Updated

This is a RUSH transcript from "The O'Reilly Factor," February 23, 2012. This copy may not be in its final form and may be updated.

Watch "The O'Reilly Factor" weeknights at 8 p.m. and 11 p.m. ET!

O'REILLY: "Back of the Book" segment tonight, "the Kelly File." Let's get right to Ms. Megyn, who is in New York City this evening and has been analyzing the U.S. Supreme Court saying it will decide whether the University of Texas has a right to take ethnicity and race into consideration when making admission decisions on students.

So this is enormous. This case will have societal implications forever, will it not?

MEGYN KELLY, FOX NEWS ANCHOR: This could potentially wipe out the use of affirmative action in college admissions. I mean, it was a huge ruling when it came down, the last affirmative action decision, in 2003 by the U.S. Supreme Court.

And in time they said, you know, in time we'll probably reconsider this. You can't have affirmative action forever. In time there's not going to be the need for it. And the prediction back them was 25 years later they would take a look at it.

Well, here we are. We're not even ten years away. We're nine years later. The court looks very different than it did when the last affirmative action case took place in the high court.

And now only that, but one of the liberals will be off of this case. Elena Kagan, because she was solicitor general when it first -- when it got argued at the lower court level. So you've got the four liberals. One of them is gone. So now you've got three liberals versus four conservatives and one swing justice, Justice Kennedy who has not been a fan of affirmative action. That is the context.

O'REILLY: All right, let's -- let me define the argument. You tell me where I'm going wrong, because I know how much you enjoy doing that. All right.

The liberal point of view on it in in the Supreme Court ruling on it last time around said listen, because of historical atrocities directed primarily toward African Americans and Native Americans, the playing field has still not been installed at a level basis, that culturally blacks and American Indians are held back because they didn't have the resources, they didn't have the traditions that the white people have.

KELLY: Right. There's even bias in certain testing, you know, that when you consider the SAT...

O'REILLY: I throw that out. I don't believe that for a second.

KELLY: All right. Fine.

O'REILLY: Here's what I do believe. That's true. I do believe that, because of poverty, particularly, all right, that African-American students and -- not all of them but a lot of them -- and Native-American students are at a disadvantage. Live in bad neighborhoods, all right. They don't get the tax dollars that they do in the rich neighborhoods. They don't go to prep schools, all of that.

So the society does have an obligation. So that is -- that is the primary argument for affirmative action in college admissions, correct?

KELLY: Yes. And there's really not been a lot of question by sound minds that that has been a legitimate problem when it comes to college admissions.

O'REILLY: OK. So that's -- that's still in play.

KELLY: The question is whether it remains a legitimate problem. That's where they differ.

O'REILLY: I think it does remain, but does the other -- does the other override it? I think it remains legitimate. But now you have to look at the fairness issue that you're depriving people, based upon race, of a college that they would like to go to.

KELLY: We have equal protection clause in this country. And it doesn't just protect minorities. It also protects whites.

And in this case you have a white student who was denied admission to the University of Texas saying, "I -- the reason I didn't get in is because kids who have lower GPA's, lower test scores than I did were admitted because of the color of their skin."

And even though the last case said you can consider race as one of many factors when you're making your admissions decisions, she says the University of Texas considered race as way too big a factor.

O'REILLY: Right.

KELLY: And the business of dividing yourselves up by race continues. She says that violates the Constitution.

O'REILLY: Right. Because what is happening here is that individual, that student is now being unfairly treated to right an historical wrong. And I mean, I'm very sympathetic to that.

And the university would have to say, "Hey, look. Here's why the kid didn't get in if his test scores are 100 points higher than somebody else we admitted." You'd have to explain that to me if I were sitting on the court.

KELLY: Right. And typically the way you'd have to explain that is to you would say, "Look, we had the following numbers. Minority enrollment was really abysmal. And we needed to do something to boost the number of diverse applicants and diverse students."

O'REILLY: That's not going to cut it.

KELLY: But what they are saying is that the University of Texas actually had no problem with diversity among its student body. In fact, they were following a rule prior to instituting the affirmative action, where they just accept everybody who's in the top 10 percent of their classes in the state, and that includes many people of color.

So they were saying this wasn't necessary, and the used the last Supreme Court decision, as permission, essentially, to make race an unusually heavy factor and went too far afield even of the last Supreme Court...

O'REILLY: Yes. But it's going to be hard for the court to define exactly what the factor should be.

Real quick, when is this going to be decided? This summer?

KELLY: It's going to be argued this fall, not this term. Next fall probably but probably before the presidential election, at least the argument.

O'REILLY: All right, Ms. Megyn. Thanks, as always. We appreciate it.

Content and Programming Copyright 2012 Fox News Network, Inc. Copyright 2012 Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content