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One of the biggest issues facing the new Congress is what to do about immigration policy and what to do about the estimated 10 million illegal immigrants now living in the U.S. Not that long ago it was a problem in a half dozen border states, today it impacts virtually the entire country.

Frustrated with the lack of action in Washington, local communities are taking matters into their own hands, by passing laws and ordinances specifically designed to drive illegal immigrants out of their towns. And they are doing by denying them places to live and work. It has raised all sorts of issues and touched off a legal fight that is likely to end up before the U.S. Supreme court. And as correspondent Steve Kroft reports, it's being fought of all places, in a city called Hazleton.

Most of the people who turned out for the town's annual end of summer parade are descendents of immigrants who came here in the 19th and early 20th century, including the mayor, Lou Barletta.

The Barlettas came from Italy, and ended up with a street named after them. Now the mayor is making a name for himself by going after a different type of immigrant.

Barletta believes what has been going on in Hazleton, a city of about 30,000 people, is a microcosm of what's been going on all over the country, that illegal immigrants are overwhelming his city, draining its resources and ruining the quality of life

Immigration is a job that has always been handled by the federal government. Asked why he is getting involved, Barletta tells Kroft, "Well, obviously if the federal government was doing something about it you wouldn't be here today. And I wouldn't be talking about it. I mean, we're over 2,000 miles from the nearest Mexican border. So, if cities like Hazleton, Pennsylvania, that sits on top of a mountain is having an illegal immigration problem, I can only imagine what it's like elsewhere in the United States."

Hazleton's "problem" began nearly a decade ago, when the state of Pennsylvania began offering huge tax breaks to attract new businesses. And it worked, ushering in a period of growth and prosperity. Factories, distribution centers and office parks sprung up creating 5,000 jobs, many of them for unskilled labor. By and large the people who moved here to take them were Hispanics from urban areas, who brought diversity, a different language, and in some cases big city problems that Hazleton had never had before. In the year 2000, Latinos represented just five percent of the population. Today, the figure is 30 percent.

Asked what percentage he thinks are illegal immigrants, Barletta says, "Nobody knows that. Nobody knows that anywhere in the United States how many illegals are here."

"If you don't know how many illegal aliens are here, why do you think you have a problem?" Kroft asks.

"When you start seeing serious crimes being committed, very violent crimes being committed and time and time again those involved are illegal aliens, it doesn't take a brain surgeon to figure out that you're experiencing a problem here that you've never had before, nor do you have the resources to deal with it," the mayor replies.

The catalyst was two violent crimes involving illegal immigrants; a May 10th murder by two Dominican men, and a drive by shooting. The mayor claims that elderly residents are afraid to leave their homes, and constituents begged him do something.

Serious crimes have nearly doubled in the past two years, and Hazleton's small police force, with its five-man shifts, is not equipped deal with it. The department had exhausted its overtime budget for this year more than four months ago.

"Well, you know, this is a police department that has 31 police officers. A city of our size should have 60," Barletta says. "We arrested an illegal alien for selling crack cocaine on a playground. It took our detectives five hours to determine who he was. He had five different Social Security cards."

At the hospitals, un-reimbursed medical expenses for things like emergency room visits are up by 60 percent. Public school enrollments are up 25 percent.

And the budget for teaching English as a second language has gone from $500 a year to more than $875,000. There are no statistics to corroborate that any of these increases are directly related to illegal immigrants because they have been almost invisible here, and indistinguishable from legal members of the immigrant community.

Last summer, Mayor Barletta and the city council tried to change that by pulling in the welcome mat. They passed an ordinance called the "Illegal Immigration Relief Act," which punishes local businesses and landlords who give work or shelter to illegal immigrants.

Under the local law, anyone who hires an illegal immigrant or rents an apartment to one faces the loss of their business license and thousands of dollars of fines. It also requires everyone in Hazleton who rents an apartment to go to City Hall with a passport, birth certificate or immigration documents or citizenship to show that they are in the country legally. The names can then be checked against a federal data base to determine their immigration status.

The people Kroft talked to at the Blue Comet Diner, and most of the people he spoke with in Hazleton, thinks it's a great idea.

"Someone who's here illegally, you know they're breaking a law," one woman told Kroft.

"I believe Mayor Barletta is on the cutting edge of a new societal revolution that may be the forerunner for changing something very important in America," another woman said.

Versions of the Hazleton ordinance are now being debated all over the country with immigration reform groups offering financial and legal backing. Eleven cities from Riverside, N.J. to Farmer's Branch, Texas, have passed similar laws and they are under active consideration in more than 30 communities.

"Hazleton is the first of these. It's not the last. And we're gonna fight them everywhere where they're enacted," vows Lucas Guttentag of the American Civil Liberties Union.

Guttentag is one of 24 lawyers from three civil rights groups, five private law firms, and three charitable organizations and businesses that have filed suit in Scranton asking the federal courts to have the law overturned.

"The ordinance that's been enacted by Hazleton is unconstitutional. It's counterproductive. It's contrary to federal law. It's gonna lead to discrimination and divisiveness in that community, and it's not within the power of local governments to enact these kind of ordinances," he tells Kroft.

Guttentag says the ordinance violates fair housing and civil rights acts that prohibit racial and ethnic profiling. And that under the Constitution, immigration policy is the sole responsibility of the federal government; cities and states can't just come up with their own programs. Mayor Barletta, who has his own team of outside lawyers, including a former immigration advisor to former Attorney General John Ashcroft, says that's not what Hazleton is doing.

"We're not involved in immigration in any way. We're not regulating people coming in and out of the country. In fact, we're not doing anything to the illegal alien. We're simply punishing businesses that hire them and landlords who rent to them," Barletta says.

But Guttentag says one of the problems is that these ordinances are incapable of distinguishing between so-called legal and so-called illegal immigrants and that they don't have that capacity.

"Their argument is, Hazleton isn't gonna be making the decision on who is legal and who is illegal. That's going to be done using a federal database from the immigration service and their computers," Kroft tells Guttentag.

"Well that is what they say, but that's not possible. And we know that's not possible there is no such federal data base," he replies.

The ACLU argues that immigration laws are extremely complicated and that the information in the government computers that Hazleton plans to use to determine whether an immigrant is legal or illegal is not only incomplete, but inaccurate 20 percent of the time. He believes innocent people are going to lose their jobs and be thrown out of their homes with no opportunity to appeal.

"You get evicted first. You get terminated first. You get suspended first. And then you can try to contest that? That's not the federal system is set up. But that's what the Hazleton ordinance does. It punishes first and asks questions later," Guttentag argues.

A federal judge has temporarily stopped the law from being enforced until its legality is decided in court. But Mayor Barletta would argue it's already working. Many illegal immigrants who have been willing to do the kind of jobs others in Hazleton were not, have already gone.

Among them is one woman who 60 Minutes will call "Alicia." She came to Hazleton from Mexico a dozen years ago with her daughter to serve the town's need for cheap labor. She worked in small factories for $6 to $8 an hour, which with overtime allowed her to live right on the poverty line, until she packed up in September and moved to another town.

"I came to work. I don't do nothing to somebody else. I'm not criminal. I am not - not going to welfare for - how you say stamp?" Alicia tells Kroft.

"Food stamp," Kroft says.

"Food stamps," she replies.

Alicia went on to tell that she worked 10 to 12 hours a day, six days a week. She also said that most people in the plant where she worked were illegal immigrants.

She says it was a good job, "much better" than in Mexico. Asked why she moved, Alicia tells Kroft, "Why? Well, because I don't feel safe. I feel now different. I feel like a people know I'm illegal."

"Do you think the ordinance changed the way people looked at you?" Kroft asks.

"Yeah," she replies.

The larger employers in Hazleton say their labor force has not been affected. But there is a reported shortage of construction workers, landscapers and agricultural workers.
Also leaving town are the Hispanic restaurants, bodegas and shops that catered to Hazleton's Hispanic community and helped revitalize the city's downtown area, drawing praise from Mayor Baretta. With their customers gone, many of them are closing their doors.

Isabel Rubio, who is now a U.S. citizen, and runs a gift shop in downtown says her business is off more than 50 percent. But worse than that, she believes the ordinance has changed the town, stirring up ethnic tensions, and making illegal immigrants and the entire Hispanic community scapegoats for all of Hazleton's problems.

"You notice people treating you different or reacting differently to you?" Kroft asks Rubio.

"Oh, yeah we feel," she replies. "My customers they complain. They say they say to people what you're waiting for when you're gonna leave town, soon? Like they want the people to leave town."

Rubio vows to stay put and is not leaving town. "This is my home. We are here 24 years. Half of my life," she says.

"There are some people in town that think that this has much less to do with illegal immigrants than it does with the Hispanic community in general," Kroft tells Barletta.

"Well I disagree with that. I have said over and over again, legal immigrants are welcome in Hazleton. Illegal aliens are not. I'm very clear about that. I've been very supportive of the Hispanic community in the seven years that I've been the mayor here," the mayor says.

"You've been called a bigot. You've been called a political opportunist," Kroft remarks.

"I've been called the grand wizard of the KKK," Barletta replies. "I took an oath of office to protect and defend the people of my community. And they can call me all the names they want. But this is worth fighting for."
Produced By Janet Klein