a state for trying to help. >> it is clear that in america we should not have laws in which 50 states have 50 different ways

of treating immigration policy. especially laws that can only be enforced by making judgements on whether you have dirt on your boots, the color of your skin, the accent of your voice, or your last name. that is no way to make law enforcement in the united states of america. >> ifill: for more on how the arguments played out inside the court today, we are joined, as always, by marcia coyle of the "national law journal." marcia, in some ways, last time we had a big case at the court it involved health care and it was a rematch of the lawyers involved in those two cases but it couldn't have been more different. >> absolutely. arizona was represented by paul clement, who's a former solicitor general during the bush administration and the united states was represented by its top lawyer, solicitor general donald verrillly. the two men have very different styles. solicitor general verrilli is soft spoken, deliberate, cautious.

mr. clement speaks quickly, very confident aggressive and at the end of today's argument the chief justice complimented both of them on good arguments. >> let's talk about this case. the law we're talking about in arizona has four distinct parts under challenge. let's walk through them one by one. there's one about warrantless arrests, being able to arrest people without showing proof. >> that's right, the provision says that if the police officer has probable cause-- which is a higher standard than, say, reasonable suspicion, but probable cause to believe that somebody that she has stopped has committed in an offense that could result in deportation from the united states that officer doesn't need a warrant to arrest that person. >> ifill: was that argued at

all. >> there was virtually nothing on that provision. >> so that maybe would stand because it wasn't being challenged because... >> i wouldn't read the tea leaves on that. is s that immigrants-- legal or illegal-- carry i.d. >> two of the provisions create new arizona crimes and that provision, that section says if an undocumented alien in the country fails to follow federal immigration registration laws-- that is register with the federal government and carry registration document, it's a crime punishable by jail time and possibly fines as well. >> ifill: and there's another one about job seekers having to prove... >> that's right. and that one also is discussed during arguments briefly and that makes it a crime for an undocumented alien to work or attempt to solicit work in any way. >> ifill: but at the heart of this argument today really, and what the discussion many the court was was about this

question of suspicion and under what circumstances a law enforcement official can actually stop and arrest someone. >> yes, section 2b of the law authorizes law enforcement officials when they stop a person, if they have reasonable suspicion to believe that the person is in the country illegally then the law enforcement officer is authorized to do an immigration status check and that means give the name to federal authorities to run through databases to see if the person is here illegally. there was concern by some justices such as justices sotomayor and justice breyer about the duration of this kind of a stop. some of the concern is that, okay, maybe you're stopped for going ten miles over the speed limit. how long will you be stopped if the officer wants to do an immigration status check because you may be a citizen as well as you may possibly be an illegal immigrant and mr. clement tried to reassure the justices saying

"this status check takes somewhere between ten and 11 minutes." mr. verrilli countered "well, yes, the actual check may take that long but first you're put in a queue for about an hour before the check runs." so there is that disagreement there. >> ifill: but it seemed that more of the justices were raising questions about the federal government's challenge of this law. >> that's right. a number of the justices-- including justices sotomayor and justice breyer-- seemed to feel that this was basically a notification law. the police officer has the status of the person stop checked and notify it is federal government. >> ifill: the chief justice said as much. >> he did. he said it looks to me like it doesn't interfere with the federal government's enforcement priorities. in fact, he said to mr. verrilli "it seems to me that the federal government doesn't really want to know who's legal and who's illegally in this country." >> ifill: is it possible to strike down some portions of this law, uphold other portions

of it? >> absolutely, gwen. in fact, my sense of the argument was that they are going to parse each of the four provisions challenged here and one may withstand scrutiny and some of the others may not. the registration provision, for example, justice ginsburg pointed out that it appeared to her that congress had enacted a comprehensive registration scheme for aliens in this country and that may well show that the arizona new crime conflicts with that law. >> ifill: and there are other states who've tried to mimic arizona who are watching this very closely. >> there are about six states. some have even enacted tougher laws. so whatever the court says is going to mean a lot to them. but i think in general what we've seen here is this... this is going to be a very important decision for how far states can go in terms of enacting immigration-related statutes. but it's also even larger case in this sense that we'll see what the boundaries are between

federal and state power. >> ifill: and no matter what it won't be a 5-4 decision because there are only eight justices. >> that's a good point. justice kagan refused herself from the case, probably because when she was solicitor general she had some involvement in the lower court litigation. >> ifill: okay, marcia coyle, "national law journal," thank you. >> my pleasure, gwen. >> jeff: still to come on the "newshour": allegations of bribes in mexico; an indiana school tackles its dropout problem; wall street after the financial crisis and the demand for clean water in liberia. but first, the other news of the day. here's kwame holman. >> holman: the u.s. economy is growing at a moderate pace, but still is at risk from weakness in europe. the federal reserve gave that assessment today, after a two-day meeting. it also held firm to its plan to keep short-term interest rates low, at least through late 2014. fed chairman ben bernanke said the fed is not planning any further stimulus, but it is keeping close watch.

>> we remain entirely prepared to take additional actions if necessary to achieve our objectives. so those tools remain very much on the table and we will not hesitate to use them should the economy require that additional support. >> holman: on wall street, stocks made new gains, powered by strong earnings from apple and other major companies. the dow jones industrial average gained 89 points to close at 13,090. the nasdaq rose 68 points to close at 3,029. britons got the grim word today that their economy has fallen back into recession. economic output slipped at the start of the year, for the second quarter in a row. that left conservative prime minister david cameron to defend his deficit cutting, under sharp criticism from the labor party. we have a report from tom bradby of "independent television news." >> it's the brave action of this government that has lifted our economy out of the danger zone. >britain's economy is out of the danger zone and recovering.

today britain is out of that danger zone and able to grow sustainably. >> reporter: many wondered if mr. cameron would come to regret those words uttered at various points in the last two years and so it has proved as the men from the office of national statistics sat down this morning looked pretty miserable and it didn't take long to work out way. >> there's a preliminary estimate for gross domestic product in the first quarter of 2012 is that output fell by0.2%. >> reporter: it was an economic statistic but also a political bombshell. in some, we are back in recession. the tory's entire strategy is built on the idea they are putting us through this pain in order to fix our economy. >> the reality is this is a recession made by him and the chancellor in downing street. over the last 18 months, since his catastrophic spending review, our economy has shrunk and this is now a slower

recovery from recession even than the 1930s. >> there is not a single business organization or serious commentator or international body that thinks these problems emerged in the last 24 months. >> even his own backbenchers are saying the complacent arrogant porch boys just don't get it. >> whether it is the proper regulation of the press, whether it is cleaning up our financial system, whether it's dealing with our debts, i don't duck my responsibilities! what a pity he can't live up to his! >> holman: for all the shouting, government officials said britain is being hurt by recession across europe that cuts demand for british goods. media baron rupert murdoch dismissed claims today that he's had too much sway over british politicians. murdoch appeared before a media ethics inquiry. he dismissed what he called myths about his influence and ability to swing elections. and, he said, "we don't have that sort of power." the media inquiry was spawned by

revelations of phone hacking by employees of a murdoch tabloid. the u.s. senate has voted to slow down service cuts at the ailing postal service. a bipartisan bill that passed today would block plans to close thousands of post offices and continue saturday mail delivery for now. connecticut senator joe lieberman said it also includes $11 billion dollars to pay off debt and offer buyouts to 100,000 employees. >> this great american institution which still delivers over 560 million pieces of mail every day, and helps to support eight million jobs throughout our economy, cannot be allowed to spiral downward into bankruptcy. >> holman: republican >> holeman: a bill circulating in the house would circulate a commission with the power to snap no layoff clauses in postal employees contracts.

republican presidential candidate mitt romney consolidated more of his party's support today, after sweeping all five primaries on tuesday. the party's national chairman reince priebus formally declared romney the presumptive nominee. and in cramerton, north carolina, newt gingrich signaled he will formally end his campaign next week. >> i am committed to this party. i am committed to defeating obama. we will find ways to try to be helpful. i do think it's pretty clear to governor romney is ultimately going to be the nominee and we'll do everything we can to make sure he is, in fact, effective. >> holman: meanwhile, president obama argued romney will have to defend the conservative views he embraced during the long primary campaign. in an interview with "rolling stone" magazine, the president said, "i don't think that their nominee is going to be able to suddenly say, 'everything i've said for the last six months, i didn't mean.'" the president also pressed congress again to maintain low interest rates on student loans. the rates will double in july, unless congress acts to prevent it.

last night, senate democrats called for taxing privately held corporations to pay for the cost nearly $6 billion. today, house speaker john boehner offered a republican bill to take the money out of funding for the health care reform law. he scheduled a vote for friday. the secretary of homeland security janet napolitano said today she doubts the secret service prostitution scandal was part of a pattern. a dozen agents were implicated. eight have been forced out, one lost his security clearance, and three were cleared of serious wrongdoing. napolitano told a senate hearing she'd be surprised if there was a larger problem. >> a full and thorough investigation is under way to determine exactly what transpired and actions we need to take to ensure that this kind of conduct doesn't happen again. let me be clear. we will not allow the actions of a few to tarnish the proud legacy of the secret service. >> holman: 12 members of the military are also under investigation in the scandal.

pentagon officials briefed senators but republican john mccain complained they provided appallingly little new information. in syria, a damascus suburb came under heavy mortar and machine gun fire for a second day. amateur video from douma showed explosions as well as streets filled with rubble and vehicles ablaze. activists said government troops kept up the fire despite a visit by u.n. observers. elsewhere, the opposition reported rocket fire killed at least a dozen people in the city of hama. nato reported the deaths of four troops in afghanistan today, bringing the month's toll for the alliance to 31. two were killed in separate attacks in the south. the others died of non-battle injuries. for the year, 122 coalition members have lost their lives in afghanistan. a u.s. military judge has refused the request by army private bradley manning's defense to have the charges

against him thrown out in the wikileaks case. he's accused of transmitting hundreds of thousands of u.s. government documents to the anti-secrecy website. today's ruling came at a pre- trial hearing at fort meade, maryland. manning faces a court-martial in september. those are some of the day's major stories. now, back to jeff. >> brown: and we turn to the still unfolding story of wal- mart and allegations of bribery in mexico. judy woodruff has more. >> woodruff: with more than 2,000 stores throughout the country, mexico is an important foreign market for wal-mart. but a "new york times" investigation has raised troubling questions over wal-mart's dominance there and how it came to be. among some of the findings: former executives for the company orchestrated a campaign of bribery to obtain construction permits and build stores more quickly during the past decade. a paper trail of bribery documenting payments of more than $24 million. and top executives of the

company seemed to shut down an internal investigation until recently. wal-mart is now conducting an inquiry into whether employees may have violated the foreign corrupt practices act, a federal law that makes it a crime for american companies to bribe foreign officials. bloomberg news also reports the company is the subject of a criminal probe by the u.s. justice department. we look more closely at the law and potential violations with joseph hoffman, a professor of law at the indiana university maurer school of law. we thank you for being with us. >> thanks for the invitation. >> woodruff: first of all, professor hoffman, tell us more of what is in the foreign corrupt practices act. what does it say? >> so, the f.c.p.a.-- foreign corrupt practices act-- was enacted in 1977 in the wake of a number of corporate bribery scandals, including the lockheed

scandal. and the act has two major provisionses, one of which prohibits a variety of corporations and individuals within u.s. jurisdiction from paying bribes to foreign government officials. and the other provision, major provision, requires issuers of u.s. stock, stock issued through the u.s. securities and exchange commission procedures, requires those corporations to maintain transparent accounting records so that bribes can be identified. >> woodruff: and based on the reporting by the "new york times," a story that came out a couple days ago, what parts of the law is it that wal-mart is allegedly supposed to have violated. >> well, of course, we won't know for sure until the justice department completes its investigation and actually decides whether to go forward with an enforcement action, but the "new york times" allegations conceivably could go to both parts of the f.c.p.a.

in other words, what the "new york times" reports are that wal-mart de mexico was paying bribes to obtain permits and other approvals from mexican government officials and in addition that the accounting used by wal-mart's mexican subsidiary was specifically designed to hide these payments, just the opposite of the kind of transparency that would be required by the f.c.p.a. accounting rules. >> woodruff: now, explain the difference between a payment in order to get business or in order to get a permit or a license-- a payment that's legal and one that's considered a prescribe. how is that defined in the law? >> well, basically, any payment made to a foreign government official in an effort to try to get them to do something that is either against the rules of law of that country or an effort to get them to exercise their

discretion to allow an american company to expand or to do business or even to maintain business in that foreign country would be classified as a bribe. now, there's a specific exception for what are called facilitating payments. these are generally described as payments that are made to facilitate or to speed up the issuance of a permit that would already being something that the company would be entitled to get under raw. or, for example, to turn on the utility, like the company wants to get the electric turned on or the water. these are facilitating payments and they are not considered to be bribes. but if you read the "new york times" story carefully, a number of the allegations go way beyond anything that could reasonably be described as facilitating payments. for example, payments to get zoning approvals. these are not automatic. they're not something that the company's entitled to. they involve exercises of

discretion by local government officials and payment to get those zoning approvals would be a bribe. >> woodruff: so in other words there's a clear distinction in the law between what would be considered within the boundaries of what's legal and what would be beyond. >> i wouldn't describe it as a clear distinction, judy. i think actually's a pretty good case to be made that the distinction can get pretty fuzzy at times but some of what's allegeed in the "new york times" story, if it turns out to be true, will clearly be over that line, as fuzzy as it may be. >> woodruff: now what about... in talking to you earlier today you indicated one potential problem the government could have, the justice department could have. is the statute of limitations, that there's a five-year limit. explain knew could come into play here. right. so the "new york times" story does not specifically identify any actions such as bribes paid or coverups of... in the accounting sense that took place

any later than 2006 and, of course, that's more than five years ago as of right now. the statute would normally preclude the government from starting an enforcement action for activities that took place more than five years ago. but there are ways to get around that. and one of those ways is if the justice department can allege and prove that there was a conspiracy within wal-mart to not only pay the bribe bus also to cover up the bribes that were being paid in mexico. if there was a conspiracy and if there was any action taken in furtherance of that conspiracy within the past five years, that could be something relatively minor like an e-mail saying "have you taken care of those books? have you taken care of those records?" anything like that that happened within the past five years would open up the whole thing to a conspiracy charge that would get around the statute of limitations problem. >> woodruff: just finally--

and, again, acknowledging all this is hypothetical-- this is now based on a news report, there is an investigation under way but it's not known. but if it were proven what is allegeed in the article, give us a sense of the size of the penalties for punishment. >> you know, it's really hard to put a maximum dollar figure on that. in the past few days i've seen estimates ranging from the tens of millions up to billions of dollars. the statute and related statute prose ride is as a criminal matter wal-mart could be fined twice the amount of profits that they expected or sought to gain from the payment of the bribes. that's a pretty substantial figure. that would clearly... if all of the allegations in the story were true, that could clearly run into a very significant sum of money. but obviously we have to wait and see what the investigation brings out. >> woodruff: professor joseph hoffman, indiana university school of law, we thank you very

much. >> you're welcome. >> ifill: our latest story about the dropout crisis and efforts to keep students in school comes from the midwest. special correspondent john tulenko of learning matters television profiles one school district that altered its whole approach toward at-risk students. it's part of our ongoing "american graduate" project. >> reporter: in shelbyville, indiana 17-year-old kayla owsley lives a very grown up life- caring for her two-year-old daughter, bailey. >> at the end of 7th grade, that's when i found out that i was pregnant. and it was hard to think that i could even be a mom, but i am and i'm a good one. >> reporter: she stayed in school and in 10th grade began working to support her daughter, but it all became too much. >> i was exhausted. i could barely wake up.

i was starting to drag myself. my grades were slipping and i could see that, like, a lot. i was scared i wasn't going to be able to graduate high school, go to college. i was scared that what i wanted to be i wasn't going to be able to do it. >> reporter: michael maupin was worried about his future too. >> i'm a slower learner. moving at other people pace, it just makes it that much harder. i got bored of hearing teachers talk all the time. i was making straight "f"s. i mean there was no "d"s, "c"s "b"s. it was just straight "f"s. >> reporter: just teenagers, both michael maupin and kayla owsley were at a crossroads: on the verge of joining the roughly half-a-million students who each year dropout of high school. it's a life altering decision. dropouts are far more likely to

be unemployed, on public assistance, and even incarcerated. but now, school districts like shelbyville have made fixing the dropout problem a top priority. shelbyville's wake up call first came six years go, when this quiet community of 19,000, its streets lined with modest homes, unexpectedly became the poster for the dropout crisis. the high school, with its roughly 75% graduation rate, was the subject of this 2006 cover story in "time" magazine. >> it was a conversation starter in a lot of arenas and i think that was beneficial. >> reporter: tom zobel had just become the high school principal. it was a time when schools looked the other way and even encouraged some students to dropout. >> there was an emphasis on discipline in schools and so we've got to get these students who aren't going to behave in

school not to be in school anymore. >> now it just seems like wow they really didn't care but i was like one of them problem children they wanted to get rid of. >> reporter: shelbyville high school expelled tequila robinson in 9th grade, for skipping 32 days of school. a few years later while working fast food, she caught a glimpse of her future. >> a year and a half into waffle house, there was a woman who worked there for 26 years, and i was like wow, i have got to go back to school. i do not want to be like that. >> life has been hard for them and they tell us that. you know, you'll run into one or two or three here in the street, see them in the store, and they'll say biggest mistake i ever made. i wish i'd have stayed in school. >> reporter: tequila went back and just earned her g.e.d. now she's studying to be a nurse. shelbyville high school learned its lesson too: the time magazine story helped spark a dramatic shift in attitude.

>> it is now much more of okay lets sit down and talk, what kind of things can we do to help you, what can we do to make sure you're going to get graduated in four years. >> here's the board. >> this is it. >> reporter: more attention is being paid to identifying the students at risk of dropping out. >> these are kids right here that i am most concerned about graduating. >> reporter: assistant principal: andy hensley. >> i call this the watch list. so i'm watching them. i'm checking their grades. my eyes are on them constantly. >> what gets a student on this list? >> if they are behind credit wise. they may have to, what i call, run the table where they have to get every credit possible, for every period. >> reporter: watch lists have proliferated in high schools, owing largely to no child left behind. the federal education law penalizes schools that fail to raise graduation rates.